Super funds must digitise to meet new Australian retirement standards
Australians are set to have heightened expectations of the superannuation system following the
“Your Future, Your Super” reforms recently passed by the Morrison Government.
Annual performance testing and the ranking of funds is part of the new legislation, while an interactive YourSuper tool will let consumers compare super funds and consolidate funds where they have more than one.
“Stapling” super accounts to people is another controversial change, which will prevent new Super accounts being auto opened when Australians change jobs – something that can cause people to unwittingly end up paying fees to multiple funds.
For superannuation funds themselves, the changes present a twofold challenge. Savvy Australians now have greater access to information to help them switch and consolidate accounts. In addition, it will be harder to convert complacent consumers to switch funds as their stapled super account rolls over from job to job.
Even before the latest federal government reforms super as a compulsory product carried a heightened risk of consumer dissatisfaction and low trust, with about 10% of complaints to the Australian Financial Complaints Authority (AFCA) being related to super funds – that’s 4x the volume received for life insurance products.
Common complaints include delays and denial of claims, but poor service and admin errors are also on the list of top complaints. With industry changes pending and customer dissatisfaction at large, super funds are now faced with an immediate challenge to attract and retain customers.
The rising tide of consumer expectations
At an Urban Development conference earlier this year, experts on aged care remarked that Baby Boomers are the most demanding consumer generation Australia has ever seen, making them disruptors whose expectations will influence the sector. LDK Healthcare’s Paul Browne stated, “older people now have iPhones and want different things … they want a product that I want.”
The same can be said about all retirement services – the first of which young Australians must consider is of course superannuation.
Funds should be taking note that the government has already invested in digitising its own part of the superannuation experience. What sits at the core of its YourSuper model is excellent integration, which meets the growing expectations from consumers today.
As digital natives become a core audience for funds, integration could and should include consolidating with other digital government ATO services, as well as private offerings from banks and insurers, and even financial planning tools.
Leaning into a digital strategy that lasts
Infosys surveyed retirement service providers to better understand their overall strategic objectives, digital transformation journeys and intended technology investments in March 2021.
Globally, respondents reported they had shifted their focus from innovation and customer experience to shoring up their finances during the pandemic.
Meanwhile local research shows the pace of change is only increasing. Across Australia and New Zealand 95% of providers noted an increased pressure on digital transformation over the past 12 months, with half stating that this pressure had increased significantly.
The same majority reported the pace of their journey has doubled, indicating local providers are in fact leaning into digital transformation. This is hugely promising but must amount to more than simply building new platforms.
The most competitive enterprises in the world - regardless of sector - are focused on evolving their architecture to enable agility. This means obtaining the ability to un-bundle, re-bundle and build solutions as they need rather than developing a static strategy that dates. If we think about integration requirements as an example, the need to also deliver on agility becomes clear.
As governments promote better retirement choices and legislate stapling, super funds are faced with their greatest challenge to attract customers and keep them loyal. As the funds rise to the challenge, those that take action to digitise will likely be carved out as industry leaders, while others that ignore changing demands face being left behind.