Digital transformation is taking hold in the superannuation sector as funds make more use of data to add value for members.
Adam Gee, partner in KPMG’s super advisory business says there has been a change of pace in the last 12-18 months as firms invest in member analytics and market segmentation, led by Sun Super, Mercer, QSuper as well as the industry and not for profit funds.
Gee says funds are using analytics to understand membership demography, and a couple are also leveraging external sources – particularly Quantium which tracks consumer spending patterns.
The challenge for superannuation funds is to tread carefully, keep private data secure, and ensure that they are delivering value says Gee.
A recent survey of 1,031 Australian adults found consumers are increasingly savvy about their personal data.
Conducted for data marketing associations ADMA and GDMA before Australia’s mandatory notifiable data breach legislation came into force, already three in five people said they were more aware of how their data is collected and used than they were in the past.
Just 34 per cent think they currently get better service in return for the personal data that they provide to companies.
There’s clearly a way to go for superannuation firms to convince members of the benefit of sharing more data.
“Funds are always challenged by member engagement,” Gee says. Historically he says that many funds would be lucky to get much more from an employer than a member’s name, date of birth and tax file number. That’s now changing.
Cambell Holt is chief customer officer for Mercer which manages superannuation for 2.2 million people in the Pacific region. He stresses the need for consumers to perceive value rather than exploitation.
“Historically our industry has presented you with your superannuation balance. That’s a fact – the implications of that have been absent for consumers. For most Australians their superannuation balance is a very large sum of money, and possibly the largest they will ever see – and that has been counterproductive in many ways because we haven’t presented the implications of that number.”
Holt says that is now changing and in the future fund members should expect to receive more insight from their super fund – so that they still know their fund balance, but are also told that it will last them “eleven years in retirement and be 78 per cent of what is required for a comfortable retirement.
“Those data points are all available to the average super fund. It creates radical shifts in consumer behaviour and completely different experience in terms of value for the consumer.”
Holt says that although Mercer has been working on its digital transformation for four years; “The industry itself is still very much in its infancy. To a large degree it is working in the space of basic demographic data and transactional data and personal information. Where we are focused on predictive analytics, leveraging third party and inferred data to add greater and greater levels of value and convenience for our customers and consumers.”
To make use of both internal and third-party sources of data Gee says there is a lot more use of application programming interfaces (APIs) to extend the data perimeter of the enterprise. “The two large superannuation fund administrators have looked at building an integration layer” he says which then can be back ended to existing systems, or provide a bolt on interface for third party data sources.
Holt says that open architectures, platform-based businesses, APIs and Software as a Service solutions are accelerating opportunities for transformation. He also welcomes the notifiable data breach legislation and Europe’s General Data Protection Regulation (GDPR) for the increased focus on data security and privacy that they deliver.
One challenge for many super funds, according to Nathan Gower, enterprise account executive for Dell Boomi, is that a significant number have outsourced their IT in the past – often leaving them without deep internal IT skills.
The need for more agile information systems, able to respond rapidly to changing regulatory requirements and shifting market expectations where particular projects or campaigns may last just three months, has prompted a rethink for many firms, he says.
“Funds need technologies that quickly enable them to connect disparate data silos – some internal some external, with central control over the movement of data,” he says. Instead of relying on traditional middleware to integrate systems and data – which can be IT-skills-hungry and time consuming – firms are taking a different approach.
Gower says forward thinking super firms are adopting SaaS and platforms in order to meet their agility expectations, and using APIs to expose the data as required adding that; “If you choose the right technology there is no need for a compromise on security.”
One area where greater data analytics is being deployed particularly is in onboarding of new members says Gee. New members might first be directed to an online tool to consolidate all their superannuation accounts. After that the fund may initiate a conversation about salary sacrifice, then insurance, then beneficiary nomination.
At each step the fund is perceived as more valuable to the member, but it also extends its data collection.
According to Jarrod Coysh, group executive, employers, corporate development and strategy for Cbus; “As a not for profit super fund…our aim isn’t to upsell or cross-sell. We want to provide the best possible service to members and make sure members are equipped with the knowledge they need to maximise their retirement savings.”
In the past CBus outsourced much of its IT services, making it harder to capture the sorts of granular data it needed to personalise member experiences. It’s now bringing IT back in house in order to be able to harness data and deliver more personalised services.
“Insourcing data science and data engineering skill sets is giving us the opportunity to harness new platforms and technologies,” says Coysh, but he acknowledges that CBus won’t be a fund pushing the boundaries in terms of how it makes use of consumer data.
“Consumers are increasingly aware of the importance and value of their data, especially when it comes to data security and protecting their privacy. Cbus has worked hard to maintain the high level of trust our members have in us and we take protecting their data privacy incredibly seriously.”
About The Author
Beverley Head is a business and technology journalist. Dell Boomi is a corporate member of the Which-50 Digital Intelligence Unit. Our members provide their insights and expertise for the benefit of the Which-50 community. Membership fees apply.