It had to happen: like virtually every consumer market, superannuation has been blown open by competition.
Superannuation fund members – like any consumers – have realised that it’s easier than ever to compare products, and that switching super funds is almost as simple as changing mobile phone providers.
New technology-based start-up super providers have sprung up, with the drive to make superannuation into a more seamless experience – especially for younger investors. The desire of many of the “millennials” – the generation born between the early 1980s and early 2000s – to make their investments align with their values has seen “ethical” super funds grow as a market niche, and, for instance, there is even a “vegan-friendly” ethical super fund, Cruelty-Free Super.
The competition is not just between funds, it is between public-offer funds and self-managed superannuation funds (SMSFs) – the SMSF wave has swelled to almost 598,000 funds, with 1.1 million account holders holding $714 billion, or more than 27 per cent of the nation’s total super pool.
The stark reality for super funds is that someone can go to a new fund, or decide to take the SMSF route, very easily, if they want to. Like any other brands, the super funds now have to differentiate themselves – and improving the customer experience is the way to do that. And the key to that is using their data better.
“The super funds have always had data on their members, but up until relatively recently, name, date of birth, sex, address, employer and balance was about it,” says Russell Mason, consulting partner and national leader of superannuation consulting and advisory services at Deloitte.
“There is a lot more data available to them now: they can now know what is your capacity to contribute to a fund, what’s your risk profile, are you a sole income earner or are you in a dual-income house, do you have dependents, what are the likely financial strains ahead of you, do you have young children who are about to start school – all of those things,” says Mason.
“All of that data is capable of being leveraged, so that the funds know a lot more about you, and finally understand what your needs are, and finally they can use that data to create a better customer experience, and possibly get you to that ‘holy grail’ of engagement. But it is not just a matter of harvesting the data, and having it – the funds will need to interpret it, and that’s really only in its infancy,” Mason adds.
According to a senior technology executive we spoke to at a leading superannuation fund, to be competitive, a super fund has to build a “much richer” database on its members than the traditional data sets. “All funds face having to move from your employers as your acquisition channel to potentially a direct-to-member model – and that means that you need to have a richer experience for your members, especially online. You need to be able to target your messaging and target the way that people you want to interact with you, through the channels that they want to use to interact with you,” he says.
More effective use of data is helping is his company to move away from segmenting its member base by age. It can also also make assumptions about life-stage and categorise where member are in their individual journeys. “If we know where they are on the journey, we can start to be much more proactive in our messaging. Ultimately, super funds will want to move to individual segmentation, but that is going to need much richer data and advanced analytics,” he told Which-50.
Deloitte’s Mason says this richer data is closer than many people realise. “We’re starting to see funds using all kinds of data, overlaying their data with publicly available data – census data, and other data that would allow them to make some reasonable assumptions about their members. The next is to monitor members on social media: maybe they find out that you’re quite an outspoken critic of coal, or you’re very much in favour of renewable energy, and so they message you about their ethical investment option.
“The real extreme would be to start to understand your banking and spending habits. This is where the banks probably still have quite a head start. If you have a credit card and a mortgage with them, in theory, your bank should really understand you. My feeling at this stage is that even the banks probably haven’t made full use of that data. Super funds are a bit behind, but not too far behind,” says Mason.
Granularity is crucial, says Nathan Gower, enterprise account executive at Dell Boomi, but it cuts both ways. “Just as the fund needs granularity on the member, increasingly, the member needs granularity on what they own,” he says. “That’s the big opportunity for the super funds, to provide granularity to the customer, into their business – for a customer of a super fund being able to see exactly where their money is invested, in real time, right down to unit level.”
Mason agrees. “Funds must get their heads around real-time granularity – their members want to be on the bus on their mobile or tablet, interacting with their super as they do with their bank and their broking account, when and where they want to do it,” he says.
The technological challenges involved in using data better are large, but the cultural challenges can be just as difficult, says the Super fund executive. “Where the superannuation industry has traditionally used data, it’s been seen as data nerds that live in a room somewhere. We’ve completely de-siloed the data operation and put it out there in the business, out there working with the customer-facing people.”
And that is what many in the superannuation believe is the exciting thing about the data revolution, says the fund management executive. “You can have the best information in the world, but if you don’t know what questions to ask of your data – the questions that are most pertinent to your business and your strategy – it is useless. You need to have people who can query the data and understand how to draw conclusions from it, so that the business can use that data to help it make better decisions. It’s a huge cultural shift, but it’s very powerful – your data analysts are no longer just number-crunchers, they are highly strategic people helping to run the business.”
Author and article
James Dunn is a writer for the Which-50 Digital Intelligence Unit. Dell Boomi is a corporate member of the Which-50 Digital Intelligence Unit. Members provide their insights and expertise for the benefit of our readers. Membership fees apply.