Until now, one of the central challenges for the superannuation industry has been to connect many disparate data sets so funds can easily extract and make meaning of all this information to develop better products and services for their members. Now however, thanks to advancements in data analytics technology, funds can streamline and transform how they engage with members, delivering better outcomes for a broader audience.
In this new age of data analytics, the industry is starting to see how funds are using their data to better understand where members are in their different life stages, as well as their behaviours and their preferences. This is allowing funds to provide more timely, relevant messaging about their different products and services for members at different times along their journey to retirement.
Previously funds have typically focused on understanding the average member – but the world no longer lives in the age of the ‘average member’. Now that discussion is shifting, with the acknowledgement they need to deliver better outcomes for the many different types of people who make up their membership base, from young members in an accumulation phase, members nearing retirement through to members in the post-retirement phase.
A deeper, detailed understanding for better member outcomes
Data is also key to helping super funds comply with new legislation and ongoing regulatory change, to ensure they have a long term and sustainable business plan to benefit members. An example of this is the member outcome test which means funds must consider the outcomes delivered to different member cohorts, not just to the mythical ‘average member’. This is one of the driving factors behind a shift from the focus on the average member to a much deeper, detailed understanding of a wider member base.
As an industry, super has had a lot to learn from colleagues in the banking industry. Fully digital transactional banking platforms are the norm and now are taking one further step with the advent of open banking. For the superannuation industry, open banking is also likely to be a game-changer as it will allow funds, members and bank accounts to more easily collect and share data in this new era of customer-led banking. Funds may find this further encourages competition and innovation.
The power of segmentation
By implementing data analytics technology, funds are now able to segment their membership base into different groups and deliver more relevant timely messages to these groups of members to achieve better outcomes. For instance, data means funds can work with groups at different life stages and encourage them to take appropriate actions that will help them to achieve a more comfortable retirement.
REI Super is one fund taking advantage of the latest in data analytics platforms, dashboards and portals to deliver insights from its data.
Like many super funds, they have a range of data in a number of different systems. Bringing it all together allows them to draw out deep insights and connections, leading to data-backed decision making. Their objective is to make data visible, able to be interrogated and used directly to improve how they manage and care for members.
Under the guidance of new chief executive officer Jarrod Coysh, the program of work covers data collation, validation and reporting, as well as deep enquiry through a self-service dashboard that allows REI Super to directly plan new initiatives for its members and optimise the current program of work. Behavioural analytics overlays assist the fund to develop more customised member marketing and communication.
Coysh believes they are also looking to have a constant feedback loop that will continually improve their data, insights and understanding of how best to care for members so they are responsive and timely in how they respond to their needs.
Measuring retirement outcomes over time
Data analytics technology, tailored to the unique requirements of s funds, is now able to assist them measure how they help their members prepare for retirement.
Many super funds use what is known as a retirement readiness index or score. The key with this measure isn’t so much the absolute number, it’s how that number changes over time for each member. Once funds can measure this, they are better able to intervene with members at the right time to help them make the best decisions to improve their retirement outcome. Ultimately, this will assist funds to assess whether the strategies they are putting in place such as marketing and education programs are having the desired effect.
What this means is that where once funds used to compete on investment returns, now they are aiming to better understand their members and design services and products to add value to their lives today, not just at retirement. For instance, they are focusing more on improving members’ financial literacy through coaching and education and just-in-time intervention rather than just emphasising fund returns.
A lot of super funds are still at the start of this journey. Part of this is also providing members with the tools and information they need to achieve a better retirement outcome and helping them to act on this information.
This means ensuring funds’ messaging is relevant and personalised and that members receive information at a time that’s right for them. For instance, it may be more useful to encourage people to add to their super fund when they have the means to do so, either before they have a family or when their children have left home, rather than when they have obligations such as school fees and mortgages.
At the same time, funds are working on improving the entire member experience, from their call centres to their digital communication and optimising the customer experience for different groups.