The use of technology is not about keeping up with the Joneses. It is about surviving the future. KPMG, which recently conducted a survey of the functionality of the sites of 30 superannuation service providers, predicts that those funds with the best client interfaces and superior administration platforms will ultimately gain the largest market share, which will in turn prove necessary for long term survival.
Conversely, those funds which do not improve their basis for delivering information to both members and employers will not benefit from the associated efficiencies, and are likely to prove either too expensive or fail to deliver the necessary return on capital to remain viable, says KPMG.
There’s little doubt that the delivery of information through the web is becoming a powerful and cost effective communication tool for super funds. NSP Buck’s national practice leader for web services, Tony Johnson, notes as an example that sending out an annual statement can cost the average industry fund $3 to $4 dollars per member, but a fund can make enormous savings if it sent this information electronically to even a small percentage of its members.
The web is also taking super from being an annual event to a constant event, notes Mercer principal David Anderson, referring to its ability to provide members with immediate and continued personalised information on demand.
According to a recent Mercer Human Resource Consulting 2002 Global Defined Contribution Survey, Internet usage by super funds is strongly correlated to whether they offer investment choice. Those that do, rate the Internet as a more important communication tool.
Mercer’s survey also found that funds using the Internet are more likely to rate themselves as being more successful, and to believe that their members have enough information to make effective decisions.
But despite increasing recognition of the value of the web, super funds still lag behind other financial service players, most notably the banks, when it comes to embracing the technology that is available.
Johnson believes that super funds are about two years behind in their usage and he blames this on factors like lack of confidence or concerns about security.
“A lot of [super funds] just have brochure ware on their sites and haven’t developed a site from a clean page,” says Alison McIvor, national marketing manager of the Australian Retirement Fund (ARF), which examined over 100 web sites before recently rebuilding its own web site from scratch. “They’ve added a lot of things on later and it’s become a maze… Some pages are very busy and it’s hard to see where the eye should go.”
McIvor adds: “Many of the calculators out there are deficient… They are difficult to use and assume a lot of knowledge.”
But while super funds may lag the more consumer-orientated banks, many have, nonetheless, been extremely busy improving their offerings over the past year.
Mercer Human Resource Consulting, for example, has been rolling out its new state-of the-art offering, called SuperFacts, and by the end of 2002 had already connected 300,000 members onto the service, 70,000 of which are from the Mercer Super Trust.
Anderson says the site is “comfortably advanced compared to Mercer’s competitors” and is helping it win master trust business. The offering allows members to obtain real-time information on how much super they have, plan ahead with investment tips and update their beneficiaries or personal details online. It also tests the investors’ risk/return profile and has educational investment games and wealth planning tools which are anything but boring.
And the work has continued for those that had already made large strides on their sites. Over the past 12 months, for example, Plum has introduced online applications for new members of corporate plans, a move it believes to be an industry first. It has also developed a new tool which allows members to register online for education seminars, and from which Plum will track the interest in seminars and as a result, allocate its resources appropriately for these.
The recent Internet survey conducted by KPMG of 30 public offer funds (obviously a more competitive part of the superannuation market) found that there had been a clear improvement in the degree of functionality offered by their web sites in 2002, with the greatest advances being made in real-time processing and in the access provided to member benefit entitlements. A rising number of sites now also allow for personal contributions to be made by B-Pay, EFTPOS or direct debit.
In line with industry moves to cut costs by pushing back administrative activities to employers, employer functionality was found to be “quite good”. Member functionality, however, continued to be poor.
The survey found weaknesses in the degree of support given to assist members in identifying their investment and insurance needs and in providing information about the taxable components of their benefits, surcharge tax and preferred beneficiary details.
Looking ahead, Johnson says the future focus for the superannuation industry is clearly going to be on the needs of the individual. “Employers are moving away from being paternalistic to being focused on employee self service, employee empowerment and individualisation which means they are under pressure to provide more responsive services,” he says.
“The new area of member empowerment requires the superannuation plan to be totally responsive to member actions when they are initiated. There is no scope for encouraging members to take control and make decisions about their superannuation account, and then not allowing them to immediately act on their decisions once they are made.
“Under this model, there is nowhere to hide as all transactions and details relating to the member record are accessible for all to see, 24 hours a day, seven days a week.”
McIvor also expects Customer Relationship Management — or CRM — to gain increasing prominence.
“A lot of banks have put CRM in place. This gives them statistics and data so they can better market to, and communicate with, particular segments of the market as opposed to taking a mass approach,” she says.
“We are looking at this at the moment. The average consumer expects you to know them. They don’t want to be sent things that aren’t relevant to them.”
