After much energetic planning, vast expenditure, testing, flameouts and false dawns, there appears to be two major players left standing in the quest to become the hub for super industry electronic transaction processing — AUSMAQ and SuperChoice.
Both have hubs — central, Internet-based facilities for receiving super contributions from individuals and employers and then dispersing them to relevant funds — and both believe they will prevail. However, consensus within the industry is that there is a need for only one.
Others have already given up. In May, the ASX announced it had abandoned plans to proceed with its transaction hub, FundConnect, because “there was no likelihood of a sufficiently compelling business case in the present environment”.
So, what will it take to succeed?
AUSMAQ CEO Richard Burrows and SuperChoice business manager Patrick Martin agree that superannuation has become such a complex business that establishing a hub that the industry will accept is difficult.
“The superannuation industry is so vast,” says Burrows. “It includes small contributions from every individual working in Australia through to the administrators, the people investing the money, those keeping the records and more. Whether all that will go under one hub or not, I don’t know.”
However, Martin is convinced it will. SuperChoice claims to be growing by about 25,000 members a month and already has over 575,000 active members. Its major fund administration customers include ANZ, AXA, Commonwealth Bank, ING, IOOF, St George Group (SEALCORP & ASGARD), Westpac and Mercer.
“SuperChoice is rapidly becoming ‘the’ industry hub,” claims Martin. “We handled $125 million in June alone, so we’re well over $1 billion a year. In 12 months time it will become obvious there is only one hub to join.”
Martin’s confidence is buoyed by his research into major fund managers which reveals that they will join a hub providing it doesn’t cost too much and there’s a sound business case for the fees the hub charges.
SuperChoice is a web-based service for fund administrators that collects contributions from employers, splits them by fund and sends this information electronically to the appropriate fund administrator. It claims to avoid duplication of effort, reduce administrator costs and eliminate data-entry errors.
AUSMAQ, a wholly owned subsidiary of National Australia Bank, operates a system called mainhub. This service offers wholesale applications, redemptions, unit pricing and execution confirmations, with distributions, retail applications and redemptions to follow as message standards are approved.
AUSMAQ’s non-disclosure agreements prevent it from naming clients, but Burrows says mainhub has more than 30 fund managers signed up and about 10 wraps on the system.“ Facilities management of the hub is fully outsourced and managed by Accenture and WebCentral, so we have no issues around size, scalability, etcetera,” he says.
Another player, SuperConnect, was recently sold by Connect Internet Solutions, a wholly owned subsidiary of AAPT, to e-commerce software solutions and business process outsourcing company, Max eCommerce.
John Ray, CEO of Max eCommerce, says there are plans to release upgraded versions of SuperConnect and a new superannuation clearing house product that will enable multiple employers to pay multiple superannuation funds directly from their desktop payroll software.
Martin also believes that Cardlink, a provider of card processing and bill payment services once deemed to be a potential superannuation hub provider, will join SuperChoice. Cardlink is owned by the four major Australian banks.
Proponents of a supe hub claim it will reduce the complexity of a managed funds industry that has become complex, laborious and paper intensive. They say e-commerce can reduce costs for everyone involved in the superannuation chain by permitting straight through processing efficiencies.
For now, it remains to be seen which hub will win the hearts and minds of the superannuation industry.
“In principle, you’re just sending contributions over the Internet to a fund,” says Martin. “But it’s the complexity of the law, the different types of contributions and the mechanics of building a service robust enough to handle 50,000 transactions in a day that make it so difficult. It has to stand up and it has to be easy for employers to use or they won’t bother. When you think about it, a hub is a utility, just like a telephone exchange. You don’t need two or three of them. You only need one.”
