Although the number of superannuation funds will shrink by up to 40 per cent by 2020 (according to CoreData research), operational efficiency – and not size – will determine a fund's success, it said.
Smaller funds that occupy a niche space in the market and adapt to market shifts could maintain their competitive advantage and resist the current environment of consolidation, according to CoreData.
"It's not just about being big for big's sake, it's about how you make the fund more efficient," head of advice, wealth and super, Kristen Turnbull said.
Success will hinge on a fund's ability to adapt and grow – either organically or via acquisition, she said.
"You might be a big fund that is still not efficient and you might find there are small funds that are more flexible and nimble and are able to bring products and services to the market quicker. It's really about how unique a value proposition is and how you utilise that in the best way to attract new members and retain the ones you have," Turnbull said.
The research found competition among super funds would be dominated by the post-retirement space, with brand expected to play a key role as the industry moves into a commoditised environment with MySuper.
Although the success of super funds depended on their efficiency, small funds that are unable to establish a strong value proposition would be swallowed up by mid to large players, CoreData said.
"Smaller funds that are nimble and able to occupy a niche space in the market will be the exception rather than the norm," Turnbull said.
Super funds built their brand through public event advertising and by developing a sense of community among members, according to Turnbull.
