Despite 25 years of reliability, the age of the customer is demanding even more from Australia’s super funds. Their role as guardians of retirement savings remains vital, but they must now zone in on the individual needs of their members to add value and be competitive.
The Australian superannuation sector is a $2.5 trillion industry that has enjoyed an excellent reputation, earning the trust of Australians through its 25-year life. However in line with other industries, the digital age and disruption is rapidly changing members’ expectations of what their super funds should do for them.
Australian consumers are becoming increasingly connected to the importance of accumulating wealth for retirement, with many members now seeing superannuation as the core vehicle through which they will fund a good lifestyle once they finish working.
This engagement, coupled with consumers enjoying pre-emptive service from other sectors, means there is an urgency for super funds to broaden their focus from product development, investment, accumulation and administration, to ensuring their members individual needs are central to every move they make.
They must adapt to new technologies, while still containing costs, and find ways to deliver a better customer experience that matches the standard seen in other sectors.
Time is of the essence – some funds are already on the path to change, while new entrants are starting up without the constraints of legacy technology or customer experiences to overcome – so members have the choice to shift.
In the past, members have largely stayed distant from the superannuation process, so have expected very little from their super fund. Most people carried on with their default fund. If they considered a change, the judgment criteria was the fund’s annual performance compared to others.
As a result, the super funds focused on ‘one-size-fits all’ products and investment strategies, to ensure that their members achieved good outcomes, even if they were disinterested in the details.
However, many people are moving towards an ‘individual responsibility contribution mindset’ – exemplified by the growth in Self-Managed Super Funds (SMSFs). Members now expect more options and insights into investments that are relevant to individual goals.
For many, their goal has stepped up from ‘getting by’ in retirement, to having a high standard of living, without debt, and with the financial freedom to make decisions around the things that are really important to them. This could mean winding down work slowly, extensive travel, or retiring then reverting back to work part time, for example.
For others, it is the need to build super despite navigating today’s ‘gig economy’, where they are not in consistent employment for life, but rather work as contractors or freelancers, or take career breaks for family, study or travel. This cohort, exemplified by the millennial generation, expect their super fund will help them find the right investment strategy so their retirement funds don’t fall short.
All consumers expect more transparency around their funds and the investment strategy applied, as well as 24/7 access to their information. And members don’t want this help in ways that have been typically been offered by funds – such as complicated annual documentation. Further – they certainly don’t want to pay more for the service.
This all means that a fund member can’t just be viewed as a name and an account balance, but rather as an individual with higher expectations and unique needs from their super fund.
To become ‘customer centric’, super funds need look from the outside in, understanding their members’ needs, then focusing on how they can cater to those needs via ‘mass personalisation’. In other words, despite having hundreds of thousands, or even millions of members, they need to treat each as a ‘segment of one’.
The good news is that superannuation funds have a core advantage over a lot of other sectors – a solid repository of customer data that has been collected over many years. The funds already know a lot about their consumers, such as where they work and live, their earnings and contributions, likely working duration and lifespan.
Access to those insights can help them see opportunities to meet the challenge of improving the member experience.
Many super funds are stepping up to the customer centricity challenge. Some are starting with refining their multi-channel member engagement experience to ensure it is seamless. This involves establishing the ‘critical pain points’ in the engagement process – for example, finding out if members are generally happy with the fund, but dissatisfied with certain interactions.
They are improving their websites, and developing mobile apps akin to the saving and spending innovations offered in the broader financial services sector. The funds are also seeking inspiration from other sectors that are leading the way with customer centricity, such as communications, retail and some parts of government.
Others are diving into their data, establishing what insights it offers, and how to maximise its value to make decisions. For example, what are their members’ needs now, and what are they likely to be over a period of time?
This data can help them see the potential for new or differentiated product offers to try and capture new members, or to better satisfy existing members to encourage retention.
There is a lot that funds could do for members, and a lot that they could spend their money on. It requires balance to meet customer expectations of today, while still investing for their futures. Tipping the balance could mean the cost of delighting customers could exceed the potential value it can return.
Achieving balance requires a ‘holistic approach’ to customer centricity across the business. It is easy to make the mistake of thinking that if it is a technology-led strategy, it is driven by technology, or a marketing-led strategy, it is driven by the Chief Marketing Officer. Rather, every department must work in sync.
Without this holistic approach, over-investment in a call centre could mean it is the best experience anybody has with a fund, but call volume could increase so much that no-one uses the website. This inconsistency of service quality could actually lead to brand damage.
As super funds strive to become more customer centric, their members need to accept that this is a two-way relationship. They will need to be willing to share their insights – for example, who they are, why they spend, how they save money, etc. This requires trust, which super funds have already, and also an easy-to-use ecosystem for participation.
It is clear that seeing members as individuals and taking a holistic approach to meeting their needs is vital for the future of super funds. While their role as guardians for members’ retirement balances remains key, there is a chance to build more advantageous relationships for the benefit of all.
If every corner of an organisation has its eye on the customer, the next great innovation that will delight customers could come from anyone in any department. Find out more in Innovation that works – for the customer and the business.
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