Tech disruption in superannuation.


26th March, 2019

4 ways tech is poised to revolutionise superannuation

Through careful self-education and the use of emerging technologies, employees are being put right back in the driver’s seat when it comes to the management of their superannuation investments.

The old superannuation: ‘Out of sight, out of mind’

For decades, superannuation has been something that many people have taken little to no interest in – almost treating it as if it doesn’t exist until it comes time to retire.

The average employee was told that they would receive a certain amount of money (often a percentage of their wage) together with each paycheque that would be placed into a fund of some sort that would accumulate interest and would eventually become accessible when they retired.

In order to make the process as simple as possible, the employer would often select a superannuation fund on their employee’s behalf, (typically major funds like AustralianSuper, AMP, and so on) and directly deposit the bonus into the fund as required.

While this protocol simplified the superannuation process, it also created an environment where employees and employers alike did not know much about superannuation in general and knew virtually nothing about the funds that they were relying on for their retirement.

To address this lack of knowledge, access and control of superannuation funds, there have been some exciting technological developments that help employers and employees become far more involved in the superannuation process.

How tech can improve superannuation

There are several Australian tech companies that have developed solutions to improve the superannuation process. One of the leaders in this space is a company called Zuper.

When interviewed by The Pulse, Zuper’s CEO Jon Holloway gave four examples as to how technology can be used to change the way people interact with their super funds.

1. Creating educational content

The first example that Holloway offers is the ability to use technology to develop insightful and relevant content that helps people “understand superannuation, their money and how to invest in things they really care about”.

Holloway says that before starting Zuper, the founding team conducted deep market research and were surprised by the “level of misinformation about super” that they found.

This being the case, creating and broadcasting content through technology platforms can help people learn more about how to best approach the investment of superannuation funds.

2. Offering diverse options

The next example given was the ability to create a digital platform where people are given a broad variety of options as to where they can choose to invest their superannuation.

“Technology can help people to easily invest in things they care about,” said Holloway. “On top of that, it allows them to divest from things that they wouldn’t want to support.”

3. Providing behavioural insights

The use of AI and machine learning is becoming increasingly popular across many traditional industries and practices – and superannuation is no different.

READ: Would you trust AI to make your hiring decisions?

When people have more insight into their spending habits, their financial interests and their saving patterns, they are more likely to make better decisions about their finances in general.

According to Holloway, machine learning can be used to help people “understand how their behavioural barriers affect the way they save and invest”.

4. Reducing superannuation management fees

The final example that Holloway offers is using emerging tech has helps drive superannuation fund management fees down significantly.

One of the biggest costs associated with financial advice and investment/wealth management is labour. Holloway explains that using AI allows for the advice and management elements of superannuation to be automated, requiring less labour and subsequently, lower costs.

By lowering the cost through automation, taking control of superannuation becomes far more affordable – something that’s likely to help incentivise people to take this more proactive approach.

SMEs can break the mould

The question is however – when and how is this dated superannuation process going to evolve into the more innovative approach that we’ve been talking about?

We can’t exactly hold our breath and expect large corporations to change the way superannuation has been handled for so long – after all, they do say that you can’t teach an old dog new tricks.

This being the case, a big part of the transition to better superannuation practices lies in the way new and early stage companies tackle the issue.

And the reality is, it’s in their best interest to do so.

According to Holloway, finances weigh quite heavily on the heads of many employees, causing them to feel “anxious” and subsequently “impacts their performance” and general health.

Therefore, in order to help relieve a lot of this “financial stress”, Holloway encourages SME owners and start-up founders to “upskill” and “stay ahead of the curve” in this area and offer their employees more dynamic superannuation products.

If SMEs adopt this mentality and educate themselves and their employees in better superannuation practices, we will soon enter an age where people are in control of their future.