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In NZ we look across the Tasman with some envy at the AU$4T now sitting in Aussie super accounts. Achieving an equivalent level in KiwiSaver would be great, but I hope we can get there without creating the same level of product and operating model complexity which appears to be significantly hindering efforts to manage cost and achieve meaningful and positive member engagement.
Some take-outs for me were as follows.
Every time I head across the ditch this theme is reinforced. If the FUM comprises complex products (in the Australian context insurance is a very significant “complexity driver”) with complex processes, disparate data sources and complex, often outsourced, operating ecosystems, then layering of FUM simply adds to the challenge to automate, digitise and simplify process. AI has potential but requires a level of data governance maturity - firms are still very much on a journey in this regard. Delivering an engaging member experience at scale, and cost effectively continues to challenge.
The recent confluence of cyber-attacks/fraud and market volatility made for a very challenging set of circumstances for funds to manage with members calling contact centres (often outsourced) to check on balances only to find that information could not be provided as systems were down. There’s a long list of learnings from this experience (e.g. having MFA in place) but central to them is not just having a “crisis plan” but ensuring it is tested regularly and that tests include outsourced supplier relationships. APRA’s CPS230 standard has raised the regulatory bar on this. In the NZ banking/NBDT space the DTA’s non-core standards should provide a catalyst for similar efforts.
Aussie regulators are applying considerable pressure to superannuation Trustees. The handling of insurance claims is a key area of concern resulting from regulator frustration with the significant volume of complaints. In addition, the Retirement Income Covenant is driving debate relating to Trustees’ obligations to support post-retirement strategies for members. In some cases, regulators are moving to prescribe service standards. The question “how did we (the industry) get here?” is one being asked – the challenge and opportunity (operating model complexity notwithstanding) is to be doubling down on efforts to uplift member engagement and set service aspirations that go beyond any regulatory (minimum) standards.
In comparison to Australian superannuation, KiwiSaver is relatively simple. I really hope we can keep it that way on our journey to $1T+ and that in our case FUM can equate to scale, with KiwiSaver members benefiting as a result.
