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How Super funds can benefit from the Open Banking Revolution
Consumer Data Rights are set to be introduced in Australia commencing with the banking sector in a phased approach from 1 July 2019. Initially, customers will have the right to request their bank to provide information relating to their credit cards, deposit and transaction accounts to third parties.
Already introduced in the UK, the Australian model starts with read only access to data and is expected to utilise most of the UK designed API’s. Like any industry change, the Consumer Data Rights provides both an opportunity and a threat for superannuation funds. Ultimately, it will impact the way that consumers expect to interact with their financial institutions.
It’s an exciting time for both consumers and the industry alike.
The first key opportunity is around financial advice. One of the hurdles of getting members into financial planning is the effort required to collate all of a member’s financial transactions together for review. Having a tool that can download a member’s transactions across multiple accounts from different financial institutions, and that can group these into categories that can be designated discretionary and non-discretionary income will be incredibly powerful in encouraging more people to seek out financial planning. It is quite likely that this will bring about a decrease in advice costs. These tools can be integrated with digital advice and will do a lot of the grunt work in gathering information for the fact find prior to seeing a financial planner.
Another key opportunity is around retirement planning. Such tools can also be used to assist members identify their current spending and the areas that they would expect to see a change (whether that be an increase or decrease) as they transition to retirement.
Having access to ongoing transaction history would allow comparisons of current spending against expected and provide warnings on either the need to increase pension drawdowns or reign in spending. Being able to call on a member’s total financial position will make it easier for better advice, and helps super funds to send prompts to its members.
The final key opportunity is around personalisation. Specifically, there will be opportunity to provide more tailored features within superannuation. Imagine being able to provide insurance that adjusted the level of cover to track the reducing level of personal debt as a member’s mortgage is paid down.
The threat then comes from super funds failing to recognise how vital it will soon be to be able to provide a single view of their member’s financial position. With increasing competitiveness expected in this space, control of data will give companies a position of power. Additional competition will come from aggregator sites and potentially from the likes of Google and Amazon who will not only display the members information but will be able to use their vast databases to provide comparisons to allow users to benchmark what they are doing against other similar people.
Now is the time to start planning how your fund will work with the Consumer Data Right. Ensuring access to the API’s needed, planning the desired future state user experiences, and establishing a framework to safe guard the privacy of any additional data that may be held, are all vitally important tasks to make a start on.
About the author
Scott Kendall
Product Manager Superannuation, APAC, Bravura Solutions
Scott has over 15 years experience in the Australian superannuation industry. Having held various senior positions, he has an extensive understanding of the superannuation landscape in Australia, with experience in allocated pension products, insurance contracts, unit pricing processes and managing the transition of superannuation funds across administration platforms. Based in our Melbourne office, Scott is responsible for establishing and executing the Sonata product strategy for Superannuation in the APAC region.
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