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Fintech firms look at smaller super funds
Fintech firms searching for new opportunities could look to smaller super funds to help integrate financial planning and super planning software as a new source of opportunity for investments, according to Bravura Solutions.
The firm’s product manager for superannuation, Scott Kendall, said one of the things that the COVID-19 period brought to the fore was the fact that many superannuation funds still lacked a digital traction of their members and most funds were still grappling with the right level of engagement with members.
“There is quite a big change coming for small superannuation funds as there is already a lot of pressure on them to justify their existence but there will be still opportunities for boutique funds or funds that have a specific niche,” he said.
“However, there is quite a few funds there that service the same types of members or funds that are relatively vanilla and these are the ones that will need to justify why they should stay. But there will be also an opportunity for funds to take more control of what is that they want to do.
“What we are trying to do is to make it easier for somebody to go through: either a digital advice journey or gone through with their financial planner.”
Kendall explained that many financial planners were using their own software to make decisions with regards to switching from investment A to investment B, a process that traditionally required additional paperwork.
“However, the goal is to be able to switch your money with just effectively pressing the button and one interaction between the member and the adviser and funds as opposed to having that, split up,” he said.
Kendall said that traditionally there had been two models of superannuation funds and the way they operated: they either outsourced part of their job to the third party administrator or they did everything themselves.
“What we are looking to do is to provide more of a hybrid model to enable funds to take control of the stuff that they want to, which is probably more than the engagement of the members, and trying to make processing more commoditised,” he said.
“The model is digital first – but the model is not just a matter of making transactions available but it is actually a process from end to end and designing it digitally first.”
Kendall confirmed that superannuation remained a difficult space for technology providers, as many functions “were not easy to change”.
“In terms of investment and the technology, there is not a lot of margin there,” he added.
“Superannuation funds, most of the big ones, are profit-for-member funds so they do not have a great deal of money to reinvest.
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