Superannuation Funds Turn to Technology to get Ahead of the Pack

Marc Rubenfeld, CIPM, Head of Eagle Solutions EMEA/APAC

At the recent Superannuation Fund Back Office Forum in Sydney that I chaired, a number of recurrent themes surfaced that highlighted just how rapidly the superannuation market is growing and evolving. As the event’s experts and speakers highlighted, technology is central to enabling that growth and a bifurcation is beginning to take shape distinguishing those firms that can make the best use of it and those that cannot.

While a number of technology-driven trends are shaping activity, we’ve identified the three that we feel are the most important.

Building In-House Investment Teams
Historically, superannuation funds have typically outsourced the management of their investments to external fund managers. However, as funds continue to grow their AUM and reduce their fees and costs, more are looking to develop their own in-house investment capabilities and are now building their own internal teams to manage certain strategies or asset classes.

In order to do this, firms need to expand their technological capabilities with the corresponding front- and middle-office tools needed to support the activities of their investment team.

Operational Alpha
The idea of applying the concept of alpha to achieving improved operational efficiency was widely debated among the delegates. It’s something that many investment managers, not just superannuation funds, can benefit from and is likely to become a more popular trend globally.

As funds have increased their AUM since the Global Financial Crisis, they can now access assets, such as new derivatives, private equity and infrastructure, that they didn’t have the scale to access previously. The increasing number of asset classes and external managers, as well as the aforementioned growth in internally managed assets, has led to more complex operations.

As a result, firms are increasingly looking to streamline their operations to deliver efficiencies and shave costs. Technology is a key area where firms can realize cost savings by, for example, outsourcing or using managed services and replacing their existing legacy systems with a single scalable solution.

However, cost saving is only one side of this. Funds are also turning to their operations to deliver faster, more accurate and more useful data. As such, they’re also building out robust data management capabilities to mine their data in ways they hadn’t previously considered in order to realize a distinct advantage when it comes to decision-making and performance.

Digital by Default
Another thing that is clear is that the industry is rapidly becoming digital by default. Spurred by government initiatives, there is an increasing expectation among superannuation scheme members that they should be able to access their financial information online. This is straining the legacy operations platforms of many superannuation funds that are being asked to provide a level of information to their members that the legacy platform was never intended to meet. This is driving a need for next generation data platforms that can provide up-to-date information anywhere and at any time as funds look to meet client expectations of how services are delivered and how information is made available.

The success of superannuation funds is now more closely linked with technology than ever before with the result being that many firms are scrambling to get new initiatives off of the ground. For technology vendors like Eagle, this is obviously a great opportunity, but it is crucial that the solutions provided are relevant and will help the funds meet their key business objectives to maximize investment returns and drive member engagement.

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