Super funds ‘must lift their game in customer service’, says Aware Super chief Deanne Stewart

Aware Super CEO Deanne Stewart warns funds need to step up their investment in digital technology to handle the increasing number of Australians moving into retirement.

Aware Super CEO Deanne Stewart: ‘The digital transformation in the superannuation system is long overdue.’

Superannuation funds need to step up their investment in digital technology to handle the increasing number of Australians moving into retirement, the chief executive of the $155bn Aware Super has warned.

Deanne Stewart, who runs the third-largest super fund in Australia with more than 1.1 million members, said most super fund transactions were still done on paper, with customer requests such as withdrawals often taking weeks to process.

She said super funds had focused on improving their investment performance and keeping their fees down and many had not made the big investments in technology and software needed to digitise their operations.

“Most transactions are still pretty paper-based and members ping-pong between insurance companies, administrators and the fund,” she said.

“It is a huge source of frustration for members.”

She said the compulsory super system had done a good job in helping Australians save for their retirement “but it has real maturing to do in regard to member ­experience”.

She said people were now used to getting quick responses and fast customer service from their banks, travel companies and even their food delivery services, but super funds were slow in dealing with customer requests such as withdrawals for financial hardship or processing insurance claims.

“The digital transformation in the superannuation system is long overdue,” she said.

“If you look at what you can do with online banking and try to have that experience with your superannuation it is impossible.

“But as more super fund members are moving into their retirement phase, super funds are going to have to upgrade their technology and their member experience as that is what members are going to demand.”

Ms Stewart was speaking as Aware finalised the migration of its members to a new digital cloud-based Bravura Sonata Alta program, the end of a three-year process which will see the fund take its administration in-house.

Aware has ended its longstanding contract with Mercer, which handled administration for many of its members in the past.

Ms Stewart said the program began when the fund was handling the mergers behind its creation involving First State Super, VicSuper, WA Super and StatePlus.

As the fund looked at the challenge of merging the back office processing of the different funds, it decided to make a major investment that would allow the fund to “leapfrog” other funds in digitising the business and allowing for much faster customer service.

Ms Stewart would not say how much the fund had spent on the wholesale technology upgrade with the new Bravura platform but described it as “a really significant investment”.

“We’re talking large sums of money to get to this point,” she said.

“But it does mean that we will see a huge lowering in our operating cost as all of the transactions will be automated and digitised.”

Andrew Russell, the interim chief executive of ASX-listed software company, Bravura Solutions, said the move to the new platform would see a 30 per cent cut in operating costs.

The company, which focuses on the wealth management sector, with clients including Macquarie, Prudential, Fidelity International, Mercer, Westpac New Zealand, TAL, JPMorgan and Suncorp, hopes its deal with Aware will lead to other business from super funds.

“The world’s pension funds are grappling with balancing the complexity of retirement schemes together with the need to improve the member experience, ensure security and provide advice to members – all while lowering the cost to serve,” Mr Russell said.

He said shifting members to the new cloud-based platform allowed for better customer service at a lower operating cost.

Aware currently has some 100,000 members in retirement, a higher proportion than many other super funds, with another 100,000 expected to retire in the next four to five years.

Ms Stewart’s comments come after a new joint report by financial regulators APRA and ASIC criticised super funds for not supporting members in their retirement phase, despite the start of the Retirement Income Covenant a year ago.

In a speech on Tuesday, Financial Services Minister Stephen Jones also criticised super funds for poor customer service, warning that regulators would scrutinise this in future.

Ms Stewart said most super funds had focused on the increasing regulatory burden introduced in recent years.

“There has been a huge amount of regulatory change over the last five to 10 years, so most organisations have been focusing on coping with this change,” she said.

“They are trying to deal with all these extra costs coming at them as well as trying to lower their fees.

“It has been a huge workload for them.”

Ms Stewart said super funds that outsourced administration to third parties were at the mercy of their service provider’s decision to invest in technology.

This led to members being “bounced” between their fund, their external administrator, and the insurance company if the member had insurance or wanted a claim processed.

“Funds who outsource their administration are very reliant on the administrators updating their technology. They are beholden to their administrators.”

She warned that as super fund members started to become more frustrated with delays they would become “far more demanding and far more noisy.”

“You’re going to see that play out more in the media. If they have a bad experience, they are going to speak out much more. We are going to see much more focus on the member experience,” she said.

Ms Stewart said Aware’s new platform included a tracking program called My Activities, similar to those used by parcel delivery companies, where customers could check the processing of their requests if they could not be handled instantly.

Originally published as Super funds ‘must lift their game in customer service’, says Aware Super chief Deanne Stewart