The superannuation value chain may experience a wave of change wrought by the impacts of fintech, according to a recent Bravura Solutions report.
The Fintech and the Superannuation Value Chain report found that fintech start-ups have thus far predominately focussed on the asset management stage of the value chain. New platforms in the space centre largely around social media and community-based investing.
While this initially took the form on robo-advice with needs analysis leading to a portfolio choice, it had developed to include practices such as social network investing and the use of enhanced artificial intelligence in trading solutions.
The largest area of impact for superannuation area funds specifically though, has been disruption by fintechs in the distribution space. By utilising social media and digital approaches to distribution, start-ups such as Spaceship, Zuper, Grow and Mobi had been able to attract Millennials away from developing relationships with traditional providers.
The report cited the superannuation industry’s lower levels of regulatory complexity compared to other financial services, easy access to customers and healthy margins as key reasons why fintech had had a significant impact on distribution.
The PricewaterhouseCoopers 2017 global fintech survey found that the top three technologies that financial services firms intended to invest in were data analytics, mobile and artificial intelligence. All three would be key tools in the distribution stage of the value chain.
According to the report, fintech had also impacted the custody and administration and advice parts of the superannuation value chain. Improving efficiency and compliance effected the former, as new technologies such as blockchain and the New Payment Platform initiatives led to improved efficiencies around moving money and registering assets for funds assisted by fintech.
In the advice stage, the use of fintech is streamlining the advice and acquisition process, as it automates statements of advice and workflows to enact the advice.
The accumulated effect of the impacts of fintech on the superannuation value chain would be to change how the industry delivered offerings to its members.
“The superannuation value chain, as we know it, will evolve into a customer-centric ‘platform as a market’ model in which the roles of existing players will merge and fintech involvement will increase,” the report said.
“In this changed landscape, there will be a greater need for traditional superannuation participants to seek out partnerships with fintechs that can enhance their offerings to achieve a much broader proposition, even beyond superannuation.”