The superannuation industry should prepare for an “open super” regime in the next few years, in light of current moves towards “open data” and “open banking” and the fundamental shift in the balance of power in the information economy, says Jonathan Steffanoni, principal consultant – legal and risk at QMV.
“We are seeing growing momentum towards placing power in the hands of individuals, and a greater responsibility on institutions when it comes to managing information and data,” Mr Steffanoni says.
“People are becoming more and more aware of the value of their information and demanding to take back control, driving a shift towards “open data” and the mooted Data Sharing and Release Act.
“The current fiasco around Facebook and the selling of user’s personal data to private companies provides a window into a much broader problem.”
“Financial institutions managing other people’s savings also manage other people’s data. Trusted relationships will demand that institutions do more than merely have individuals click to agree on having their data shared without understanding the implications.”
“The superannuation industry will not be immune from this. Already we are seeing moves towards “open banking” in Australia, which will give customers greater access to and control over their banking data; with utilities and telecommunications to follow. Pension and superannuation funds are a logical next step.
“While open banking hasn’t happened yet in Australia, it is already happening internationally, and a reform pathway has been forged here over the past couple of years. A series of reviews, inquiries, and public policy announcements suggest that we’re on the verge of open banking from mid 2018.
“Open banking will mean that information such as transaction and loan repayment data will be available to customers with their consent, who should then be able to use that data to access better financial products or services in a safe and secure manner.
“It would be an anomaly if the superannuation and pensions industry were not the subject of new laws to govern the opening up of member data to members.”
However, Mr Steffanoni says that institutions should see this as an opportunity, not a threat.
“In an environment where policy makers are looking at ways to promote greater levels of engagement and competition in the industry, innovation around the way super funds interact with members presents a significant opportunity and can add value to the services they provide.
“It is an opportunity to create better outcomes for members, and indeed to continuously improve Australia’s position as a world leader in retirement incomes.”
Mr Steffanoni says that open data involves the idea that some data should be freely available for use by the people it relates to, in flexible ways which aren’t tied to a particular technology or organisation.
“The “some data” aspect is important. While there are large amounts of data which are intellectual property and therefore controlled by whoever holds the rights to own it, organisations hold large quantities of valuable data about individuals which isn’t intellectual property and therefore cannot be owned by anybody.
“Typical examples include personal details, transactional records, and information which an individual or third party has provided an organisation.
“Open data presents the possibility to advance market infrastructure and promote efficiency and member engagement in the superannuation system.”
He says that the window between “open banking” commencing and “open super” being introduced, might be an initial period of opportunity for any superannuation fund which is able to act quickly to enhance member experience and outcomes by integrating banking data in some of the following ways:
“It will be vital for superannuation funds, and other financial services organisations, to ensure that data quality is actively managed, if members are to have the key to access it.
“Data quality issues will be more visible to members, and potentially present a risk to reputation if member data quality isn’t good enough,” Mr Steffanoni says.
QMV was founded in 2008 and provides trusted and independent consulting services and technology systems to superannuation funds, trustees, administrators and wealth management organisations.
Its services focus on successfully managing change across technology, regulatory change, data quality, data remediation, migrations and mergers.
Its products include Investigate, an automated data quality management solution used to validate data for millions of accounts. The technology manages data for over 10% (and growing) of Australia’s total superannuation balances.