The prevalence of big data, the greater focus on governance through the Royal and Productivity Commissions, and the transition in data ownership with the moves towards open banking, mean a data strategy is now central to the success of managing a superannuation fund – as well as being of great benefit to members, says Mark Vaughan, managing director at QMV.
“While data strategy sounds like a combination of the two most overused buzzwords of twenty first century business, super funds can no longer afford not have one, and super fund members will be the ultimate losers if funds do not take this seriously – as long as such a strategy is developed and implemented properly.
“After years of focusing on regulatory and compliance reporting, funds have gone on the offence with their use of data, focused on analytics and member-facing digital solutions.
“This has been driven by an increased competitive landscape and greater emphasis on having an understanding of, and connection with, the member,” Mr Vaughan says.
However, he questions whether superannuation funds have got their defence in order before going on the offence.
“While the volume, use and value of data has continued to rise, the poor quality of data can act as a handbrake to the success of proactive efforts. For example, having a robo-call that wishes a member a pre-retirement ‘happy 65th birthday’ is counter-productive if the member is actually 34 and it’s not their birthday.”
He says while such a phone call would be an irritant, there are far more serious implications for members if their fund does not hold good quality data.
“Incorrect data concerning something as simple as the wrong birthday can have devastating flow-on effects. The date of birth can impact the insurance coverage and the premiums as well as eligibility around when funds can be withdrawn.
“Errors like this spread through the fund like a disease with serious implications for fund members,” he says.
“If identified early the remediation cost is minimal. However, if the error is not identified for a month or more, it can filter into monthly processes, and may impact investors who may have left or transferred products – such as from super phase to pension phase.
“If left unchecked the error can affect annual processes such as member statement and ATO and APRA reporting. In this case it may be considered a breach, and will be expensive to remedy, not to mention to negative impact it has on the fund member.
“While a regular data integrity validation – such as one that prevents a unit pricing error from spreading across the entire membership – can literally save a fund millions of dollars, the savings are the compensation costs that were prevented and the reputational damage that was saved, so they are difficult to quantify.
“However, the quality of data is the heartbeat of any organisation’s data management efforts. If super fund data is not managed diligently and quality is not ensured, the data can quickly become a risky and expensive liability instead of a valuable asset.
“As we enter the Superannuation phase of the Royal Commission, the integrity of the data held by funds will be under increased scrutiny.
“Super fund members too, are urged to check their statements thoroughly when they arrive, to ensure all information is correct and up to date,” Mr Vaughan 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.