Benjie Fraser, global pensions executive at JP Morgan’s Investor Services, explores the impact of ‘big data’ on Australia’s super industry

Another debate that looks interesting is the one around big data and the Australian super industry. Some are describing big data as the new frontier of member engagement in the superannuation sector over there.

The potential of big data is best understood by looking at the life stages of an Australian super fund member. Meet Michael – it is likely over the course of his working life, Michael will achieve a number of milestones. Take his first job, for example, and subsequent job moves, which may include a career change. Michael is likely to marry and have a family, a mortgage and education costs. These milestones bring with them decisions relating to Michael’s superannuation. Engaged or not, Michael will generate for his super funds large amounts of data over the course of his life, and the challenge for these funds is what to do with this intelligence to meet Michael’s retirement goals and retain his membership.

Contribution rates are soon to increase from 9% to 12%. At the same time, the issues of volatile markets, disappointing investment returns and investor dissatisfaction are coming into play. Beyond the competition to engage and retain members, increased regulatory scrutiny and industry consolidation are significantly impacting the sector.

Australia’s superannuation fund members are largely disengaged. Recent attitudes towards fund managers and adviser networks have been negative, reflecting the state of investment markets in difficult economic conditions and the need for greater transparency around fees and investment recommendations. It is against this backdrop that funds are starting to wake up and have conversations about big data. While custodians have always processed, interpreted and delivered massive flows of data, the rapid evolution of mobile technology devices and social media channels is changing the nature of customer information – and engagement.

Although there is no silver bullet, big data presents an opportunity to come to grips with some of the challenges facing the industry. A record number of Australians will retire within the next decade – a total of 50% of new super fund members are aged from 20 to 29, and half of those are now taking their fund with them when they change employers. The reality is that growth and retention opportunities are high for funds that can meaningfully track member activity and engage individuals.

Funds that can truly harness their data and combine traditional investment insights with individual member information will be in the box seat in Australia’s highly competitive investment and super industry.

Globally, are any other markets witnessing this kind of debate at the moment? Or do they anticipate something similar in the future?

Benjie Fraser is global pensions executive at JP Morgan’s Investor Services