Consolidation at Supers – Navigating the Operational Challenges, ASFA 2022

by Mahendra Shirali, Practice Lead, Business Solutions, SmartStream | June 2022

At the recently concluded Superannuation Conference held in Australia, the dominant trends impacting the Superannuation industry seemed to be on everyone’s mind – the impact of Consolidation across Supers, the regulatory requirements from APRA’s data transformation project, and stress testing mandates for deposit taking institutions.

This is not very far off from the official definition of a tsunami: “a wave train, or series of waves, generated in a body of water by an impulsive disturbance that vertically displaces the water column.”

An early flurry of activity (eight merger announcements during 2011-2013), followed by a lull (five announcements during 2014-2016), and a subsequent wave train from 2017-2019 (17 announcements) and 2020-2021 (15 announcements), overlayed with an impulsive disturbance introduced by APRAs data transformation and stress testing requirements, fit well into the definition of a tsunami, in the years to come.

However, this tsunami is one that can have a very positive and indeed beneficial end state if this is adequately managed. Conversely, the tsunami for Supers can be a calamity without planning.

Although it was our first time participating at the ASFA 2022, we have had thought provoking discussions on the challenges faced by the participants in this new world.

Many thought leaders at the ASFA 2022 discussed the importance of data reconciliations and the world of Supers post-consolidation. An interesting theme that emerged was the benefits of managing back-office operations post consolidation, with an in-house team. They looked at leveraging cloud-based and AI technology rather than the current resilience on external service providers.

They noted that having clean and reliable data was fundamental to the integrity of the fund and product performance, from the consolidated entities. Product transparency as mandated by APRA’s ‘Your Future, Your Super’ legislation would immediately contribute to their reputation risk, if their data story post-consolidation, had white spaces.

When the tsunami settles, what guarantees do the Supers have that all the data has been reliably ported across? How has the Supers balance the merger activity alongside its core business? Has this impacted their brand? Are they ready for Phase 2 (Depth) of APRA reporting requirements? Can they ride these waves of change?

These were some of the sentiments we picked up at ASFA2022. At SmartStream we enable our customers worldwide to navigate such impactful change. We are a trusted partner, who understands the ‘swell period’, and we can help you navigate out of ‘no man’s land’ and prevent you from getting ‘rag-dolled’!

We encourage our clients to focus on their core business. We have specialist surf boards to ride the waves of Data Transformation, APRA reporting initiatives, reconciliations, fees and expense management, and stress testing.