Jonathan Steffanoni says the government will eventually extend its open banking policy to the superannuation sector after the initial launch on July 1, 2019, and while the authorities may not be ready to broach the prospect, the funds themselves are starting to prepare.
Steffanoni, a principal consultant at financial services advisory firm QMV and a fellow of the Association of Superannuation Funds of Australia, says it makes sense for superannuation to come onto the same agenda as the other sectors.
“The expectation is that open banking will turn into open super at some point because it is economy-wide,” Steffanoni says.
Treasurer Scott Morrison stated in February that after open banking commenced, similar policies would be applied to the telecommunications and energy sectors. He also provided hints that the open banking system would extend beyond those named areas, remarking that the Consumer Data Right (CDR) is a “more general right to data being created across the economy”. However, the government has not publicly broached the subject of extending the open system to superannuation and there is no reference to super in the 138-page review into open banking on which the government’s decision was predicated.
A head start
The people who are, in fact, discussing it, Steffanoni says, are the ones running superannuation funds. He adds that “the majority” of QMV’s clients are super funds, and they are already positioning themselves for a move towards open super.
“It’s already starting to affect what we (QMV) do in that it’s coming onto the strategic agenda for superannuation funds,” Steffanoni says. “When we start to move close to a point where it’s announced that open super, open pensions, is happening, we’ll change tack and look at what it means in terms of technical implementation.”
When asked what this means for consumers, Steffanoni gave the example of families having all their retirement information consolidated onto one platform.
“If we look at how most people retire, it’s not as an individual – most people retire in a family unit. However, the superannuation system and all our retirement planning is often focused on the individual,” Steffanoni says. “So the obvious application up front is an app that will enable a view of your family unit and integrate your view of superannuation.
“I’m sure there will be plenty of other applications as well. As soon as you open up that information, you create an ecosystem where you get innovation, and there will be people much smarter than me who will come up with fantastic ideas for how you can use it. What they will look like, we don’t know – that’s the beauty of innovation.”
Steffanoni points out that super funds are looking to harness Application Programming Interface (API) technology, which will power the open banking system, early to get a head start on the rest of the field.
“There might a window of competitive advantage for super funds initially, drawing on banking data to augment information they already have,” he says. “We’re less than 12 months out from open banking, so that’s another challenge to add to the mix.”
Steffanoni has no doubt that superannuation will come under the spotlight before long, telling Investment Magazine earlier this year that it was only a matter of time.
“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,” he said.
Free information
The government’s move to open banking came about after the announcement of the CDR in November 2017, which was part of its response to findings from the Productivity Commission regarding data availability and usage.
The CDR led to the publication of the Review into Open Banking in Australia, which made recommendations on the most appropriate model for implementation of the regime.
In accordance with the government’s mandate, financial services providers will need to free up information for other financial service providers if clients direct them to do so. The hope is that open banking will boost competition, aid tailoring to individuals’ needs and simplify choice, Treasurer Morrison says.
