How real-time payments may future-proof Australia’s superannuation industry

Six million Australians¹ were old enough to withdraw from their superannuation in June 2023, according to a report released last year by the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority. It showed that a further three million will be eligible to draw on their super over the ensuing 10 years.

Ethan Teas, Executive General Manager of Payments, CommBank, says an increase in the number of members in retirement phase (including an increase in payments out of their superannuation account) presents new challenges – particularly in terms of security and engaging fund members.

“The safety aspect is really critical,” he says. “Members who are prime targets for scammers now have a material amount of money sitting somewhere and are suddenly going to want to tap into it.”

Many new retirees won’t have thought much about superannuation or had much engagement with their fund before they start withdrawing money. “The fund doesn't have a history of them, so it could be difficult to identify anomalies in their behaviour that could indicate fraud,” says Teas.

Safety in numbers

Advances in payment technology and better use of data and artificial intelligence may help address these challenges. CommBank’s NameCheck system, for instance, compares account names to account numbers and aim to combat fraud by helping to ensure payments are sent to the intended recipient.

“Members who are prime targets for scammers now have a material amount of money sitting somewhere and are suddenly going to want to tap into it.”
– Ethan Teas, Executive General Manager of Payments, CommBank

Digital proof, such as ConnectID and the Australian government’s myID, may also play an important role in verifying identities and making payments safer.

Catherine McDonald, Managing Director, Institutional Client Coverage, CommBank, says it is an exciting time for the super industry in Australia, with demographic and regulatory changes coming into focus. “We have been working to better understand the needs of our super fund clients. CommBank sees great opportunities to support the industry with potentially safer and more innovative payments.”

A matter of engagement

As more Australians retire, super funds may have to consider how they engage with the new (and growing) cohort. Teas says they should think about the type of relationship they want to have with their members and how they’ll establish it. 

In terms of customer experience, the bar has been raised, according to Teas. Members expect their best experience with a service provider will be matched by all other providers.

A 2024 survey² released by J.P.Morgan shows that super funds are prioritising member engagement and communication strategies as they update their operating models. CommBank collaborated with J.P.Morgan in piloting its anti-scam technology NameCheck,

Deanne Stewart, CEO, Aware Super, says leveraging new technologies, particularly digital solutions and AI, was vital to getting more superannuation fund members the help they needed to achieve their goals for retirement.

“As super funds grow in scale and the population ages, more people will need help to retire well and great member service is increasingly important to how well super funds respond to the challenge,” Stewart says.

“At Aware Super we’ve digitised more than 90 per cent of our transactions and the benefits have been clear in an easier, more helpful service experience for our members, while also giving our teams more time to focus on the personalised guidance and advice that gives people confidence in their retirement goals.”

Getting personal with numbers

Data-rich payments can help. The New Payments Platform^©* (NPP), which provides near real-time digital payments, allows messages of up to 280 characters – enough to give a super-fund member some context about the payment. This extra information can obviate the need for a customer to call their fund seeking clarification about the transfer.

The data could also be used to engage the fund member. A message might tell them: “You’ve just withdrawn $3000 from your superannuation fund and your remaining balance is $1.23 million.”

“You can tell a story in the payment,” says Teas. Alternatively, the message could contain important record-keeping information, making it easy to find later on and helping with the customer’s tax affairs.

Teas notes that real-time payments (where transfers are completed in a matter of seconds rather than a day or two) may also make for a better customer experience. “The immediacy is really critical, especially in this day and age,” he says.

Charting a course

Super funds can also provide insights to help members optimise liquidity in their accounts as they withdraw cash to live on. Similar to an electricity bill that equates the power used to, say, a five-person household, these insights could potentially nudge the customer into changing their behaviour.

“Funds that have visibility of payments data can bring insights to life that might help the member with the context of how they're behaving relative to others,” says Teas. The insight may be as broad as noting the fund member’s withdrawals relative to others in a similar situation, or it could delve into specific spending.

For voluntary contributions

Payment innovations and the NPP may also benefit super-fund members in the accumulation phase. One example is the NPP’s PayTo^® capability, which can be considered a modern update of payments functionality. It puts control in the hands of the customer, allowing them to alter or cancel payments in their banking app or online.

“You can tell a story in the payment. Funds that have visibility of payments data can bring insights to life.”
– Ethan Teas, Executive General Manager of Payments, CommBank

Teas says super-fund members could set up automatic payments to make voluntary weekly or monthly contributions. “That will be good for Australians planning for their retirement more broadly,” he adds, noting that members would be more likely to commit to regular payments if they know the schedule can easily be paused or stopped. “They might want to skip a month, a week or whatever frequency they're working with,” says Teas.

Additionally, if they connect the payments to their PayID^® – an easy-to-use payment identifier that’s used on the NPP – their automatic payment will come with them if they change banks

A new super model

Another issue superannuation funds are grappling with is Payday Super, which will require employers to pay their employees' super at the same time³ as their salary and wages, rather than paying it quarterly.

Once again, data-rich real-time payments can help manage the transition. “With Payday Super, we're speeding up everything and increasing the frequency. And in that, we can't tolerate today’s error rates,” says Teas.

Real-time payments and receipts confirming payment should help, with any irregularities surfacing quickly. “The payment flows can be much more approximate to the data flows,” says Teas.

Many employers have developed their payment processes based on the slower, less frequent model. As such, they’ll need support as they adjust to the new system, which is scheduled to take effect from July next year.