Big change is happening in Australia’s superannuation funds market. As outlined in KPMG’s new report on the sector, the number of superannuation funds in the country are forecast to plummet by 60% over the next two years as a result of rapid market consolidation. The report also suggests that there will be a steep increase in the size of mergers, which had already risen from an average fund transfer of $1.5bn FUM in 2018 to $22.3bn FUM in 2019.
According to KPMG, this unprecedented wave of market consolidation is being driven by greater regulatory pressure, scrutiny, and oversight. Specific pressures include a need for funds to focus on member outcomes, fees, cost, and performance, as well as meeting the requirements of the impending Financial Accountability Regime.
The pressures being placed on funds during this period of rapid market change are highlighting the need for best practice around market data management and governance. Andy Barrow, Head of Sales – APAC at RIMES, explains: “Australia’s superannuation funds find themselves in an unusual position, and firms will be looking at ways in which they can scale efficiently, reduce unnecessary costs, and provide members with more detailed information around fund performance. All of this requires a robust approach to market data management and governance.
“Large, consolidated funds in particular will need to aggregate, validate and store data from a large number of providers before distributing it to end user systems – many of which will be incompatible. For growing in-house data management teams that can mean a time-consuming data standardization process that takes precious resource away from core business activities.
“We’re already seeing evidence of this from our interactions with our current super fund clients, where there’s an alarming tendency for some funds to follow in the footsteps of the institutional asset management community when it comes to data architecture and the deployment of data storage and analytics components. This needs a lot more attention.
“The good news is that managed data services, such as those provided by RIMES, offer a more agile and lower-cost alternative. Third party data experts take care of the end-to-end data journey, from source to system, ensuring its fully validated and of the highest quality along the way. With RIMES, firms are provided with market data in feed ready formats that are fully auditable for good governance.
“As KPMG highlights in its report, funds are increasingly asked to ‘do more with less’. One way they can achieve this is to leverage elastic data services that flex with their business requirements, rather than investing heavily in large data management platforms that may well be out of date by the time they’re implemented.”
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