A beginner’s guide to behavioural fintech for super funds
Advancements in technology, notably artificial intelligence and big data, and an increasingly sophisticated appreciation of how behavioural strategies affect funds’ understanding of, and influence on, their members are two mega-trends set to reshape the superannuation industry over the next decade.
In short, there will be a synergistic collision of behavioural finance and technology to create ‘behavioural fintech’.
Technology may be part of the solution, but it is also part of the problem. It is enabling a flood of information to permeate our daily lives, much more than our brains were designed to handle. Our cognitive capacity reaches its limits quickly and throws up defense mechanisms to filter information and avoid seemingly unnecessary thinking. When the problem is information overload, the answer is not more information.
In this context, some current well-intentioned attempts by super funds to better engage members might be having the opposite effect. We should not use technology to open another floodgate – the one containing all the information about superannuation that we think members should know. If we do, we should not expect our letters and emails to be opened, or our forms to be completed correctly.
The traditional route to influencing behaviour is through member education: teach them what they need to know about saving for retirement; show them what they need to do, give them the tools, and sit back and let them shine. This might work for some, but clearly it doesn’t work for many others. The reason is that the barriers to action for most are not rational, but behavioural. And behavioural barriers require behavioural solutions.
Members will not thank us for making them the best-educated paupers in the retirement village! A behavioural fintech approach can use technology to find alternative ways to influence outcomes.
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Source: A beginner’s guide to behavioural fintech for super funds – Investment Magazine
