Super review puts bite into backoffice

A major report into Australia’s superannuation industry claims annual savings of over $A1 billion can be achieved through major changes to back office processing to reduce costly manual processing of funds.

The Cooper review was released on 30 June 2010, the result of 14 months analysis of the efficiency and governance of superannuation funds by a team led by Jeremy Cooper, former deputy chairman of the Australian Securities & Investments Commission.

The report notes “Australians have over a trillion dollars in superannuation savings. The compulsory nature of super contributions means that by 2035, Australians are projected to have increased their collective super savings to $6.1 trillion.”

This scale brings enormous administrative and other associated costs for superannuation administrators.

It concludes, “The back office dominated by manual transactions ... is in urgent need of an upgrade and annually costs members hundreds of millions of dollars more than it should.”

The report has recommended a package of measures that have been dubbed “SuperStream”, describing ways to bring the back-office of superannuation into the 21st century.

John Brogden, chief executive of the Investment & Financial Services Association, wrote in The Australian, “Despite being a dynamic, innovative, world-leading retirement income system, it relies on millions of cheques and pieces of paper. The Cooper review's SuperStream comprehensively addresses this farcical situation. Its recommendations will sweep away costs and improve services.”

SuperStream’s main components are the increased use of technology, uniform data standards, use of the tax file number as a key identifier and the straight‐through processing of superannuation transactions.

This term is used for the end-to-end processing of transactions (both data and monetary) from start to finish, using technology to automate and control all elements of the process and workflow. The elimination of manual handling or intervention optimises the processing speed and eliminates data entry errors.

“Excessive costs caused by manual processing of both money transfers and data in super can be significantly reduced by requiring electronic transmission of linked financial and member data at all levels, using standardised formats. Use of the TFN as the primary identifier is critical to this process.”

The Cooper review has not recommended a specific timetable for implementing its recommendations, nor provided an estimate of the upfront costs required by funds to implement SuperStream, deriving from the need to adjust IT systems to meet the new data standards.

Andrew Griffin, Registry manager at State Super Financial Services Australia Ltd, believes these costs will be significantly less for those funds that have already taken steps to introduce solutions for automated data extraction and digital workflow.

These are still in the minority though, as it is estimated that most retail funds in Australia are still employing manual data entry off the scanned image
Having already implemented a ReadSoft solution in 2003 for automatically capturing data and digitising transaction request forms received from clients, State Super Financial Services looked to extend the solution to maximise their processing capacity and have front-end visibility of the 15,000 document sets received on a monthly basis.

Their manual inbound mail process involved physically opening mail, date stamping each document, sorting by transaction type and distributing documents to individual desks for further processing. This process involved excessive photocopying as documents passed from one person to the next in the processing cycle as well as the need for physical storage of original documents.

The requirements for an automated solution were driven by the need to have total visibility of all inbound documents for control of client information and to save time at the front end of the document processing cycle. The ReadSoft software totally removed the manual process by providing a solution that classifies, sorts and groups documents automatically and feeds appropriate images to workflow systems for full OCR and data extraction.

“The new process is saving us significant time and effort, as well as providing the quick and easy option of electronic storage and retrieval," says Andrew.

While the Cooper review has proposed a digital revolution for transaction processing, this will not ever completely eradicate the requirement to scan and process paper documents.

“Currently there are paper application forms when people commence with a fund and people will still write you a letter with their cheque attached,” said Griffin, “but once people move to accepting funds electronically it’s not hard to integrate OCR software into the workflow.

“With the work that we’ve done with ReadSoft, it’s not a big step now to take the information delivered to us by employers or another fund electronically, rather than scanning the paper and turning it into a data stream.”