Making pension data-driven

At ABP’s annual conference, which centered ‘data-driven pension’, Alexandra and Henriëtte highlighted #data and #AI as gamechangers to make customer propositions better, faster and cheaper. #Customercentric automation of decision-making should be at every Board’s agenda. Learn more about the rapidly changing pension market in the article below.

It’s an interesting time in today’s pension market. By 2027, a new legal framework will come into play that makes one’s pension more personal but also more risk-carrying. This is against the backdrop of a population that increasingly  got used to being in control of its own life decisions. Be it execution-only mortgages, do-it-yourself investment platforms or Siri/Cortana as the PA-for-all.

At the same time, the pension sector is positioned next to a financial sector that’s in full disruption mode, with FinTechs taking over insurance, wealth management, and payments. Not surprisingly, FinTech is this year’s largest unicorn sector by value – and counting. Strong regulation has kept the pension sector protected, but bottom line is that pension providers will have to up their game sooner than later on price, service, and adaptability.

Ask yourself, with Spotify offering you fully personalized listening suggestions at your fingertips, aren’t you getting increasingly fed-up with the one-size-fits-all approach of incumbent organizations?

A successful response boils down to establishing a data-driven way of working. Since the rise of digital channels in the last 10-20 years, organizations now have a wealth of customer data. Often it is only very limitedly used to serve customer better, faster and cheaper. Pension funds should do exactly this and take an example from leading cases in finance:

• Better: ING uses the data from its personal banking app to inform customers ahead of time of how much they still have left to spend at the end of the month (‘kijk vooruit’)

• Faster: DeGiro has created a 5-minute acceptance & onboarding process for new customers based on aggregated customer data

• Cheaper: Capgemini will offer pension execution for €15 euro per participant, starting with the retail sector

Especially for the pension sector, data has a lot to offer. Funds and providers have access to very large data sets, they often recognize the urgency to redesign their duty of care (‘zorgplicht’) to the changing needs of their participants, and finally pension providers having long-standing experience in data-driven investment strategies. Not surprisingly, many have started initiatives to use their data in ways that are responsible, safe and value-adding for its participants, such as increased transparency in investment decisions (APG and PGGM’s SDI Assets Owner Platform).

Not surprisingly, ABP’s annual conference this year centered ‘data-driven pension’. Below are three of the lessons we shared as keynote from our work in guiding organization in becoming data-driven:

• Organize around the customer, not – as traditionally in process automation – on the employee or the internal process. Goals should always be to make an interaction better or faster for your customer. Cost reduction usually follows.

• Automate where possible, don’t loose the human touch – streamline your organization by using data to automate mundane tasks and decision-making. Paradoxically, this elevates the ‘human factor’ to where it really counts: impactful conversations with clients and highly complex decision-making.

• Approach data from your core process – often organizations set up innovation offices with funky bean bags and table tennis tables far away from their core business; this way you are ensured that impact will be at the fringes. Successful organizations redesign their core processes in a data-driven way by tying this data transformation to the C-level agenda and positioning it as a C-level responsibility.