Fintech

The Digital Retirement Revolution – A Pensions Story

Waracle
9th March 2020
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https://waracle.com/blog/fintech/the-digital-retirement-revolution-a-pensions-story/
The Digital Retirement Revolution – A Pensions Story

Digital retirement. It’s a thing – and no, it doesn’t mean you’ll be automatically uploaded to the cloud when you wake up on your 65th birthday. Today, we’re talking Pensions, and their long-overdue catchup with the strides being made in digital banking – making it easy for customers to engage with, and manage, their finances – wherever they are. We recently explored InsurTech, the impact of 5G on the financial services sector, RegTech and the wonderful world of banking-as-a-service, today we’re exploring the digital retirement revolution – a pensions story.

So, when was the last time you checked your pension? If you’re anything like me (and I hope you’re not!) I’m really lazy at opening envelopes that come in the mail – after all, the last thing I need is more paper, more updates, more lengthy explanations . You could say I’m a pensions avoider, but if I’m honest, it’s only because it all seems so difficult. When I can manage the rest of my entire financial life on my phone, and am comfortable doing so, why hasn’t my pension been a part of that? 

But hang on … what’s that I hear – the distant but unmistakable rumble of change? With new entrants to the market and existing providers driving the ongoing transformation of pensions, could digital retirement be within my grasp? 

Financial innovation

Digital banking – as we all know – has undergone, and continues to undergo, a veritable revolution. How we manage our finances, and the technology that’s powering that, is nothing short of astounding. Trust me, I know what I’m talking about – I’m one of the old-school who used to have to make an appointment (in person, imagine!) with my bank manager if I wanted a car loan. Today, managing, streamlining and planning our financial lives really is as easy as pulling out our smartphone, and doing the necessities – all while waiting in the queue at (insert chosen coffee shop).

This new-found ability to engage with our finances 24/7, quickly, easily, and importantly more frequently has brought personal finance into the spotlight, stripped it of its mystery, removed the fear and made it easy to make friends with our money again. Digging out my paper statements to see where I’m at with my spending is a thing of the past – heck, I don’t even get paper statements anymore. I don’t need to make long phone calls to move money between accounts (or remember a ridiculously long telephone banking number), and I don’t need to write a cheque (remember these?) to pay the plumber. Yes, familiarity, and the ability to interact with our money in ways that suit us, has powered fintech innovations that show no sign of a slow down. So when I want to know what’s happening with my pension, it should be easy, right? Except, until now, it’s not been.

Pensions innovation – why so slow?

There are a couple of key reasons:

  • Lack of interest. Both the need and the desire for digital pension solutions was until recently, very limited, primarily because most of us were looped into either a final salary pension, or looking at an annuity. Alternatives were simply not available, or not known about, so there was little demand for pensions information until retirement was really looming.

 

  • Lack of demand. The key audience for ‘digital retirement’ has always, until now, been older – meaning the drive to do things digitally has simply not been there. 

 

However, the working world is now a very different place. The introduction of auto enrolment of the UK workforce into workplace pensions where employees now have more control over how to invest their money, and the new pension freedoms introduced by the government in 2015, mean we’re all now far more likely to want to keep tabs on our savings, where we’re investing, and the rewards we could reap if we do it smartly. 

What’s more, we’d like – no, – we need it to be easy.  Having quick, easy access to the technology and information that will enable this new found financial freedom, will drive the digital pensions revolution, and we’d be right to expect great things. Luckily for us, there are a few savvy pensions companies out there that are ready to take the bull by the horns and deliver. More of that shortly … 

But there’s another element to this pension industry transformation – one which the digital approach could solve – and that’s the demystifying our finances through increased engagement. How? One of the key issues with pensions is getting individuals to a) sign up and secure one, and b) engage with it, interpret what it means, and understand how it fits into their future financial life – without the time, complexity and forests of paper that we’ve come to associate pensions with.  This is where the humble app comes in … 

Change is here

Powered by the changing workplace, the new pensions opportunities, and the millennials that have absolutely no interest in doing things the way they’ve always been done,  there’s a whole new audience that are far more interested in knowing what’s going on with their money. 

Imagine if, when it comes to finance, and particularly pensions, that we had clarity around our financial future – with regular insights that are visually engaging, genuinely interesting, and maybe even entertaining – without having to dust off the filebox at the back of the cupboard? 

Royal LondonAegonAviva, and relative newcomers PensionsBee and Nutmeg, are a big part of the driving force that’s powering digital excellence across the industry and putting pensions in our pockets. 

These innovators in the pensions market, have been using digital to drive a better, more involved customer experience – not only by putting accessibility on the table, and making pensions more engaging, but by bringing the customer closer. After all, if you’re going to spend most of your adult life investing a big chunk of your money into a pension pot, it seems obvious that you’d have a close relationship with the provider, right?

Today’s consumers, whatever they’re doing online, and whoever they’re doing it with, tend to share large amounts of personal information with a vast number of organisations – and in return, they rightly expect the relationship they have with these organisations to be as personal as they need it. It made sense, then, for these pension companies to make the strides needed to deliver on that need for their customers – and using digital innovation to deliver it.

Securing future growth – Digital Retirement

In just a few short years, we’ve catapulted from having little interest in finding out about our pensions via digital means, to wondering why on earth we don’t have a mobile app on our phones so we can be as involved with our financial life, in the same way we are with our Insta buddies.  The message is loud and clear – the old way of ‘doing’ pensions no longer cuts it. 

The world is a quicker, more connected, more demanding place for business, and the ever-increasing operational, strategic and customer demands we’re all seeing, means that the pensions industry must respond quickly and efficiently in order to drive innovation, boost the bottom line and secure future growth.  

One thing’s for sure, having my pension in my pocket has changed my outlook on my financial future for the better – and that can only be a good thing.