Change doesn’t always fail because we don’t know what to do. Sometimes, it fails because knowing isn’t enough.
That’s the situation the retirement sector is currently facing: it is aware of its problems but unable to act on them. Everyone agrees that the industry needs to modernize. Clients expect seamless digital experiences. Regulations are evolving and tightening. Technology keeps pushing forward. And yet, progress is a challenge.
At our recent webinar on Creating a Blueprint for Digital Success in the US Retirement Industry, our experts identified several bottlenecks that need to be addressed: legacy systems, outdated processes, and deep-rooted resistance to change.
The diagnosis is clear. So what’s holding back the retirement industry?
There are four main factors:
- Legacy systems and technical debt
- Complex regulatory compliance
- Tight profit margins
- Organization culture
The Reality of Tech and Process Debt
Trying to innovate on legacy systems is like streaming 4K video over dial-up – slow, frustrating, and doomed to fail. This results in technical debt, where short-term gains are prioritized over long-term investment. The combination of clunky tech, outdated processes, siloed information, and legacy thinking isn’t just inconvenient. It’s immobilizing.
Organizations wanting to innovate, improve, and evolve are finding it daunting to even get started. Many of their core systems were built in an era when tech tools weren’t designed to talk to each other. As a result, each update requires a complex workaround to ensure it fits with the rest of the system. These workarounds multiply, and before long, the entire system is a maze, trapping innovation.
The Compliance Conundrum
Meanwhile, there’s another problem: regulatory pressure is increasing, and so is the fear of non-compliance. And, fear is a terrible environment for innovation. Teams trying to move forward are held back by understandable but relentless compliance concerns that major changes can bring.
The result? A standstill. Regulatory compliance seems to demand that nothing changes. Without smarter tools and proactive governance, organizations fall into reactive loops. And every new regulation becomes another nail in the innovation coffin.
Thin Margins, Thin Incentives
Retirement providers, like so many other low-margin businesses, are under pressure to show immediate, short-term results. Modernization and digital transformation do bring real results, but these gains accrue only in the future, and that can make them feel intangible.
And there’s another wrinkle. Many legacy vendors simply don’t feel the heat. Clients are locked in. Switching costs are enormous. The software works… most of the time. That means that the incentive to rebuild, rethink, or reimagine is minimal. As long as the system is “working”, mediocrity is acceptable.
This is how outdated tools stay alive. Not because they’re loved, but because they’re tolerated.
A Vicious Cycle: The Impact on Talent and Culture
An organization that resists innovation for any reason, no matter how valid, communicates a deeper cultural message that young talent hears loud and clear.
Young, energetic employees don’t just want a job. They want meaning, momentum, and modern tools. But this isn’t just about technology: it’s about energy. And over time, what’s left is a culture optimized for maintenance, not progress. A culture that further resists digital innovation and transformation.
So, what comes next?
The retirement industry isn’t facing a lack of knowledge of its problems. On the contrary, its problems are well-known and understood. And that’s a great first step.
Digitalization can transform the industry, but the complexities of high investment, compliance challenges and technological implementations can be intimidating. That’s where Congruent’s smart SaaS-based offerings come in. We’ve worked extensively with organizations in the retirement industry to design and develop the CORE platform that tackle specific challenges with actionable solutions.
Our plug-and-play tools are easy to use and already designed to comply with industry norms. At the same time, they’re customizable to suit your specific business requirements.
Ask us how we can help get you started on that first step.
