The US retirement industry is undergoing a chaotic shift with dropping fee margins, increasing competition and changing participant demographics. Retirement plan administrators and recordkeepers are struggling with the increasing complexity of regulations and escalating costs.
A study by Everest Group shows that 80% of recordkeeping systems are homegrown and 77% are mainframe-based legacy systems. As this outdated technology cannot meet the evolving customer and regulatory demands, it mainly impacts profitability.
To sustain in the highly competitive market, retirement plan service providers must spend more on digital transformation. They must adopt new-age technology to address customer service issues and deliver personalized services with self-service options. Besides offering convenience, using digital platforms helps cut down costs for recordkeepers.
However, you must understand digital transformation is not only about changing your existing IT infrastructure. It is an ongoing change that penetrates deeper.
Why does the retirement plan industry need digital transformation?
The paper-based retirement services environment used legacy processes and obsolete systems until recent years. The industry went under a digital disruption with the onset of demographic changes. In comparison, the breakout of the COVID-19 pandemic accelerated the digital transformation of the retirement plan industry.
The rising awareness regarding financial planning has brought in more plan participants. Recordkeepers and plan administrators have to manage larger volumes of data and deliver personalized services for a much bigger audience. They have started investing in automation to cut costs and adopting Cloud services to deliver operations at scale.
Moving beyond upgrading infrastructure, digital transformation for the long-term calls for business leaders to reimagine their business models and processes. They must look at profitability and growth in a more sustainable go-to-market approach. The most useful options are:
- Conversational platforms like chatbots to quickly deliver support plan participants
- Robo advisors that collect information and offer financial wellness solutions to engage participants
- Analyzing participant data offers useful insights to improve their experience by easing common pain points like complex withdrawal processes
- Automation of data management using Blockchain helps streamline recordkeeping while ensuring maximum transparency
- Adoption of gaming techniques and self-service options to engage participants from the tech-savvy millennial generation
The digital transformation journey
Digital transformation is a process of continuous improvements. You can start by breaking down your monolith systems into smaller components with microservices architecture. Use low code / no code software to enable your workforce to build customized solutions that enhance customer experience. You can also leverage RPA to automate compliance testing, contributions, and distribution processing.
Besides reimagining processes, you should also think of better ways of engaging plan participants. Recordkeepers can use data to assist participants in making financial decisions. Cloud services and enhanced cyber-security mechanisms ensure data security. It has a positive emotional impact and improves trust in the long term.
Congruent Solutions brings the benefits of agility, flexibility, and automation into its CORE platform. It is built for the Cloud using a microservices architecture. The platform offers an interactive UI and supports a mobile-first approach. It prioritizes customer convenience by delivering a seamless transition across various devices.
We help you make your record keeping and retirement plan administration systems interactive. With over 18 years of industry experience and best-in-class technology solutions, Congruent’s team of experts is ready to assist you through your digital transformation journey. Start today!