Being the super fund of choice for Australia’s front-line health and community services workforce, HESTA is driven by a core purpose to ‘help the people who help us’. As digital interactions increasingly define super funds’ relationships with their customers, HESTA’s challenge, and indeed opportunity, is to ensure its growing digital and data assets serve to empower and enrich its members’ experience – not just in the here and now, but well into their twilight years.
Stephen Reilly, chief operating officer at HESTA and featured keynote speaker at the Future of Financial Services Melbourne 2022, walks us through the super fund’s purpose-driven digital transformation program, why the shift to an in-house digital development capability, alongside its industry-leading migration to cloud, is paying dividends for the business, and why the advent of blockchain-backed ‘smart contracts’ could augur a transformative shift financial services over the next decade.
FST Media: Digital transformation is now very much baked into the fabric of financial services’ operational priorities today.
Take us through HESTA’s digital transformation path over the last 18 months, particularly as we move out of – hopefully – the worst of the Covid lockdowns.
Reilly: Fundamentally, it’s about enablement – of both our members and our people. We’re enabling them to do what they want to do in the easiest, most relevant way possible. That ends up requiring a few things. One is having the infrastructure in place, connected to all the right data sources, and then building the piping to get the right data to the right place at the right time, and in the right format. Then there’s the presentation of it, to both our members and employees, so that they receive it in a way that’s usable. And, of course, there are also the tools to be able to execute on.
Key to enabling our members has been our Member Online portal, which we brought in-house about two years ago. The idea was to make it fit for purpose – after all, our members don’t need to be financial gurus or sophisticated investors to build a great financial future.
We wanted to develop a site that’s understandable and navigable by all, to de-jargonise and provide an easy-to-follow path for members to make the decisions they need to make.
The same principle applies in enabling our employees. There are so many different bits of software and software-as-a-service for them that we need to continually feed and water. And key to supporting this back-end infrastructure is our work in the cloud. With respect to integration, this is one area where we’re an industry leader. We recognised six years ago that we needed to not just be good but great at integrating ecosystems. Our differentiating capability that we’ve worked on through our partnerships is one of connecting ecosystems and suppliers, mostly through APIs, but in some cases it might be through an organisational data store that transforms the data and then sends it off to where it needs to go.
FST Media: With the rapid shift towards open data ecosystems, the ability to effectively link up and make use of third-party data has proved a key industry differentiator today.
Reilly: We realised about six years ago that connectivity was going to be a real differentiator of experience delivery, performance and efficiency. Our operating model had traditionally revolved around large outsourced arrangements, which was the best way to access scale economies and skills. But the rise of APIs, cloud and automation changed the economics of how to provide great and reliable experiences.
We set out to make data integration a differentiating competency and found a partner who could help grow our ecosystem in a structured, safe and future-oriented way – same with cloud; same with user design.
Instead of leaning on a very good jack of all trades, we were able to build a virtual best-of-breed operating model which excelled at getting the right data to the right tool in the right format at the right time, so that members or employers or employees or partners can make better decisions.
If you think about investment decision-making, there is so much data out there that can help really shore up any quantitative analysis that you put into your investment decisions. Feeding data from Bloomberg or MSCI or some risk system, that is an ecosystem that’s gone from zero to 100 miles an hour in the last few years, but it needed that connective infrastructure to do it. And we’ve accelerated so quickly in the last two years because we built the infrastructure to plug and play.
FST Media: So how would you define success in your transformation program – both at the employee, but also at the member end?
Reilly: For members, it’s about making it easier to do what they need to do – to inquire, to join, to get advice, to ask for help – through their channel of choice. The main measure we have for that is NPS, but there’s probably a more subtle metric, which is the growth of self-service versus reductions in phone calls.
There are similar but different metrics driving how we’re defining success for our employees, with employee engagement and employee NPS looking at, in particular, their use of technology and whether their tools are fit for purpose. While there’s no good metric for this (yet), increasingly, we’re taking note of how many processes we’re automating or making easier. If I look at our adoption of Okta for single sign-on, we started with a handful of applications; we’re now using it for dozens and dozens of applications. With it, you only need to remember one password. That’s a massive time-saver for everyone.
FST Media: You mentioned earlier bringing your web development in-house. With the trend over the last decades to outsource many tech functions, particularly infrastructure, I’m curious whether you’ve extended this in-sourcing push to other parts of your technology ecosystem.
Reilly: Two points to make on that. Firstly, we don’t insource everything; we run the numbers and see if it makes sense.
A whole lot of financial institutions take it as an article of faith that you need to run your own contact centre – well, the economics of running our own contact centre pale against getting some scale, especially in the training and recruiting space.
If you can train up top talent and get them passionate about how they can do some of their best work at HESTA, that’s making a real difference for our amazing members – and that puts us way in front of outsourcing. We’ve continued to outsource our contact centre, complaints, and insurance claims, and we have an escalation process that brings it into the HESTA world.
The other thing that’s changed is the way we outsource. As you mentioned with cloud infrastructure, we outsource a lot of server work to AWS. And guess what? It takes away a great deal of the scale disadvantages that we had in the old world against the bigger super funds or even the big four banks – once upon a time, they’d have had a suburb in the western suburbs to house all their servers; we couldn’t compete with that. But, put us all up on AWS and that scale disadvantage disappears.
We can choose a virtual, best-of-breed outsourced operating model based on what we need and the economics where it’s worth it.
FST Media: Cloud computing and the transition to ‘as-a-service’ operations have defined digital transformation programs over the last decade.
Take us through your cloud journey to date. How are you leveraging cloud to innovate front-line services, and again, drive back-end efficiencies?
Reilly: In terms of innovation of member-facing services, we’ve used it to support the insourcing of our member online platform to create instant contact centres and to really increase the amount of real-time data flow to different channels in our ecosystem.
Looking at the instant contact centre, during lockdown when the Federal Government announced its early release scheme for super, the Link [Group’s] contact centre was overrun.
We had people who were available, so we took advantage of AWS Connect – their contact centre-as-a-service – which we got up and running within a couple of days.
We were able to redirect access calls, or particular topic calls, through Link’s IVR into our instant contact centre network. We’ve used a variation on that ever since.
We’ve automated a lot of our back-end processes for digital and integration development, increasing our ability to efficiently deliver digital services, reduce errors and defect rates, and enable robust security processes. We have 24/7 monitoring and, in some cases, self-healing – essentially, using cloud and automation to prevent someone from having to get up at 1:00 am to look after a flashing red light. Through things like AWS Landing Zone, implemented over the last year or two, we’ve been able to deliver more rollouts, more quickly, more accurately, and more robustly.
FST Media: There’s been no shortage of M&A activity in the super industry of late, with HESTA itself recently announcing its merger with Mercy. What has the business done to prepare for this integration process, minimising risk and ensuring your back-end is equipped for a seamless merger?
Reilly: The decision to get great at connectivity has seen us create what is essentially a hub-and-spoke operating model.
We take that hub-and-spoke approach to our architecture, with a strong focus on decoupling the front-office, the middle-office and the back-office and connecting to all the infrastructure that can scale.
That includes having cloud and API infrastructure, and that gives us the ability to connect platforms and services without long lead times. We’re able to bring that approach to our integration with Mercy. And we’re more flexible, we have more choices and, when we make the choice, it’s easy to execute.
FST Media: HESTA very recently released its Future Planner tool, a uniquely personalised and user-friendly financial support service for members. Looking at UX in particular, what is your secret to creating accessible, consumer-friendly, and timely digital services and touchpoints?
Reilly: Two elements are crucial here: de-jargonisation and de-complexification. The best thing about Future Planner is that it’s a general advice tool that any member can understand and customise and make it useful to themselves – that’s a harder ask than it sounds because the regulatory space to deliver these things is particularly difficult.
Future Planner has been so successful that we hit our first-year targets for usage in about six weeks. If you start with the member and their needs and get the design right, and you have the infrastructure and data to deliver, these are the sorts of results you get with the proper application of digital and tech.
FST Media: On the point of regulation, under ASIC and APRA mandates, super providers have a not insignificant number of regulatory data reporting obligations to fulfil. How are you moving to drive greater efficiency and accuracy in this process?
Reilly: Regulators are certainly getting more and more detailed with their reporting, which I see as a good thing. We believe transparency in the market is important for our industry and for improving member outcomes. However, with more and more reporting, the more you can automate outputs and the more you can use system smarts to reconcile them with all other data and check that they’re right, the easier this process becomes.
Like a lot of funds, we’ve still developing our capability to automate in this area, as our initial focus has been on delivering enhanced member experiences and getting our investment team the real-time data they need to make decisions.
The benefit, however, of becoming more data-driven and having an infrastructure that includes increasingly sophisticated data warehousing and data analytics is that we’re able to produce a lot more of this reporting more quickly.
It means that where before we might spend 80 per cent of our time gathering data and 20 per cent of that figuring out what it means; we’re now flipping that around entirely.
FST Media: The tech and cyber talent shortage issue has been a bugbear of all industries of late, and no less the increasingly tech-dependent financial services.
What is HESTA doing to attract the necessary tech and cyber talent, and ensure it remains an innovative, secure, and compelling service provider?
Reilly: Three big answers come to mind in this space: purpose; leading-edge opportunities; and T-shaped talent.
To me, purpose is the main driver and differentiator that attracts good people to our business. In the case of HESTA, we provide world-class investment services for nurses, midwives, early educators, and aged and community service workers. Despite the amazing work they do, many of our members are on lower wages and wouldn’t have been able to access the benefits of a globally diversified investment portfolio or expert financial advice. The motivation to help people who help you when you’re at your most vulnerable flows right through HESTA. Supporting how we deliver outstanding investment performance is our approach to responsible investment and our advocacy on issues like climate change and gender equity that impact our members.
This gets to the second point, which is the opportunity to do good work – at HESTA, this is enormous. We still have very small teams, so you can see end-to-end across the business what needs to be done and how it links together.
The difference between us and a big four bank is that, instead of being a small cog in an enormous machine, you become an incredibly important cog in our machine or you coordinate multiple cogs of different contributors to our ecosystem.
That gets us to the third point: the opportunity for our people to develop a very T-shaped skillset. We love experts and the opportunity for people to really go deep into their area of expertise. However, we’re too small to let anyone just stay in one space – you have to wear many hats. You’ve got to go broader and develop T-shaped expertise, bringing both deep technical knowledge with that skill to collaborate across the business It’s this environment that HESTA provides that’s such a great opportunity for our people to accelerate their careers.
FST Media: Looking more broadly at wider industry trends, what one digital innovation do you feel will fundamentally transform financial services over the next decade?
Reilly: I’m a big believer in smart contracts. That’s the element of blockchain or distributed ledgers that, I think, will fundamentally transform financial services.
We operate in an incredibly intermediary-heavy industry, and smart contracts take a lot of the repeated processes away. Obviously, they require a lot of automation to make them work and a significant amount of space in the cloud to store that data that sits in the blockchain; this has slowed the process.
But as that supporting infrastructure improves, I see smart contracts fundamentally changing financial services.
FST Media: Consensus builder, bleeding-edge innovator or tried-and-true change maker. What defines your leadership style and how do you inspire your team to be better, more customer-focused innovators?
Reilly: It’s important to give your team a vision and direction but also the autonomy and space to do it their way.
There are so many different areas of expertise in technology; everyone in your team will end up approaching a problem in a different way, and you shouldn’t dictate how they approach the problem. Therefore, you need to nudge and encourage them to include areas of expertise or areas of disinterest that they might not want to include and then bring them together in an interesting and differentiating way.
Related to that, it’s important that you always hire the whole person.
There’s a temptation in the technology world to regard someone as a functional contributor. However, everyone brings all of themselves to a problem, from their identity, their gender, their background and experience, or even how much they’re inspired by social causes.
If you can allow the whole person to contribute to answering your problems in a space that is as open as your technology, then you’ll end up with better answers and a team that wants to work together to come up with better answers. ◼
Featuring at the upcoming Future of Financial Services, Melbourne 2022 conference, Stephen Reilly will unpack what means to be a truly purpose-driven organisation, connecting the exponentially expanding bits and bytes of technology capability with the core values of the organisation.