Digital Transformation in Retirement Industry: Avoiding the Dial Up Fate

Retire your Outdated Technology and Transform with Infosys

Are you one of the 77% of retirement recordkeepers still using mainframe applications as a core part of your business? If so, now may be the moment to embrace a technology modernization agenda that will unlock value and set the stage for years of growth.

While banking and financial services firms have rapidly embraced modernized technologies that improve user experiences and reduce operational costs, the retirement services industry is still rife with legacy systems that cost a lot to maintain and fail to meet modern consumer expectations. To avoid falling further behind, it’s imperative that retirement service providers adopt a digital transformation agenda now, or risk becoming akin to a dialup service in today’s modern world. Done right, a digital transformation can drive efficiencies, reduce costs, and open new business models.

How can a digital agenda help today?

Moving off legacy technology

Relying on legacy technology to run your business is like driving an old car. Yes, it can get you from point A to point B, but constant maintenance and repairs drain your time and money. In the retirement services industry, some 80% of record-keepers use custom-built systems and 77% still use mainframes. Some of these older architectures are monolithic, so to change one thing, the provider must redeploy everything – a costly and labor-intensive proposition, fraught with unnecessary risk. Firms grappling with this reality have a number of options worth considering, from smaller-scale exploration of computing alternatives like cloud hosting, to wholescale cloud-native architecture transformations. The correct option, of course, depends on the unique characteristics of each firm. This is where many firms struggle to even get started.

Deploying intelligent automation

While a full digital transformation agenda can be both daunting and far reaching, retirement services organizations may uncover relatively easy-to-capitalize on opportunities for automation through bots, voice experiences, or AI-driven analysis and tech solutions. Many firms continue to handle unnecessary calls out of contact centers, driving up costs and putting a drag on the user experience. Technology can help participants, sponsors, and advisers self-serve so they’re getting the answers they need faster, while easing the workload on the call center.

Staying ahead of regulatory changes

Secure Act 2.0 was just signed into and is the latest chapter in the ever-changing regulatory environment in financial services. Key provisions of this legislation include the expansion of Roth contributions to employer matching contributions and catch-up contributions in retirement plans, more options for multi-employer plans, and making it more attractive to offer annuities. Providers who continue to sit on outdated technology or business processes will struggle to operationalize these new rules, as Secure Act 2.0 brings about changes that will require tech development that may not be easily accommodated on legacy platforms. However, those with a more modernized technology are more likely to be prepared to drive in the high-speed lane toward implementation of these changes, and the next, and the next.

Finding the right partner

All this underscores the urgency and opportunity for retirement services providers to invest in innovation. To avoid becoming the dial-up of the retirement industry, organizations must embrace a digital transformation agenda to ensure they are providing a compelling offering that fits the market and delivers on their mission. The good news is that the industry primed for it – nearly 90% of retirement services providers we surveyed said they are positive about the industry’s ability to transform. However, transformation can be complex, and there’s no one-size-fits-all solution.

And while an end-to-end digital transformation can take several years to fully implement, a well-orchestrated strategy can deliver efficiencies within a few months. There is often low-hanging fruit that can be plucked quickly with bots, automation, and right-shoring. Making steady improvements month to month means the benefits add up quickly. Moreover, these incremental operational efficiency savings can be used to fund the next round of transformation. It’s a way to self-fund efficiencies over a multi-year period while building a well-oiled service.

An important part of this journey is having the right technology partner – one that can help identify a firm’s unique priorities and build a custom solution that delivers tangible results quickly; one that understands these technology challenges in the context of retirement services and how they fit into the broader financial services business; one that can offer custom designs and solutions for any need, whether that’s getting a data and analytics engine up and running, overhauling an entire record-keeping platform, or serving as the strategic integrator to help get the most out of one’s current platform. At Infosys, our retirement expertise extends globally from our senior leadership on down and is combined with an unparalleled breadth of technology services. Whatever your need, Infosys can be that strategic partner to help you find the right solution for your business.

The industry is moving forward at the speed of innovation. Not all providers are keeping pace. By embracing digital transformation, retirement services firms can meet this frontier of innovation head on, delivering cost savings today while unlocking new opportunities for tomorrow. And together, we can leave the notion of dial-up for nostalgic recollection of days past.

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