Welcome to our new weekly Behind the Idea slot, where each Thursday a FinTech company will explain the thinking behind their innovation.
The auto-enrolment pension provider Smart Pension, today announced a new partnership with London-based FinTech DueDil, enabling Smart to deliver its market-leading platform as a service model. The company is known for playing its part in transforming the pension sector through cloud-based technology. It has allowed Smart to quickly adapt to suit the government’s response to COVID-19 including employer support for ongoing contributions.
Darren Philp is the Director of Policy and Communications at Smart Pension and Sam Barton is the Chief Technology Officer. The pair have found themselves adapting recently to business life with weekly virtual town halls, staff yoga and mindfulness sessions, alongside virtual drop-in sessions for people who might be living alone, need mentorship, or are self-isolating.
What has been the Smart Pension response to financial technology innovations?
As a relatively new player, we have been at the forefront of using technology to power our workplace pension proposition. This is a sector that has traditionally been stuck in the past and has shied away from technological innovation, so using technology to help make providing and administering pensions easier for employers and individuals has been the name of the game.
As we’re using modern technology and designed our platform from the ground up, we are not reliant on synching up different business models to suit regional hubs, instead, we offer a common solution across all of the UK.
How has this changed over the past few years?
As a company, we were founded in 2014 and our approach has continually been to use technology to solve everyday administration problems. This means that we are constantly improving our technology but also our ways of working. Another way of answering this is to reference our engineering, product UX and project team who collectively work together to introduce change to the Smart platform and as a result, we deploy new features between 25 and 30 times to production a day. This may seem trivial in the world of contemporary fintech businesses, but technological innovation in pensions has been sparse and building from a clean sheet of paper means we can automate many standard tasks to remove burdens from employers in running their pension scheme.
How have you created a culture of change inside the company?
As a relatively new company (albeit one that is expanding at a pace) we are a tight-knit community and our agile ways of working mean that we are in a great position to solve problems and quickly react to market change in an agile way. We place a lot of emphasis on staff development and collaboration and there is always something fun going on at Smart.
What FinTech ideas have been implemented?
When Smart was founded we started from a position of best practice and using technology to solve problems – just like any fintech business would do. This was necessary as the Government-led initiative behind automatic enrolment would create a high volume of demand on and any solution we built. So we started from scratch and built an API lead, cloud-based solution that was designed to accommodate an unknown volume of new customers each day (sometimes 250 business each day). We were not aware of how distributive this approach would ultimately be to the industry as it is simply a practical approach to the problem. Today, all our customers interact with a real-time platform that automatically reconciles and invests their money. This offers a great customer experience whilst at the same time reducing the operational burden and manual processes that are typically associated with this industry.
What benefits have you seen from FinTech adoption?
Every employer in the UK legally needs to provide a pension to their staff, so the main benefits have been making it quick and easy for tens of thousands of small companies to become compliant with the law, but crucially to easily manage their pension. Remember, a majority of our customers are not experts at pensions, but legally have to become fluent. By offering a simple, self-serve platform we can remove the compliance headache and let business owners quickly get the job done and back to running their business. We continue to add enhancements to our platform to make it even easier and do loads of testing to identify and fix any pinch points. Longer-term, we want to use technology to help people take ownership of their pensions and achieve a decent retirement for themselves.
Do you see any other industry challenges on the horizon?
As both customer needs and government-led initiatives increase the demand for the industry to evolve it will be a big challenge for many incumbents. Auto-enrolment has seen 10 million more people suddenly have a pension raising the question, how do they access their pot like they can with their mobile banking app? Similarly, the DWP wants to introduce a pension dashboard, a single view of all your pensions from each provider. This requires standardisation of systems and data, the kind of initiative only seen in Open Banking. Both of these challenges have contributed to the term ‘Digital Transformation’, a cultural and technological change for an organisation. Starting from a digital-first position means we can by-pass the transformation phase and approach the challenge with an existing API and set of accessible data meaning we are ready to address the next challenge on the horizon.
Can these challenges be aided by FinTech?
Most definitely. In many ways that is why we as a FinTech exist, to challenge the norm. We want to bring pensions, saving, and technology together to make it easy for people to save for the longer term and manage their finances. Much has been made of the pensions industries equivalent to the open banking, the pensions dashboard. But the big hill to climb here is the outdated way in which pensions are administered on outdated platforms and in many cases with a paper-based approach to data. The use of contemporary technology to address these challenges is vital to an efficient, cost-effective response that is in line with what customers expect in a digital, online experience today.
Pensions is an industry that has lagged behind others when it comes to innovation and the effective use of technology. However, that is changing as people rightly demand more for their pension providers and want to take control of their money. Just as we have seen with Open Banking, the pensions industry is starting a period of massive change and it will be those that embrace the potential of technology that will power the pensions of the future.