As KiwiSaver providers navigate a maturing sector, the need to differentiate and innovate is more important than ever. But Sevaka founder, Clive Fernandes, suggests KiwiSaver firms can stand out from the pack by rethinking processes rather than product-creation in a world where investment is increasingly commodified…
Traditionally, companies approach innovation with either a product focus or a process focus. A product-focused strategy prioritises developing new or unique offerings to stand out.
In the KiwiSaver space to date this meant introducing specific funds, specialised investment themes or competitive portfolio options aimed at distinct investor groups.
However, in a highly competitive and commoditised KiwiSaver landscape, the potential to differentiate solely through products is fading. Passive investment strategies are becoming more common as providers scale, making it increasingly difficult to stand out based purely on performance or fund offerings.
A process-focused strategy, on the other hand, targets the internal operations of a company, emphasising cost-efficiency and customer experience enhancements.
For KiwiSaver providers, this involves streamlining workflows, refining customer service practices and leveraging technology to deliver a seamless and efficient experience.
Process-focused innovation allows schemes to differentiate through operational excellence and high-quality service rather than product uniqueness.
And one well-documented approach that has proven successful in other mature markets points the way for KiwiSaver providers too.
The strategy known as ‘market-driven exploitation’ sets out a framework for innovation by making targeted, incremental improvements to existing products and services based on customer demand and market needs.
Elements of market-driven exploitation
Instead of aiming for radical innovation or completely new offerings, market-driven exploitation leverages what the company already does well, refining and enhancing it in ways that add value for customers… across a few key elements as below:
- Customer-centric adjustments: By listening to customer feedback and closely watching market trends, companies can identify specific areas where small changes can make a big impact. This could mean tweaking a service to make it more user-friendly, improving response times, or introducing minor product updates that address customer needs directly;
- Incremental improvements: Rather than overhauling products or services, companies using market-driven exploitation focus on making small, manageable changes. This could be anything from refining the user interface in a mobile app to simplifying a process that customers find complex. Incremental improvements carry less risk and require fewer resources than larger-scale innovation, making them a sustainable way to stay competitive;
- Leveraging existing strengths: Companies can create more value without needing entirely new capabilities by simply improving what they already do well. For example, if a KiwiSaver provider is already known for strong customer service, they might enhance this further by implementing faster response times or adding a user-friendly knowledge base; and,
- Low-risk innovation: Since changes are gradual and based on customer needs, companies can improve offerings without over-investing or facing high failure risks often associated with larger, disruptive innovations.
Drive for change: how to make smooth transition to excellence
KiwiSaver is a typical example of a mature market where products and services are well-established and competition is high. Market-driven exploitation offers KiwiSaver providers several ways to enhance existing offerings without needing to disrupt the whole market, including:
- Enhance customer experience: Using feedback from members, KiwiSaver providers can continuously refine their services. This might involve enhancing the online user interface, simplifying withdrawal processes or making account information more accessible. These small improvements ensure the provider’s services remain relevant without requiring radical change;
- Data-driven personalisation and advice: By leveraging member data, providers can deliver tailored insights and advice that align with each individual’s investment goals and risk profile. For instance, KiwiSaver providers can send personalised updates about market changes or suggest rebalancing options as needed, making members feel supported and informed;
- Leverage existing funds with niche options: Instead of overhauling their fund offerings, providers can introduce niche fund options which cater to specific investor interests. This allows providers to expand their appeal without fundamentally changing the core product line, creating value for members with distinct preferences;
- Streamline customer service with technology: Automating high-frequency customer service interactions can greatly reduce operational costs and enhance responsiveness. By implementing AI-driven options, KiwiSaver providers can deliver 24/7 support, improving member experience while allowing customer service teams to focus on complex inquiries;
- Adopt a test-and-learn approach: Providers can trial new features or improvements based on real member feedback. For instance, they might test different methods of communication, such as personalised notifications or milestone reminders, to determine what members find most valuable; and,
- Build scalable solutions with technology: As KiwiSaver membership grows, scalable technology solutions like digital advice platforms allow providers to expand their member base without overextending resources. This maintains service quality as the business scales and ensures that costs remain manageable.
Conclusion: a future of efficiency and experience
In a mature KiwiSaver market where competing on product features alone is no longer sustainable, providers must turn their attention to improving efficiency and creating an exceptional customer experience.
Process-focused innovations, supported by cutting-edge technology, enable schemes to deliver value beyond returns, establishing an adaptable and future-ready financial product for New Zealanders.
Additionally, market-driven exploitation builds on the strengths providers already possess to bring incremental innovations that enhance member experience and operational efficiency.
At a time when investment products are increasingly standardised and/or easily replicated, KiwiSaver providers now need different ways to innovate – high-quality service and efficient operations will likely define the future stand-out winners in a crowded space.