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Industry Evolution Insights SMSF Disruption

SMSF Disruption –Regulatory change and technological evolution

Presented by: Neil Sparks

National Manager SMSF, BT Financial Group

Disruption, change and the

super industry

Rapid growth,disruption and continuous change0

1

Technologicalchange

03

Demographicchanges

04

Pricepressure

05

Rethink our business strategies

06

Regularlegislative change

02

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Superannuation members are considering an SMSF

Reductionin new SMSF establishments

Under50 Years old

20

%20

%48

%

Source: Investment Trends 2016 SMSF Investor Report and ATO ‘2017 Quarterly Establishments Demographic’ table (link)

2013

RG243SMSF Auditor registration

2016

RG104 Licensing

2017

Introduction of Transfer Balance Accounts

2018

EventBased reporting -TBAR/TBEN/TSB

Who’s next? What’s next?

Regulatory oversight

“We always overestimate the change that will occurin the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction”.

Bill Gates, The Road Ahead

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SOURCE: https://home.kpmg.com/content/dam/kpmg/au/pdf/2017/australian-fintech-landscape.pdf

Fintech

BlockchainDistributed Ledger Technology

SOURCE: http://plugandplaytechcenter.com/2018/01/05/fintech-blockchain-trends-2018/

11%

11%

9%36%

6%

4%

4%7%

3%12%

1%6%

Today

In 3 years

BlockchainInvestment by industry

Which technologies areyou making substantial investments in?

Hospitality & Leisure

Financial Services

Automotive

Technology,Media & Telecomm

Healthcare

Retail & Consumer

Blockchain Process

01 02 03 04

User requests a transaction

Request is transferred to peer-to-peer “nodes”

Nodes verify the transaction with a computer algorithm

The winning node groups transactions

Transaction is completed and ledger is updated

This is added to the blockchain, the register of all previous verified blocks

This forms a newtime stamped block of transactions

07 06 05

SOURCE: http://plugandplaytechcenter.com/2018/01/05/fintech-blockchain-trends-2018/

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Local Blockchain Pioneers

Australian Securities Exchange

(ASX)

GOV PASS

DIGITAL ID

Australian Government Digital Transformation

Agency

Australia Post

CHESS replacement

2018

Partnered with DIGITAL ASSETS

Why Blockchain?

Improved identity managementand data security

Accurate, reduced operational costs

Faster, settlement and transaction reporting

Lower Cost- fewer intermediaries

Consolidation

Improvedservice

Decentralised

Greaterinvestment choicei.e. cryptocurrency, direct assets etc.

MORE

New Productopportunities

Artificial Intelligence – AI

Artificial intelligence , machine learning and deep learning have created ever larger disruptions.

1950’s 1960’s 1970’s 1980’s 1990’s 2000’s 2010’s

DEEP LEARNING

Deep learning breakthroughs drive

AI boom

MACHINE LEARNING

Machine learningbegins to flourish

ARTIFICIAL INTELLIGENCE

Early artificial intelligencestirs excitement

SOURCE: https://blogs.nvidia.com/blog/2016/07/29/whats-difference-artificial-intelligence-machine-learning-deep-learning-ai/

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Artificial Intelligence – AI

Machine based learningAnalysing your spending data lookingfor patterns and actionable insights

Behavioral EconomicsLearns from your habits and makes recommendations to change behaviour

Conversation EngineTo understand context of enquiryand respond appropriately

Algorithm Investing

Product DevelopmentPersonal budgeting

Machine Learning

Deep Learning

Natural Language Processing (NLP)

Think, Alexa, Siri,or Google home

Deliver improved client outcomes and new product development

AI andProductivity

Possible benefits to business, complianceand customer

Not a threat (e.g. Centaur)

“Human and AI, working as a team”

AI/ML

Employees adding more value leveraging AI:

Automation of processes, that older tech can’t accomplish.

Identifying trends in historical data

AI giving insight to improve human decision making (strategy)

ROI – more than financial, think increased customer and staff satisfaction.

PaperlessAI supportedcompliance

Data driven insights,

Client outcome focused

Automatetransactionreconciliation

24x7x365

SMSF management

“Your Fund, Your Way”

Aggregate data

Enhanced investment management

Revolutionize SMSF

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“In the same way that e-mail did much more than replace letters sent in stamped envelopes, the internet of value would be a platform for myriad as-yet-unthought-of innovations. Just as nobody forecast social networks, blogging or Netflix in the 1990s, the absence for now of any tangible applications other than bitcoin for the blockchain merely points to humankind’s deficient imagination”

SOURCE: https://www.economist.com/news/special-report/21650295-or-it-next-big-thing

Disclaimer

BT Portfolio Services Ltd ABN 73 095 055 208 AFSL 233715 (BTPS) operates Panorama Investments. Westpac Financial Services Ltd ABN 20 000 241 127 AFSL 233716 (WFSL) is the responsible entity and issuer of interests in BT Managed Portfolios. Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714 (Westpac) is the issuer of the BT Cash Management Account (BT CMA). Together, these products are referred to as the Panorama products. A Product Disclosure Statement or other disclosure document (PDS) for the Panorama products can be obtained by contacting BT on 1300 784 207 or by visiting www.btpanorama.com.au. You should obtain and consider the relevant PDS before deciding whether to acquire, continue to hold or dispose of interests in the Panorama products. In addition, BTPS is the provider of the Panorama SMSF Establishment Service and the Panorama SMSF Administration Service. The Guide and Terms and Conditions for these services are available by contacting BTPS.

BTPS and WFSL are subsidiaries of Westpac. Apart from any interest investors may have in Westpac term deposits, Westpac securities or the BT CMA acquired through the Panorama products, an investment in, or acquired using, the Panorama products is not an investment in, deposit with or any other liability of Westpac or any other company in the Westpac Group. These investments are subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested. Westpac and its related entities do not stand behind or otherwise guarantee the capital value or investment performance of any investments in, or acquired through, the Panorama products.

The information provided is general in nature only and does not take into account your personal objectives, financial situation or needs, so its appropriateness will need to be considered having regard to your personal objectives, financial situation and needs.

How can Big Data, Artificial Intelligence and Machine Learning be applied to SMSFs

Ron Lesh

Managing Director, BGL Corporate Solutions Pty Ltd

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This session…

Big Data

Artificial Intelligence

Machine Learning

What is Big Data ?

“Extremely large data sets that may be analysed computationally to reveal patterns, trends, and associations, especially relating to human behaviour and interactions”

Much IT investment is going towards managing and maintaining big data

ie: BGL holds over 250 million transactions in the cloud, what can we do with them ?

What is SMSF Big Data ?

Transactions

Members

demographics, income, account balances, insurance

Investments

Processing

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What do we know ?

Accumulation v’s Pension accounts

Accumulation / Pensions status ie minimum / maximum met ?

Contribution caps

Member balancesie < $1m, $1m -> $1.6m, over $1.6m?

Insurance

Processing status

What do we know ?

Investments

Investment balances

Insurance status

Lodgement status

How can we use what we know ?

The BIG question…

You have these incredible databases but what are you doing with them ?

Its should be all about client service…

How can you use this data to better service your SMSF clients ?

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What is Artificial Intelligence ?

“Artificial Intelligence is the science of engineering and making intelligent machines”

John McCarthy, Computer Scientist, the Father of AI, 1956

What is Artificial Intelligence ?

A video from Peter Diamandis

Founder X Prize, Executive Chairman Singularity University, Author

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Artificial Intelligence and SMSFs

But maybe think about it like this…

AI is: bringing a lot of stuff we already know together, to predict the future…

Machine earning and SMSFs

Machine Learning is a subset of AI

“Machine Learning is a field of study that gives computers the ability to learn without being explicitly programmed“

Arthur Samuel, Computer Scientist, first coined the term Machine Learning in 1959

What can Artificial Intelligence and Machine Learning do for SMSFs ?

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What can Artificial Intelligence and Machine Learning do for SMSFs ?

Zero touch transaction matching

Predictive complianceSISS/Tax Act / Companies Act ?

Asset return / assessment / prediction

Automated SOAs

Automated / Exception Auditing

Thank you

What does disruption mean to you - technology or client needs?

Andrew Stewart

Head of Advised Distribution – CommSec Adviser Services

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The information in this presentation has been prepared without taking account of your objectives, financial situation or needs. Because of this, you should consider its appropriateness, having regard to your objectives, financial situation and needs and, if necessary, seek appropriate professional advice. If a Product Disclosure Statement is available in relation to a particular financial product, you should obtain and consider that Product Disclosure Statement before making any decisions about whether to acquire the financial product. Any securities or prices used in the examples in this presentation are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Australian Investment Exchange Limited (AUSIEX) and its related entities do not accept any liability for losses relating to this material. This material does not represent advice and must not be relied upon as advice.

This presentation is directed and available to and for the benefit of Australian residents only. CommSec Adviser Services (CAS) is a brand of Commonwealth Bank of Australia (CBA or the Bank) ABN 48 123 123 124 AFSL and Australian credit licence 234945. Share trading is a service provided by Australian Investment Exchange Ltd (AUSIEX or Participant) ABN 71 076 515 930 AFSL 241400, a participant of the ASX Group and Chi-X Australia. Portfolio Service is offered by AUSIEX (under the CAS brand) and Colonial First State Custom Solutions (CFSCS), which is the registered business name of Avanteos Investments Limited (AIL) ABN 20 096 259 979 AFSL 245531. AUSIEX and AIL are wholly owned but non-guaranteed subsidiaries of the of the Bank. The Accelerator Cash Account is a deposit product issued by CBA and administered by AUSIEX under the CAS brand. The Managed Investments Account is an investor directed portfolio service operated by CFSCS. Lending products under the CAS brand are provided by CBA. Investment loans are administered by its wholly owned but non-guaranteed subsidiary Commonwealth Securities Limited (CommSec) ABN 60 067 254 399 AFSL 238814, a participant of the ASX Group and Chi-X Australia.

Disclaimer

What is Disruption?

How do we think of disruption?

New entrants to financial advice

Consolidation and increased regulatory focus on vertically integratedmodels

Platform substitutes,low cost and alternative options

International MultinationalCorporations and non-traditional new entrants

Non-traditional new entrants to retail direct insurance products

Shifts to ETFs, passive funds, ISF internalisation and online automation

Retention through digitalguidance and advice/retirement solutions ISF Govt.

lobbying for default awards and pensions

Enhanced digital SMSF offerings

FundsInsurancePlatformsAdvice

Independent Financial

Adviser (IFA)

New platform providers to SMB Employers for HR / Payroll & accelerated by Single Touch Payroll

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Another way of thinking about disruption?

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Disruption to consider in your business?

1. Sources of advice – collaboration important?

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2. What services are you providing your clients?

3. How are you communicating with your clients?

4. What opportunities exist to better meet the needs of your SMSF clients?

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Thank you

Visit us at stand 52.

Improving Service and Quality

Through AI

Kurt GroeneveldChief Technology Officer

Artificial Intelligence

“I have exposure to the very cutting edge AI,

and I think people should be really concerned

about it …” - Elon Musk

“I keep sounding the alarm

bell, but until people see

robots going down the street

killing people, they don't

know how to react”

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Artificial Intelligence

“We cannot predict what we might achieve when human intelligence is magnified by the tools that AI may provide,

but the eradication of war, disease and poverty would be high on anyone’s list. Success in creating AI would be

the biggest event in human history.…”

- Dr Stephen Hawking PhD

“… Unfortunately it might also

be the last.”

Artificial Intelligence

AI Market will be $5.05 billion

by 2020, at a CAGR of 53.65%

- IBM

Artificial Intelligence

• Natural language

• insights into volumes of data,

• tag and classify visual content

• understand tones and emotions

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Artificial Intelligence

• Big Data

• Machine Learning

• Neural Networks

• Computer Vision

• Robotics

• Expert Systems

• Speech Processing

• Natural Language Processing

What is AI?

Artificial Intelligence

Artificial Intelligence

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Artificial Intelligence

Artificial Intelligence

Artificial Intelligence

“It's about augmenting what you and I do so

we can do what we're supposed to, our best.”

- Ginni Rometty, IBM CEO

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Disclaimer

The content of this presentation has been prepared to provide you with general information

only. It is not intended to take the place of professional advice and you should not take action

on specific issues in reliance on this information. In preparing this information, we did not

take into account the investment objectives, financial situation or particular needs of any

particular person. Before making an investment decision, you need to consider (with or

without the assistance of an adviser) whether this information is appropriate to your needs,

objectives and circumstances. You should obtain a copy of the relevant Product Disclosure

Statement (PDS) before making a decision to invest in any financial product.

Any advice in this presentation is provided by SMSF Administration Solutions Pty Ltd,

ACN 097 695 988, AFSL No. 291195 which is part of the AMP group of companies.

Thank you!

Ripping apart the traditional accounting process

Olivia Long

Chief Executive Officer, SuperGuardian

Overview

Working with SMSFs

Working with volume

Working with technology

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Working with SMSFs

What if, by reconciling 200 investments at a business level (through Class) you could complete 80% of the annual work required for 2,000 funds?

Working with volume

- Richness of data- Small changes to business capabilities can have a great impact- Value can be created through automation at a business level - Value creation can be delineated to functions, rather than

funds, to create significant efficiencies- The greater the number of funds, the smaller the ratio of

unique investments across the entire business

Working with technology

- Scalability with business level processing- Data feeds- Bulk reporting and report packs- Consoles to support business level processes- TBAR lodgement- Custom reporting- Partner integration

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What now?

- Reorganise the way information is processed and value is created in your organisation

- Exploit business level processing, custom reports and TBAR functions

- Look beyond compliance and use your wealth of data to serve clients in ways they will actually value

- Continue to invest in new capabilities, not old business models

- Connect

The information in this presentation is factual information, and not financial advice. The information is objectively ascertainable information, and is not tailored to your personal circumstances. You should consider obtaining financial advice before making a decision in relation to this information.