The objective of this paper is to explore how best, if at all, building societies should enter the superannuation industry.
Starting with building societies traditional role in the Australian financial system, the question of declining market share is addressed. Some of the factors influencing this decline are examined, and the question is asked whether superannuation is one area that might profitably be persued.
It is necessary to first have a good grasp of the industry and its component parts.
The paper sketches the history of superannuation in Australia, and examines in some depth the influence of the taxation laws. There follows a discussion of the various forms of superannuation, the role of the major participants and the products they market. There is a particular focus on the banks and their entry as late starters into the field. There is also a discussion of investment management as one of the high profile areas of the market.
Following this there is a discussion of some of the issues presently facing the industry and which might impact on a decision to enter it.
A market analysis is then performed, detailing the size and make-up of the various market segments and their potential for growth.
The final stage of this background work is a review of the academic literature on services marketing, focussing particularly on financial products.
The preceding work is drawn together with an analysis of the various options open to building societies wishing to enter the industry, together with some of the issues that would need to be faced.
The paper concludes with a recommendation that not only should building societies enter the industry, but that they should do so as principals. This is in contrast to the agency arrangements method, traditionally adopted by building societies when entering a new field.