Perfiicent Financial Services Blog


Mobile Payments Add Fuel to the Economic Engine

Electronic Payments Fuel the Economy

As a consumer, I like electronic payments because they make my life easier and they save me an extraordinary amount of time.

As a retailer, electronic payments make it easier for people to buy from you with the touch of a button, thus growing the bottom line.

Electronic payments are designed to make the buying process easier for both buyers and sellers, but there is one big beneficiary in this equation that isn’t always mentioned: the economy.

“Electronic payments are highly efficient, offering advantages such as speed, reduced costs, and accuracy,” said Dr. Ray Perryman, President and CEO of The Perryman Group.”These enhancements have contributed significantly to the expansion of the US economy, increasing liquidity and stimulating personal consumption.”

Throughout history, humans have been seeking better and better methods of payment:

  • Bartering
  • Trading livestock
  • Shekels
  • Shells
  • Coins
  • Leather Money
  • Paper Money
  • Wampum
  • Gold
  • Gold-backed dollars
  • Credit cards
  • Dollars
  • Mobile payments

Each progression has made our lives easier and has made it easier for the exchange of goods and services.

The advent of electronic payments has dramatically increased ease, while simultaneously decreasing costs. How many times have you logged into Amazon to order one thing and ended up spending over $100 because it’s easy?

“The electronic payments system is the force behind one in five jobs because employment in the United States is 20% higher than it would be if the system had never existed,” said Dr. Perryman.

Every time that buying and selling is simplified, the opportunity exists for the economy to get a boost. So, go ahead and hand over your Starbucks app in the drive thru. The economy will thank you.



Financial services firms challenged in using data to serve customers

data science in financial services is such an important aspect of the future.“Retailers are light years ahead of Wall Street in analyzing their data to find out what their customers want,” said to Peter Giordano, managing director at Oppenheimer & Co. “Instead of analyzing customer data, the industry still relies on salespeople, relationships and actual trades to tell us what clients want.”

Big data might be a fun buzz word at the moment, but it’s an actual business imperative. The opportunity for organizations to extract value from the data they collect and store has never been greater.

If you look at Giordano’s comment above, you would think that financial services firms would easily be able to leverage the data they have on client behaviors to recommend great products to their clients at the right times. Certainly, executives in this industry are talking about it.

IBM conducted a study called “Analytics: the real world use of big data (PDF).” The study accurately identifies the big data opportunity that financial institutions face as they work toward transforming into customer-centric organizations:

“By improving their ability to anticipate changing markets conditions and customer preferences, banks and financial markets organizations can deliver new customer-centric products and services to quickly seize markets opportunities while improving customer service and loyalty.”

In this study, they found that financial services executives are acknowledging big data and talking about it, but the extent that they are currently using it to benefit their businesses varies greatly. “With no physical products to manufacture,” says the report, “data – the source of information – is one of arguably their most important assets.”

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What is a Bank Anyway?

What is a bank?













When the word “bank” is used as a noun, it is referring to either an institution that manages financial transactions or the building that houses the institution. As technology moves forward, the term bank is becoming less and less synonymous with an actual physical structure.

When I was 5 years old, my mom took me to a bank where I opened up my first bank account called The Squirrel Club. I would save up my change at home and we would drive to the bank where I would hand over my bag of hard earned cash.

The bank was a place that I went with my mother.

Now, it’s an app.

My daughter is one year older than I was when I opened my first bank account. She has been inside of an actual bank one time in her life. We had moved to a new city and needed to open an account. Other than that, she has little concept of a bank being an actual place that she can visit.

Last week, Bank of America announced a series of improvements to its mobile banking app (Android, iPhone and iPad), including fingerprint and Touch ID sign in. The improvements offer eligible customers a secure and convenient way to log into their app without the additional need of a passcode.

Banking used to mean grabbing your checkbook, your check, your car keys and your kids. It meant 30 minutes (or more) of your time. It meant a building.

In a relatively short amount of time, we have moved from driving to the bank to touching our finger to a screen. You can now do your banking with one hand while making dinner with the other.

Your bank is now an app.

Your phone is now a bank.

Any questions?

The 5 Most Significant Compliance Issues in Financial Services

ThinkAdvisor recently published a list of the top 5 compliance headaches faced by advisors and BDs.

  1. you will not get what you truly deserve (1)Mandatory Succession Planning Rules for RIAs, which could require advisors to “plan for market stress and other events that may prevent an advisor from serving its clients.” These new rules are expected by the end of 2015.
  2. Form ADV – Form ADV is the uniform form used by investment advisers to register with both the Securities and Exchange Commission (SEC) and state securities authorities. It currently requires an advisory firm “to identify its website.” The proposed amendment would require an advisor to include any social media platforms it uses. To respond appropriately to this regulation, advisors will have to take stock of their reporting systems and assess how compliance-related data is stored and received. More on this at Institutional Investor.
  3. Treasury’s AML Rules for Advisors –  This proposed rule would “require all RIAs to develop and implement a written anti-money laundering program, and as needed, report suspicious activity to FinCEN under the Bank Secrecy Act via Suspicious Activity Reports.” The financial services industry is focusing considerable time and expense on capturing data to meet regulatory requirements in reporting, risk management, and compliance. Gathering, enhancing, and reporting the required data from multiple applications to meet regulatory demands is a significant challenge.We recently addressed AML challenges in our webinar, “Leveraging Data to Meet Regulatory Requirements and Create Competitive Advantage
  4. BD Conflict of Interest Sweep – FINRA is asking BDs to answer 19 questions about their retail accounts from mid-2014 to July 2015 in writing by Sept. 18 “regarding conflicts of interest they have related to their compensation practices.” FINRA wants to know:
    1. “how compensation policies for registered reps and supervisors are reviewed and approved”
    2. “what role the board has, for both individual packages and the firm as a whole.”
    3. “how firms identify compensation-related conflicts of interest and the controls used to manage those conflicts”
  5. DOL Fiduciary Rule – The Department of Labor wants to amend the definition of “fiduciary” and this is considered one of the largest changes to happen in compliance and regulation in this industry. It’s expected to occur in May 2016.



Leverage data to improve compliance like the SEC and FINRA


The SEC’s Office of Compliance Inspections and Examinations (OCIE) is responsible for protecting retail investors and assessing market-wide risks, but now is shifting its attention also toward figuring out how to leverage data analytics to identify potential for illegal trading activities, conflicts of interest or other misconduct, according to a recent article by ThinkAdvisor, Compliance Data Analytics: Do as Regulators Say AND as They Do.

How will they do this?

They are enhancing data mining and analysis functions through the National Exam Analytics Tool (NEAT), a tool that looks at data to identify “insider trading, improper allocation of investment opportunities and other infractions.”

FINRA has also jumped on this data mining bandwagon to combat fraud. It already uses technology to monitor nearly 90% of trading in U.S. equities markets, running “complex surveillance algorithms against massive amounts of trade data to detect market manipulation, insider trading and other compliance breaches.” Read the rest of this post »

Financial services customers are now expecting compliance expertise

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A recent survey of asset managers, broker/dealers, alternative managers and wealth managers found that compliance is now a core business practice of financial services firms, yet many are not yet devoting the financial resources toward making these programs truly effective.

Firms have been facing enhanced scrutiny for years: 81% of respondents stated that they are “concerned or very concerned” about the SEC’s current practice of identifying and prosecuting individuals. But now these firms also finding that their clients have come to expect a robust compliance function: 70% of respondents have clients who included this in their due diligence.

Financial services firms who have been most effective at this are assigning the compliance duty to the committees and individuals with sole responsibility in this function. However, according to the report, two years ago, compliance officers’ paychecks were decreasing and budgets were being cut in this area. With a dedicated compliance resource or function, firms benefit from:

  • Reduced conflicts of interest
  • Enhanced regulatory compliance
  • Increased internal visibility for compliance issues

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How to drive the most value from your compliance investments (WEBINAR)

Compliance has become a strategic and executive-level imperative for financial services organizations. Capturing data to meet regulatory requirements in reporting, risk management, and compliance is timely, expensive and challenging because it requires gathering, enhancing, and reporting the required data from multiple data sources.

Thomson Reuters’ sixth annual “Cost of Compliance” study was just released this past month, and it reveals that the following are increasing this year and show no signs of stopping:

  1. shutterstock_142778230Regulatory fatigue: 70 percent of firms expect regulators to publish even more regulations in the next year. Many firms are required to address both domestic and international regulatory requirements and have trouble keeping up with the growing volume of compliance pressures and the frequency of regulatory change.
  2. Resource staffing challenges: Senior compliance professionals are difficult to find and expensive to employ.
  3. Compliance budgets 
  4. Personal liability on compliance officers: They’re even more exposed to scrutiny, accountability and face record fines for non-compliance.
  5. Senior leadership involvement: It’s also becoming a hot topic in board rooms as senior executives must step in to correct non-compliance and put together strategies and enterprise-wide systems and strategies to prevent further sanctions and meet new rules.

With the increased importance and scrutiny, it’s more important than ever that these investments pay off.  The report suggests further that senior leaders “ensure a culture of transparency, trust and adaptive-change in behaviors throughout firms” and “begin to think through how they can help their firm to ‘future proof’ changes made, and in turn get the very best value out of their investment made into systems, technology and personnel.”

How can you do this?

Our experts are positioned to assist leading financial services firms to implement strategic and structural technology and data management processes to meet the new rules and drive tangible business benefits from these projects.

Rather than structure your data project as a tactical approach to meet regulatory requirements, join our webinar with CEB TowerGroup, “Leveraging Data to Meet Regulatory Requirements and Create Competitive Advantage” to learn how your data investment can drive

  1. True cost savings,
  2. Fine avoidance,
  3. Revenue creation, and
  4. Competitive advantage.

June 16th at 1:00 ET
Learn More | Register


Firms often address these data challenges as one-off projects with the objective of complying with a single regulation rather than improving risk management overall.

Our experts understand the current regulatory, compliance and anti-money laundering issues that financial institutions are facing. We know the pros and cons of a tactical versus strategic approach to meeting regulatory requirements, specifically around data governance.

In this webinar, Perficient’s team of risk and compliance experts and CEB TowerGroup analyst Andrew Schmidt will present their experienced point of view on current regulatory compliance and anti-money laundering issues that financial institutions are facing, the pros and cons of tactical versus strategic approaches to meeting regulatory requirements, specifically around data governance, and examples of how financial services firms can leverage data governance to drive compliance as well as competitive advantage.

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SIFMA AML Highlights: Compliance, Enforcement and Preparing for Tomorrow

2015We attended SIFMA’s Anti-Money Laundering & Financial Crimes Conference last month where experts in the industry discussed legal and regulatory developments, enforcements, and industry perspectives.  There were many discussions around whistleblowers, anti-bribery & corruption, securities fraud and even marijuana related securities legislation.

Andrew J. Ceresney, Director of Enforcement at the U.S. Securities and Exchange Commission, gave a keynote address on these important elements of compliance:

  1. Promoting a culture of compliance at companies is critical; AML compliance programs must not be siloed from other aspects of compliance.
  2. Suspicious Activity Reports (SARs) are critical to what the SEC does in the Division of Enforcement.
  3. SAR filings present troubling data, but the SEC remains committed to enforcing the rules relating to the BSA, and the Division has launched a program to address fostering compliance with these rules.

Our team of experts attended to discuss how we help our clients navigate the evolving financial crime landscape by reducing cost, improving efficiency, and overcoming reputational, operational, and financial risks associated with anti-money laundering and regulatory compliance initiatives. A sound AML and KYC policy and reporting procedure must be in place to monitor and prevent fraud and money laundering. If you happen to be a target or a subject of a federal investigation, you must have crossed your t’s and dotted your i’s when it comes to the adequacy and effectiveness of SAR content and sanctions screenings.

We’re currently working with one of the world’s largest financial services institutions in an anti-money laundering (AML) initiative where we are leveraging for our client our team’s extensive banking, payment and regulatory expertise and a proven track record of industry success. For the summit, our AML and compliance experts at Perficient put together this presentation around our core capabilities as they related to AML and financial crimes. It is an 8-point approach to AML, risk and compliance for financial services firms, including: Know Your Customer, Customer Due Diligence, Anti-Bribery and Corruption, Global Payments, Sanction Programs, Cyber Security & Privacy Regulations, Anti-Money Laundering, Fraud Protection, and Regulatory Compliance.

Regulatory change, budgetary constraints and rapid changes in technology are making it hard for financial firms to transform for tomorrow while managing the challenges of today. Our guide, “Transform for Tomorrow”, can help.

Contact Us to Learn More.


Deflategate: Lessons Learned for Financial Services Firms (and the NFL)

If you had not heard about the latest NFL scandal with the New England Patriots leading up to the biggest football game of the season (the Super Bowl) surely you did during some of the coverage of the game. National news took time out of their normally depressing nightly news to cover the latest developments in Deflategate. I’ll preface this story by saying I’m a Patriots fan and I’m quite used to being heckled by my friends for liking “America’s (Most Hated) Team”. However, there are many people that do not feel the same about New England regardless of the now four Super Bowl Championships they’ve won in the past two decades, their dominance in the AFC under Bill Belichick’s leadership, and with Tom Brady, one of the greatest quarterbacks of all time, at the helm (but I digress). Deflated Football

So you may be asking me, “What’s your point to this story? How possibly can Deflategate equate to lessons learned in financial services? Let me connect a few dots.

If you’re not following the story, the NFL has spent the last several weeks conducting a very thorough investigation into the New England Patriots after the AFC Championship game where they were accused of having 11 of 12 footballs “underinflated”. Immediately news of these mysteriously deflated footballs spread like wildfire on social media and the Patriots were bombarded by media and critics asking questions and lashing out calling them cheaters. The Deflategate debate raised several questions:

“Would the controversy taint the Patriots’ dynasty?”

“Would Deflategate overshadow or discredit a Patriots Super Bowl victory?”  

“Will these allegations tarnish Tom Brady or Bill Belichick’s reputation and keep them out of the NFL Hall of Fame?”  

Message to the New England Patriots: The Importance of Managing Reputational Risk

While the investigation is still ongoing and no one has been found guilty of purposefully deflating the teams’ game balls, these allegations surrounding the Patriots have potentially tarnished their reputation with outsiders and maybe with league officials. While you could point fingers at Bob Kravitz for leaking the story and portraying the Colts as sore losers or Roger Goodell for how the investigation has been handled, ultimately this falls on the shoulders of Robert Kraft, Bill Belichick and Tom Brady.

What has been the effect on the Patriots organization as a result? The perception of the organization’s trust-worthiness and question of whether this potential rule violation compromises the integrity of the game has resulted in reputational risk. So what exactly is reputational risk and how can financial firms relate to managing risks similar to what the Patriots are facing?

Reputational risk is defined as a risk of loss resulting from damages to a firm’s reputation, in lost revenue, increasing operating, capital or regulatory costs; or destruction of shareholder value, consequent to an adverse or potentially criminal event even if the company is not found guilty.

Since, a bank’s business model is primarily built on public trust, it’s essential firms avoid risks that can undermine trust and potentially result in financial loss. Similar to the Patriots, financial firms need to have a framework in place to help identify, escalate, and resolve reputational risks that may arise from business activities of the bank.

Here are 5 keys to managing reputational risk based on the exercise the Patriots have gone through with Deflategate as the organization and certain individuals were forced to defend themselves:

  1. Oversight at the executive level. Just like it is Robert Kraft’s job to uphold the reputation of the New England Patriots, so too is it important to have strong board oversight when it comes to risk oversight. When managing a financial firm’s reputational risk, it’s important for executive management to be alert for behavior that can lead to ethical breaches or taking risks beyond their risk appetite.
  2. Effective communication and brand building. Similar to what football fans expect of the Patriots’ players on and off the field, clients expect financial institutions to live up to their brand promise. Messages the press, regulators or internal sources can deliver can have an impact on the brand. As we’ve seen in recent bribery and corruption cases, as well as the impact of major data breaches can have on a bank’s customers. Financial institutions need to have a communication plan in place and spokesperson assigned to openly communicate to customers, regulators and media during situations where a company’s market value is threatened as a result of reputational risk.
  3. A strong culture of compliance. In the case of Deflategate, if any wrongdoing on the part of the Patriots occurred (locker room attendant or Brady), could potentially tarnish the brand’s reputation. As the head coach, it’s Belichick’s duty to uphold and deliver a strong “tone at the top” and assess whether or not certain behaviors could potentially undermine the way he coaches the team and the values he stands for. The need to focus on values serves as the foundation for sustaining the reputation of your financial institution. Encouraging employees and other stakeholders to uphold and abide by these values is a critical component to managing reputational risk.
  4. A commitment to quality. During this league investigation, it was evident that the speculations had a deep and personal impact on Tom Brady. He commented during numerous interviews his feelings were hurt. Brady, and the Patriots organization, have done a lot to advance the game of football for the league, so for these rumors to surface leading up to potentially their fourth Super Bowl Championship it was likely a hard pill to swallow. From an industry perspective, there were many lessons learned from the recent financial crisis. As banks embark on their post-crisis journey rebuilding consumer trust, it is important to understand and have a commitment to quality. This can encompass day-to-day interactions with employees, partners, regulators and other stakeholders to having sound public and financial reporting.
  5. The need for internal controls and policies. Belichick has probably learned an important lesson with this whole situation. He openly said he now knows more about the rules around pre-game processes for preparing footballs and officials approving the balls (probably more than he cared to know). As Belichick discovered in their own internal investigation and research, there may be a number of variables that could have affected the PSI of the balls – weather, how they prepare the balls, testing them in a controlled environment, etc. Clearly, having a strong operational focus and control environment are vital components to managing reputational risk. For financial institutions, knowing how to respond to a crisis, who should be speaking to the media, understanding the importance of transparency with regulators, stakeholders and customers, as well as having a plan of action to help mitigate and manage reputational damage and financial loss, are all important steps to take.

Message for the NFL (and Regulators): Ensuring Compliance of Rules and Regulations 

Just before the Super Bowl on Sunday, the news broke that the NFL had neglected to record the actual PSIs of the Patriots’ game balls. What did that mean for Roger Goodell and Wells’ Deflategate investigation? It means a lot when it comes to having irrefutable evidence to convict the Patriots of purposely deflating the footballs. The balls are simply “approved” or “disapproved” before the game. In other words, the NFL is taking the referee’s word that they were set to 12.5 PSIs. It wasn’t clear if the balls were just slightly under-inflated due in part to a change in temperature (if at all) and that won’t sit well in the minds of many.

Here are 3 keys to managing reputational risk from a regulatory agency’s perspective and how financial institutions play a role in helping to shape relationships with regulators:

  1. The need for sound policies and procedures. As we learned in the financial crisis of 2007-2008, the ramifications of loose lending requirements, the ensuing credit crunch, financial bailouts and a lack of checks and balances across the industry are still being felt. Goodell has likely realized that the NFL and the competition committee will need to take a good hard look at the pregame football procedures. The impact this had on an organization illustrates the need for documented evidence and audit trails to uphold the integrity of game and for the sake of all parties involved. This can also be translated over to the goals of a financial institutions’ enterprise risk management practices, regulatory compliance processes and reporting, as well as how this is communicated to a bank’s board of directors.
  2. The need for complete transparency. One of the biggest complaints from fans and Belichick was the lack of open communication and transparency from Goodell regarding the Wells investigation. By Monday the media was drilling Belichick with questions and repeatedly he told reporters to ask the NFL because he didn’t have the answers nor did he have an explanation as to how the balls became deflated. From a governance perspective, it is important that regulators are openly communicating regulatory requirements and expectations to banks, especially when reputation damage or financial loss occurs as a result of regulatory fines.
  3. The importance of sound regulatory relationships. In the wake of the Deflategate controversy, New England Patriots owner, Robert Kraft, demanded an apology from the league should the organization be found not guilty of violating any rules. In a statement, Kraft said he was disappointed in how the matter has been handled and reported upon. They expected hard facts rather than circumstantial evidence leaked to drive the results of the investigation. The relationship between the team owners and the NFL Commissioner is critical to the league’s growth. While Roger Goodell may deserve a lot of the credit for the NFL’s growth the past few years, the relationship he has with many of the league’s owners, players association and fans can lead to reputational risk. The same can be said for maintaining a healthy relationship with regulators in the financial services industry. A top-down approach (driven from the board level) to developing and maintaining sound relationships with regulatory agencies will help build trust and confidence, and ultimately, enable you to not only meet the regulators’ perspective and mission, but help you achieve your business’s goals as well.

Banks Have a Handle on KYC, Lack KYV Guidance

While most banks have a better grip on Know Your Customer requirements than they did years ago, the challenges and risks of non-compliance continue to grow as regulators focus on sources outside the financial institutions’ walls. What is the impact of a failed risk management program as a result of actions committed by a vendor or service provider? Your financial institution may be exposed to reputational damage and multi-billion dollar fines.

During our webinar “Navigating the Financial Crimes Landscape with an Effective Vendor Management Program” last week, we explored this newer risk management focus area that is surfacing as a top strategic priority for banks in

Our speaker and regulatory compliance expert covered the complexities of the growing financial crimes landscape and potential areas of risk associated with third-party relationships. Some key takeaways for attendees included:

  • How firms are evolving their regulatory compliance programs
  • Understanding areas of vendor risk and gaps in supplier management
  • The need for governance and an enterprise approach to managing risk
  • Synergies with your existing financial crime and compliance framework
  • “Know Your Vendor” (KYV) due diligence best practices
  • Conducting comprehensive vendor assessments

Below is a copy of the Slideshare deck from the webinar. Also, join us for Part 2 in our 2015 Risk and Compliance Webinar Series next week as we explore, “How to Drive Value from Operational Risk Data”.