The trust placed in financial services organizations by clients, investors, and stakeholders is not only a reflection of reliability but also a significant driver of business success. But, as one of the most regulated and notoriously untrusted industries, the financial services industry is among the most vulnerable to being impacted by negative digital media, driving up its vulnerability to reputational risk.

In this blog, we will define reputational risk as it pertains to the financial services industry, discuss the heightened role of trust and reputation within the industry, and offer strategies for controlling the narrative of a financial services institution in the face of a crisis.

Defining Reputational Risk for Financial Services Institutions

Reputational risk occurs when an institution’s action or lack thereof gives its stakeholders or employees a negative perception.

Reputational risk is convoluted. Political climate, environmental issues, technology innovations, criminal activity, economic volatility/inflation, account diversity, and industry regulatory changes are just a few examples of factors that often spur reputational risk or crises.

Most financial services institutions have in place some sort of reputational risk framework that intends to mitigate such risks. However, these reputational risk management (RRM) frameworks are still widely underdeveloped. Rather than executing the components of these frameworks as part of a strategic, long-term goal to prevent reputational risk from heightening at all, most RRM efforts are developed mainly in the context of minimizing losses after a crisis or scandal.

Recent bank crises plead the case for risk management preparedness. For example, the disaster with Silicon Valley Bank earlier this year illustrates how big of a slippery slope a crisis can mount if not handled strategically. Silicon Valley Bank experienced a devastating liquidity crisis, yes, but equally devastating was its public relations blustering and hesitance to confront client fear in a head-on and reassuring manner.

Heightened Role of Trust and Reputation

Nearly all crises, if not handled promptly and thoroughly, can cause a company to lose the trust of its important customers, clients, and counterparties.​ Financial services institutions are especially vulnerable to these risks because of the emphasis many of their marketing and business models place on public trust and customer relationships.

A financial services institution’s most important task when responding to a crisis is to avoid a cascading loss of trust and relationships, not only with its regulators but also with its depositors, borrowers, clients, and counterparties. ​Erosion of trust and relationships can be precipitous and quickly turn an otherwise isolated incident into an existential crisis for the organization.

And responding to crises is more multifaceted than ever. Today’s customers are so inundated with media that the communications delivered through the industry’s traditionally preferred channels of press releases and newsletters tend to get lost in the shuffle. Financial services institutions must meet customers where they are, not only with standard marketing and services but with crisis management strategies, as well.

Controlling the Narrative

Perficient is providing banks and other firms a way to use modern communications and influencing methods to maintain control of their brand narrative. Our cross-functional Banking Crisis Service Offering combines financial analysis, social media monitoring, and IT changes, including artificial intelligence offerings, that:

• Automates the orchestration of data mining, reporting, and generation of actionable insights to replace labor-intensive, manual reporting and analysis using discrete data from multiple sources.
• Uses social media and analytics to assess market sentiment and generate prescriptive insights on threats to brand reputation.
• Conducts continuous assessments of key customers for deposit outflow risks and 360° customer value to direct targeted campaigns to those customers and/or specific market segments.
• Coordinates multi-channel campaigns with personalized, targeted messaging for social media influencers, analysts, key customers, and employees.
• Enables automated and on-demand reporting to provide more timely and granular information to investors, such as deposit details, customer concentrations, liquidity immediately available vs contingent liquidity sources, and loans by collateral and CRE segment to better evaluate risk and boost institution responsiveness.

Contact Perficient’s financial services team today to learn more about how we help leading financial services institutions manage their reputational risk.

Open-Source vs. Proprietary Software – What’s the Difference?

To thoroughly grasp what open source is, one should understand what it is not. Open source is not restricted by licensing agreements, and the user behind open-source software is not forbidden to change, edit, study, or redistribute manipulated versions of it.

Open-source software grants its users a degree of accessibility that is not possible through its proprietary counterpart. Open-source codes are published publicly for all who wish to study and manipulate them, whereas proprietary software keeps users more restricted, inside hard, iron-clad lines.

Richard Stallman, founder of the free Unix-style operating system GNU and leading voice in the open-source movement, asserts that there are four essential freedoms of open source:

1. The freedom to run the program as you wish, for any purpose.
2. The freedom to study how the program works and change it so it does your computing as you wish. Access to the source code is a precondition for this.
3. The freedom to redistribute copies so you can help others.
4. The freedom to distribute copies of your modified versions to others. Doing this gives the whole community a chance to benefit from your changes. Access to the source code is a precondition for this.

Open Source Is Essential for Modern Development

These freedoms, for Stallman and open-source advocates everywhere, are part of what makes open-source a huge driver of innovation. Due to its free nature, open source inevitably cultivates collaboration and prompts interaction among those in the software world. Code can be constantly shared in open-source environments. This leads to increased productivity because coders waste less time searching for solutions to problems, and it supports the diversity of skill sets.

If a glitch occurs when using proprietary software, especially in the business realm, one typically must go through many channels to get it fixed; open-source software, on the other hand, gives the user a greater sense of agency over issues and user experience. This is convenient for expert software engineers and is integral for educational purposes, as it allows students to learn through application. Any student of code, whether they be pursuing a degree in computer science, or a hobbyist trying to make their own program from scratch, can click “view source” in their web browser and dive deeply into the recipe of the site’s open-source code.

This education is also driven by the open-source community’s expectation that users will be active participants in its democracy. Open source follows the philosophy that all can contribute to the pot of knowledge, and discoveries should not be withheld under the guise of intellectual property.

Open source empowers the user over the program and encourages the utmost technological collaboration and education. It allows users the liberty to change the source, making it do what they want it to do. Rather than the user remaining stuck inside the constraints instilled by a proprietary developer, the open-source experience allows a higher potential to execute the exact desire of the user. The philosophy of open source flips the notion that one must maneuver code in the bounds of the preexisting and promotes a more dispersed power dynamic.

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Perficient partners with many open-source companies to deliver innovative, scalable solutions to our clients. Interested in learning more about how your company can reap the benefits of open source? Contact one of our strategists today.

Given that 81.5% of Americans are considered “fully banked,” many opportunities exist for financial services institutions to take advantage of the vast amount of customer data they possess. Here are three ways financial services institutions can reap the benefits of a data-driven mindset.  

1. Improved Productivity & Efficiency

Institutions that prioritize their data will realize the importance and benefits of optimizing data processes. Optimization tactics include the implementation of automation, machine learning, and artificial intelligence, with the use of sophisticated databases and cloud services. 

Developing a strategy to take advantage of these tools in a way that is tailored to an institution’s unique needs can cut costs and improve both employee and customer satisfaction. Employees can perform their jobs more effectively and use the insights made available through accessible data to better fulfill their customers’ needs. 

2. Personalization

The financial services industry is massive, which means financial services institutions collect a LOT of customer data. They can use this data to segment customers and keep a close pulse on their customers’ behavior. Doing so will offer them the insights needed to tailor services and develop highly personalized products that can be presented to the most relevant customers at the right times.   

Institutions can also compare their customer data with external data (ie. market trend data, economic data, etc.) to more accurately perform “bigger picture” predictive analysis. 

3. Risk & Fraud Prevention

Having greater data insight not only helps institutions better sell to their customers, but it enables superior customer care and protection. For instance, greater data oversight makes things like unusual account activity more apparent and promotes timely follow-up with such matters. 

Additionally, maintaining clear, comprehensive data systems promotes business ethics and adherence to laws and regulations enforced by regulatory bodies. 

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Want to learn more about financial services industry-specific considerations for improving operational efficiency through data optimization? 

Perficient is a proud sponsor of the 2023 North American Financial Information Summit, which is the largest North American data conference for banks and asset managers looking to the future of data in financial services. The one-day conference is on May 16 at etc. Venues in New York City, and it is free for those employed by financial services institutions to attend.

[Register for the North American Financial Information Summit for Free Here] 

At the conference, Eric Walk, our director of enterprise data strategy, will present with Eric Hirschhorn, BNY Mellon’s chief data officer. Their presentation is entitled, The Road to Maximizing Operational Efficiency Through Enterprise Data Management and Governance, and is set to take place at 11:30 AM ET on the Main Stage (see the full conference agenda here). 

If you are unable to attend the conference, you can always reach out to Perficient’s team of financial services industry and data experts here. 

The Landscape

According to Forbes Advisor: 2022 Digital Banking Survey, as of 2022, 78% of adults in the U.S. prefer to bank via a mobile app or website.

That’s a whole lot of consumers, all of whom come with unique expectations, needs, and data. And those consumers desire digital experiences that are personalized and meaningful.  In fact, Gartner shares that brands risk losing 38 percent of customers from poor personalization efforts.

Tectonic Shifts Demand Value-Adding, Strategic Steps

This shift in digital banking preferences confronts institutions with technology and business challenges that are more convoluted than ever, and a plethora of platform and technology advances have risen in response to consumers’ expectations for more personalized, meaningful experiences with their banking institutions. However, it’s not always obvious which of the many potential technology vendors and implementation partners will best drive an organization’s desired business goals. Not to mention, institutions face new, more sophisticated threats every day that defy the ways in which they’ve traditionally conducted business (i.e.., blockchain​, digital wallets​, money center banks​, emerging payment solutions, digital lending​, economic turmoil​, and fintech disintermediation).

Choosing the Right Strategic Partner

Banks seek partners who understand the headwinds, will empower them to navigate these challenges with confidence and enable them to create tailored experiences that engage customers in new ways. They want to have meaningful relationships with technology partners who will bring innovative ideas and proven experience to the table.

As financial services leaders research personalization technology partners, we recommend the following value-add checklist. The right partner will help you to:

• Get ahead of your competition
• Balance incumbency and innovation​
• Expand your franchise to grow and increase profitability​
• Create unique combinations of products and functionality that solve customer problems​
• Scale new product propositions quickly and efficiently​
• Avoid over-investing in capabilities that do not drive strategic value
• Improve organizational flexibility and modular approaches to service design and product development​
• Remain in compliance

Propelling Success With Omnichannel Marketing

All these efforts, to be successful, must coincide with omnichannel marketing. Marketers often turn to technology vendors to help them define robust and compliant digital marketing strategies. The right technologies can give marketers the reliable and digestible data needed to enable them to make strategic decisions and deliver streamlined, personalized communications across channels in the locations where consumers are engaging most.

Bankers that have a defined digital marketing strategy are seeing greater lead generation and client acquisition. However, according to research, sixty-five percent of advisors who generate leads through a website still find it ineffective at meeting growth targets. This indicates an opportunity for further optimization of video, digital advertising, webinars, search engine marketing, social media, and more, which reinforces the importance of having the right technology in place to drive these initiatives effectively.

How Perficient Can Help

Perficient enables banks to deliver end-to-end personalized, omnichannel marketing initiatives and products. We partner with leading technology vendors, such as Salesforce and Adobe, to match our clients with the right platforms for their unique needs.

Interested in learning more? Explore our expertise in financial services, and contact us today.

Throughout history and across cultures, women have been forbidden from opening bank accounts, owning property, and taking out loans.

Fortunately, most societies today don’t legally bar women from partaking in these tasks, but the ancient history of shutting doors on women seeking greater financial control has left an undeniable gender gap in the world of financial services and a lingering, detrimental attitude that money management is a man’s job.

As we celebrate International Women’s Day, we can recognize the financial services industry’s progress in forging more equitable attitudes and practices while still acknowledging that it still has far to go in its journey toward greater inclusivity.

Here are some ways that financial services institutions can continue to work toward bridging the gender gap:

1. Promote the advancement of women into leadership roles

According to research conducted by Mercer, about 46% of employees in the finance sector are women; however, only 15% occupy executive positions. Many factors contribute to this statistic, such as the historically male-dominated workplaces of many financial services institutions that lead to male-oriented workplace culture values. This exists in tandem with the inequality in numbers from the bottom up (i.e., 84% of finance professors are men). Another issue is the common “broken rung” women experience when trying to move up from an entry-level role to a managerial role; a woman who holds an entry-level role is far less likely than her male counterpart to be slated into a managerial position.

Successful institutions must intentionally work to mind this gap by investing in the education, training, and mentoring of women. Not only does including more women in c-suites give businesses a better public perception, but it helps deter decisions from being made under rigid “groupthink” mentalities, which in turn contributes to higher profits. According to Forrester, companies in the top quartile for gender diversity are 21% more likely to have above-average financial returns.

2. Consider women more mindfully in marketing efforts

When determining your target audience, it should no longer only be older, wealthy men. In fact, a 2021 study by BNY Mellon showed there would be an extra $3.22 trillion of assets under management from private individuals if women invested at the same rate as men. Not to mention, as of 2020, women control two-thirds of consumer spending, hold 40% of total global wealth, account for 40% of entrepreneurial activity worldwide, and are the main breadwinners in 49% of U.S. households.

Firms must more thoughtfully consider the different assets, behaviors, and financial needs of women when executing their marketing tactics. And they must do so with an intersectional approach – what may be true for one woman is not for another. One-size-fits-all marketing is no longer sufficient to remain competitive.

3. Examine how your institution’s products and services support women

Keeping in mind that women are 30% less likely to have sufficient access to funding for entrepreneurial efforts, eight times more likely than men to look after sick family members (which can prevent them from working and getting paid), and typically have 30% to 40% lower retirement account balances than men – how are your institutions’ products functioning to help women maneuver these challenges?

One example of an institution building products and services with women in mind is JPMorgan Chase. The firm developed a Curated Coaching for Entrepreneurs offering that provides free small-group coaching to female entrepreneurs as part of its Women on the Move initiative.

Goldman Sachs has a similar initiative called 10,000 Women. This program strives to provide “women entrepreneurs around the world with business and management education, mentoring and networking, and access to capital.” As part of the initiative, Goldman Sachs developed a free online business education program available to women globally. The program has 10 courses in topics including business finance, digital marketing, and innovation strategy.

Gone are the days when a company could just add some (traditionally) feminine branding and call its efforts toward gender inclusivity sufficient. Gender diversity is an essential component of delivering elevated business strategies. It helps attract and retain better talent, enhances creativity, and improves ROI.

Today’s banking customers are far more complex than they once were. The experiences made standard by revolutionary players like Amazon and Uber have contributed to a drastic shift in customer expectations, across all industries. Customers have grown accustomed to the convenience and visibility made possible using elevated technologies and data insights.

In fact, the Future Digital Finance conference in Austin, Texas, plans to discuss just this. This year, its agenda focuses on tactics to improve digital banking and create better user experiences.

Participants from leading financial institutions will discuss complex topics, including the following:

• How to maintain a human touch while also delivering cutting-edge digital experiences
• How digital banking can contribute to improved financial health and wellness
• Improving the alignment between cross-functional teams to improve end products
• Leveraging data to increase ROI
• How financial institutions can appeal to multigenerational customers
• How customer feedback fosters increased digital capabilities

Our financial services and strategy teams are excited about how a refreshed emphasis on these themes will contribute to growth and innovation for financial services institutions.

If you’re attending Future Digital Finance and would like to connect, let our director of digital strategy Kevin Colletti, know by connecting with him on LinkedIn.

2023 has commenced, and rates are climbing, inflation is bubbling, and banking customers are continuing to demand hyper-personalized products and experiences from their institutions. Here are five banking trends we’re forecasting for the new year.

1. Banks are focused on efficiency initiatives to optimize their operations and lower costs.

Three prominent areas where there is a strong desire to optimize:

1. 1. Data. Institutions are seeking to clean up their data pools to enable the cultivation of insights that lead to actionable change.
   2. Applications. Institutions are investing in more sophisticated application capabilities, and there is a new focus on the scalability of these applications. They want applications to be able to grow and progress alongside their growth and progression.
   3. User experience. As the use of technology continues to increase, it should not get more difficult to use. While institutions want to increase their technology play, they are weary of overcomplicating operations.

2. Banks have a heightened interest in customer-first initiatives regarding overdraft fees, non-sufficient funds, and loan products.

And with new legislation surrounding overdraft fees leading to a decline in service charges, banks are seeking to make up for the profit loss elsewhere. The movement has ignited a renewed sense of openness toward pursuing more creative business solutions. For example, many banks have launched small-dollar loan products that give eligible customers a few hundred dollars for a small flat fee. Such products give customers access to funds virtually instantly, and they can typically be repaid over several monthly installments.

3. As institutions rely more heavily on self-service channels to serve their customers, branch consolidation and renovation are on top of mind.

According to the Federal Deposit Insurance Corporation (FDIC), in 2000, there were 8,000 commercial banks in the United States, but as of March 2022, that number had dwindled to 4,194 operating physical bank branches. Most banks are not wanting to do away with their physical spaces altogether, as lack of physical presence has proven to contribute greatly to attrition, but they want to get more use out of their spaces. Many institutions are seeking to design more open-concept-styled branches that have greater multipurpose potential.

4. Digital sales are growing, and virtual assistants are giving human sellers a run for their money.

For instance, Bank of America’s digital sales represent half of all sales in its consumer business, and its virtual assistant, Erica, has passed a billion interactions since its introduction. Another example is Eno, Capital One’s virtual assistant. Eno uses artificial intelligence to analyze customer data and make personalized product recommendations, a highly effective sales tactic.

5. Institutions are dedicated to remediation work and more adamant than ever about risk prevention.

This renewed sense of urgency regarding remediation and risk prevention is in part due to The Consumer Financial Protection Bureau’s (CFPB) recent formation of a Repeat Offender Unit. The Repeat Offender Unit is a group within the CFPB that is dedicated to “reviewing and monitoring the activities of repeat offenders; identifying the root cause of recurring violations; pursuing and recommending solutions and remedies that hold entities accountable for failing to consistently comply with Federal consumer financial law; and, designing a model for order review and monitoring that reduces the occurrences of repeat offenders.”

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Interested in discussing how you can ensure your financial institution is up-to-date with industry trends? Contact one of our financial services experts today.

Across industries, so much of marketing effectively comes down to timing — appealing to the right person, at the right place, at the right time. Timing for marketing financial services and products as a financial advisor is especially crucial, as many financial needs follow the timeline of milestones in an individual’s life.

But financial advisors that work for larger wealth managers and are looking to be more targeted and personalized with client outreach are often burdened by the hoops put in place by corporate infrastructures that they must jump through in order to get new marketing content made or sales campaigns underway. Some advisors simply want the ability to reach out to a handful of clients about a very specific product or initiative, but corporate marketing teams often lack the bandwidth to make small advisory campaigns a priority. Efforts are often so delayed by corporate infrastructure and regulatory review that the perfect moment to target passes and opportunities go unseized.

Having seen how personalized, smaller-scale marketing tactics can be extremely effective (have you heard of #FinTok?) many firms have become increasingly more interested in giving their advisors more autonomy to market themselves.

However, wealth management firms must walk a fine line between granting their advisors more marketing freedom and ensuring all marketing and outreach meet regulatory standards.

How can firms give their advisors more liberty to be personalized and tailored in communicating with their clients and prospects while still ensuring utmost regulatory compliance?

Through Salesforce, of course!

Here is an example scenario in which a financial advisor equipped with Salesforce was able to better target a client while maintaining regulatory compliance.

Tax season was approaching, and Jane, a Financial Advisor employed by Faux Advisors Group, wanted to target clients and prospects that would benefit from using tax-aware asset allocation (moving high-yield assets to a tax-deferred or exempt account to help decrease taxable income). She had a list of eligible prospects from community events she had recently attended, as well as current clients in mind that would benefit from tax-aware asset location. The list of “perfect” targets for her campaign was just 35 individuals.

Faux Advisors Group’s marketing and sales development teams were consumed with carrying out broader-scale campaigns, so they did not have the bandwidth to help Jane. But Jane was able to execute a tax-aware asset allocation campaign all on her own because Faux Advisors Group worked with consultants to stand up Salesforce’s Financial Services Cloud and Marketing Cloud. Salesforce’s Financial Services Cloud, which is built on the Salesforce CRM platform, is intuitive and customizable, making it the go-to tool for anyone in retail banking, commercial banking, corporate and investment banking, mortgage and lending, insurance, and wealth and asset management. With Salesforce, Jane was able to easily filter client data based on specific criteria (and, Salesforce visualizes this data in a digestible way for easier comprehension) and select the individuals she wanted to target.

After pinning down whom to target, Jane used the templates stored in Salesforce that were created for this purpose by Faux Advisor Group’s legal team. Supplying their advisors with these templates ensures that all necessary regulatory language and disclosures are included in their campaign copy while also allowing advisors to tailor their messaging to serve the purposes of their campaigns.

Jane sent her compliant and timely email, informing relevant clients and prospects about how and why they could benefit from tax-aware asset allocation. Because Jane reached out to the right people at the right time, she had several clients and prospects respond to her, indicating their interest.

Empowering your financial advisors with the Salesforce CRM solution markets them as savvy and in the know and enables them to get information and services to their clients when and where they need it. All of this contributes to higher ROI and elevated customer experiences, which work in tandem to boost brand reputation and loyalty.

Interested in discussing how you can implement Salesforce for your financial advisors? Contact our Financial Services and Salesforce experts today.

Inflation reached a forty-one-year high in June, and according to the Consumer Price Index, prices have remained elevated. Many are struggling to make their dollars stretch and are looking to their financial institutions for guidance on how to better manage spending and stay afloat financially.

Financial firms cannot singlehandedly control inflation, of course, but they can position themselves as knowledgeable partners that customers can depend on to be in their corner.

Here are four ways financial institutions can better support struggling customers during periods of high inflation:

1. Harness customers’ financial transaction data to tailor personalized solutions.

Companies should invest in data governance, data analysis, and data visualization. More accessible and digestible data gives organizations the information required to build the kind of intuitive, tailored products that customers want and need. It also supplies firms with deeper insight into their customer base, enabling them to suggest and sell the right products at the right time.

For example, a customer struggling to pay off a credit card bill because of inflated prices may benefit from transferring their balance to a new credit card that is zero interest for the first twelve months. Access to data gives companies the understanding they need to match such a product to an appropriate consumer. They can use data to make decisions on the types of products they should build, as well as to figure out whom to market certain products towards.

2. Invest in marketing.

Many financial institutions offer budgeting tools and apps that can help customers better manage their spending when money is tight, but adoption lags because clients aren’t made aware of them. To get the most out of these investments, companies must prioritize publicizing their tools and products in an appealing and clear way. Investing in marketing does not only mean investing in the creation and sharing of content and collateral, however. To fully reap the benefits of marketing, employee outreach and training must also be prioritized, so employees are prepared and encouraged to teach all types of customers how to use these tools and products in a way that suits their unique needs.

3. Eliminate overdraft fees.

In a study of 5,000 banking customers worldwide conducted by Censuswide, 29% of banking customers suggested that eliminating overdraft fees would help them make it through this high inflation period. Many large banks have done away with overdraft fees (thanks to the Overdraft Protection Act of 2021) or have at least begun giving longer grace periods for payments before charging fees. Getting rid of overdraft fees and implementing more lenient overdraft policies not only helps save customers money but contributes to higher customer loyalty and improved brand reputation.

4. Implement rewards and loyalty programs.

Banks can implement cash-back programs through their products, partner with businesses and venues to provide special discounts, and offer rewards upon new account creation and card openings. They can also offer incentives to customers when they practice healthy financial behavior, like paying bills on time and in full when they are able. Rewards-based programs are a fantastic area to start for banks striving for a more personalized, customer-centric approach.

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Interested in discussing how you can better support your customers during this period of high inflation? Contact one of our financial services experts today to learn how to make the most out of your data and offer personalized solutions to your customers.

Hurricane Ian slammed into Florida’s gulf coast and Georgetown, South Carolina, on September 28, leaving countless businesses and homes — if not wholly destroyed — drowned with flood water and without power. The Insurance Information Institute, an industry-funded research group, estimates that Ian has caused at least $30 billion in damage.

Now that the storm has passed, residents are scrambling to assess damages to their homes and businesses and, if insured, begin the claims processes with their insurers. Here are some ways insurance companies can step up for everyone in their communities (those they serve and the uninsured) in the wake of natural disasters.

1. Community outreach

Insurance companies can partner with, volunteer with, and/or donate to organizations such as the American Red Cross, Convoy of Hope, Feeding America, Midwest Food Bank, and Habitat for Humanity.

2. Set up customer care sites

Carriers can set up tables at local businesses so that representatives can be more accessible to customers who may have questions or need in-person assistance with their claims processes.

3. Allow multiple channels for submitting claims

. Due to power outages, many may not have as many means of communication as they would in standard times. Insurance companies should make it as easy as possible for customers to submit claims through text messages, phone calls, emails, websites, and mobile apps. Live customer service representatives should be easy to reach through each channel, should customers have any questions during the process.

4. Practice financial flexibility

Offer extensions on payments and expedited disbursements to policyholders. Customers will remember these gestures, and an empathetic approach, or lack thereof, can make or break a customer’s experience.

This blog marks Part 1 of our Embedded Finance Blog Series and will introduce the overarching concept of embedded finance, setting us up to discuss embedded payments, embedded lending, and embedded insurance (all of which fall under the embedded finance umbrella) in future blogs.

Embedded finance is the “embedding” of payment or banking software into non-financial services companies’ operations. It enables payments, transactions, and loan processing to occur directly within a business’s platforms, as opposed to the more traditional “checkout” experience where a customer must enter their card information on a web page or app, swipe or insert a physical payment card into a card reader, or visit an outside party to get the loan or insurance they may want or require for a purchase.  

Use Cases 

Uber is one of the most prominent examples of a company reaping the benefits of the convenience posed through embedded finance experiences. Uber users input their payment information upon account creation, eliminating the need to dig through a messy purse or fumble through a wallet to find cash or a credit card to pay for a ride. Uber also uses an embedded finance function to pay its drivers – the Uber driver app has a function called Instant Pay that allows drivers to cash out up to five times a day. By “cashing out,” earnings are transferred to drivers’ linked debit cards – all of this occurs without users having to leave the Uber app.  

The popularity of embedded finance is not limited to the transportation market. Many retailers, restaurants, real estate companies, and even media platforms are seeing the value of adding embedded finance components to their platforms.  

The Technology Behind Embedded Finance  

The interconnectedness that enables embedded finance functionality is made possible through application programming interfaces (APIs). APIs allow data among disparate software systems to be transferred back and forth and used across applications.  

Financial APIs are particularly complex because of the heightened sensitivity of financial data. Financial institutions have combatted this by building dedicated endpoints for third parties (i.e., data networks and app developers) to access permissioned data. These dedicated endpoints make it so that the access given to the third parties is limited to what the customer consents to share. If a customer agrees to use an embedded finance function, they will usually have to consent for the respective company to access the necessary data to carry out functions, such as transactions and money transfers.   

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Companies can garner a competitive edge by implementing embedded finance capabilities that elevate customer experiences. Our subject matter experts have the industry and technical know-how required to implement embedded finance strategies and the technologies to support them.  

Interested in learning more? Reach out to our financial services team today to hear our point of view on embedded finance.  

Financial Advice Isn’t Just For The Wealthy.

Oftentimes, when we think of financial advisors, the upper class and those planning for retirement are first to come to mind. In fact, in a survey conducted by MagnifyMoney, 42% of respondents (notably, 48% of women and 35% of men surveyed) indicated they believe financial advisors are “only for wealthy people,” and 25% of respondents indicated they don’t see the need for a financial advisor for those younger than middle-aged.

However, those not in the wealthy or close to retirement-age categories – i.e., Gen Z-ers, millennials, and low to mid-income individuals – could greatly benefit from a financial advisor’s assistance, and financial advisors can stand to profit by diversifying their business books, as well.

Generation Z is the largest, most ethnically diverse generation in American history, comprising 27% of the U.S. population, and Millennials make up ~25% of the U.S. population. While keeping in mind that many Gen-Zers and millennials also fall into the low to mid-income professional category, this means well over half of the U.S. population is not seeking financial advice. This represents many missed opportunities for both advisors to build more business and potential clients to get the most out of their money.

Many are hesitant to seek financial advice because they don’t have enough supplementary income to invest, but it is a common misconception that all financial advisors are solely investment focused. In addition to being able to offer investment advice, a good financial advisor can offer personalized budgeting, debt management, and saving strategies to help clients achieve their financial goals.

If you fall into the majority that does not currently use a financial advisor, here are some suggestions and considerations if you choose to seek one:

1. Research your options. Your current financial institution may have tools and resources available to their account owners that are low-cost or even free and suffice your advisory needs, so it’s a good place to start your research. If their tools don’t suffice your needs, there are also many online databases and search portals (https://www.letsmakeaplan.org/, https://findanafc.org/, https://www.napfa.org/, https://www.garrettplanningnetwork.com/) that allow you to filter searches based on location and other criteria to help you find a financial advisor or counselor appropriate for your circumstances. Lastly, robo-advisors and budgeting apps can also be good options, especially for those with fewer assets, as they typically charge a smaller fee.

2. Understand your financial goals. Having a true grasp on your financial and life goals, whatever they may be (I want to pay off my credit cards and student loans so I can stop living in debt, I want to be able to pay my child’s college tuition, I want to buy a new car…) and clearly communicating these goals to an advisor helps the advisor act more intentionally when helping you come up with a financial strategy. It also helps provide insight into what kind of advisor may be best for you, as some advisors specialize in helping clients navigate certain life events and circumstances.

3. Check the advisor’s credentials. Chartered financial analysts (CFAs) and certified financial planners (CFPs) are required to act as fiduciaries, meaning they must act and advise in the best interest of their clients. If a financial advisor is a fiduciary, they will usually advertise it. You can also check the credentials of an advisor on the SEC website.

4. Understand differences between the advice offered by different types of institutions (wirehouses/banks, insurance agents, independent broker-dealers, independent registered investment advisors, etc.). Advisors in a wirehouse environment are considered employees of a firm, which sometimes limits them in the types of clients they can take on, while independent advisors have more control over who and how they advise.

5. Understand how the advisor is compensated. Some financial advisors charge a flat fee or hourly rate, while others receive a commission from investment and financial products. Fees are usually calculated based on how much money an advisor manages for a client, ranging from .25% to 1% of the client’s managed assets. For those without a lot of assets and seeking more of a general financial game plan, financial advisors paid hourly are a very practical option, but those with more dynamic financial situations may require more consistent management, where the fee structure makes more sense. It’s also important to note that some institutions, like your bank, will also offer “free” financial advice, but while offering that advice, they may offer products or offerings that are not free.

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Perficient’s financial services consulting team knows that there is no “one-size-fits-all” approach to a financial institution’s client engagement; different financial advisor models require different personalization approaches. Personalization efforts are a long-term strategy to increase loyalty and revenue and remain competitive in the market.

We have helped wealth management companies enhance front-end user experiences, improve and monitor data quality, modernize architecture and legacy platforms, broaden scale, migrate to the cloud, and more. We’ve equipped them with the tools and platforms needed to empower their financial advisors to support clients in the most personalized manner possible.

Interested in discussing how Perficient can help you achieve your personalization goals that meet today’s client expectations? Contact our financial services consulting team today.