Financial institutions across the spectrum, whether it be banks, credit unions, or wealth management firms, are beginning to face expense management challenges that threatens their survival.  

Various headlines paint a sobering picture: 

• “Moody’s Cut’s Ratings of 10 US banks and puts some big names on downgrade watch“ 
• “ Credit card delinquencies surged in 2023, indicating ‘financial stress’…“ 
• “ High interest rates are getting more challenging for even the biggest banks “ 

In this environment of uncertainty and volatility, the financial services industry is face to face with a host of pressing questions like: 

• How can we boost profit margins amidst shrinking returns and rising costs? 
• What inefficiencies lurk within our operations, hindering our ability to adapt and thrive? 
• In our pursuit of cost-cutting measures, how do we strike a balance between efficiency gains and maintaining exceptional customer experience? 
• Are our automation solutions truly optimized for efficiency and scalability, or are they adding complexity to our processes? 
• Above all, how do we ensure a seamless and satisfying customer experience while implementing cost-saving initiatives? 

As institutions begin to grapple with these questions, the imperative to tighten belts and optimize operations becomes increasingly urgent. With labor costs skyrocketing, profits dwindling, and losses mounting, the need for transformative solutions becomes undeniable. 

Meeting the Imperative for Change 

At Perficient, we stand at the forefront of innovation, offering bespoke expense management solutions tailored to fit the unique needs of any financial institution.  

Our approach is grounded in the belief that significant efficiency gains can be achieved through process automation and digitization, particularly in the middle- and back– offices where manual processes often hinder operational agility and where banks often under-invest. 

Uncovering Inefficiencies: A Comprehensive Approach 

Your journey toward operational excellence begins with a comprehensive business assessment, delving deep into the intricacies of the institution’s operations to unearth hidden inefficiencies and pinpoint opportunities for improvement. Through this rigorous process, we prioritize initiatives that promise the greatest return on investment, ensuring that every effort is strategically aligned with the institution’s overarching goals. 

Streamlining Processes: Optimizing Operations for Success 

Central to our approach is the optimization of headcount through the streamlining of labor-intensive tasks and the elimination of redundant steps. By harnessing the power of automation technologies and advanced analytics, we empower businesses to reallocate resources towards high-value activities, driving efficiency gains and cost savings across the board. 

Harnessing Technology: Accelerating Transformation 

Leveraging state-of-the-art automated process analysis tools and AI, we accelerate time-to-value and streamline operational reporting, enabling financial institutions to make data-driven decisions with confidence. Our solutions not only enhance operations but also elevate the overall customer experience, ensuring that cost-saving measures do not come at the expense of client satisfaction. 

Transforming Operations, One Institution at a Time 

Our track record speaks volumes, with numerous clients, from global banks to community credit unions, voicing their success 

Whether it’s revolutionizing workflows or optimizing processes, our expense management solutions have consistently delivered tangible results, driving efficiency, profitability, and customer satisfaction.  We have saved our clients millions of dollars through smart automation, supply chain gap elimination, system consolidation, and reduced manual work. 

Enhancing Workflows through a Strategic Partnership 

Our client needed to improve the efficiency of its workflow as it relied on multiple, manual back-end systems. We knew it needed a modern, enterprise-wide automation solution. Our team of experts leveraged an IBM tool to update and migrate legacy workflows to a unified enterprise workflow automation platform that supported 15 diverse business processes at once.   

As a result of our work, the client’s accounts per employee grew by 5% annually, U.S.-based institutional and retail account openings were expedited, and processing time was reduced by 50% and 30%.  Their customers experienced shorter wait times and it benefited from enhanced processes. 

Automation Strategies Lead to a Market Advantage 

A client came to us wanting to infuse automation and AI into its back-office operations to reduce costs and manual effort across the business.  We recognized the actions that needed to take place so that this effort could be accelerated.  Our team developed a roadmap and automation center of excellence and built a solution using RPA, NLP, ML, and BPM to drive end-to-end back-office processing automation. 

Through our partnership, the client experienced a 92% reduction in loan processing time, saving customers headaches and giving it a strategic market advantage it didn’t have previously. 

Charting a Course Toward a Brighter Future 

As the financial industry continues to evolve, the need for innovative solutions has never been greater. At Perficient, we are committed to helping financial institutions thrive in the face of adversity, empowering them to navigate the challenges of today and build a brighter future for tomorrow. 

Contact Perficient today to embark on a journey toward greater efficiency, profitability, and customer satisfaction.  

Together, let’s harness the transformative power of optimizing processes and leaning out expenses to ensure that your company delivers the customer experience and profit margins needed in both good times and challenging ones. 

The Consumer Financial Protection Bureau (CFPB) has narrowed its focus on what it terms “junk fees” targeting financial industry practices.

Understanding the CFPB’s recurrent theme and deciphering its message from the recent press releases provides insights into potential enforcement actions over the next 12-24 months and how banks can reassess their current fee structures.

Failure to understand the prevailing wind risks running counter to the CFPB’s current focus.

The CFPB’s Problem with Junk Fees

Recently, a regional bank headquartered in Richmond, VA faced a hefty $6.2 million fine for alleged illegal overdraft fee harvesting. CFPB Director Rohit Chopra stated, “Americans are fed up with junk fee scams and the CFPB will continue its work to ensure families are treated fairly”.

The term “junk fee” has appeared in no fewer than 10 press releases in 2023 alone, signaling a broader concern for the CFPB.

In January 2022, the CFPB launched a press release soliciting public feedback on four specific concerns:

• Fees for things people believed were covered by the baseline price.
• Unexpected fees for a product or service.
• Fees that seemed too high for the purported service.
• Fees where it was unclear why they were charged.

Starting in June 2023, the CFPB released several other press releases further criticizing practices they deemed inappropriate. These culminated in an advisory opinion paper where the CFPB illuminated the fact that “…many large banks erect obstacle courses and impose junk fees to answer basic questions.”
A cursory reading elicits the obvious question: Is this a genuine attempt to protect consumers, or is it a strategic move to redefine industry norms?

Guidance to Halt Large Banks

The CFPB’s issuance of guidance to curb large banks from charging illegal junk fees for basic customer service points to a regulatory stance that goes beyond isolated incidents. The choice of words implies a proactive measure, suggesting that the CFPB is steering the industry away from what it considers questionable practices.

Examining Illegal Junk Fees Across Industries

In their October 11th press release, the CFPB shared that examinations have resulted in the return of $140 million to consumers affected by illegal junk fees in banking, auto loans, and remittances. This significant sum underscores that junk fees are not isolated incidents but a systemic concern that requires industry-wide attention.

Questionable Practices – Looking Ahead

The regulatory spotlight has uncovered potentially illegal junk fees in various financial products. While the CFPB positions itself as a consumer protector, the exposed practices raise questions about whether the financial industry is genuinely plagued by issues or if it’s becoming a target for regulatory reform from a partisan agency, not under congressional oversight.

Regardless of the motivation, the CFPB’s recent actions serve as a warning to banks to proactively scrutinize their fee structures.

Junk fees are a central theme, and financial institutions should note it as a leading indicator of regulatory scrutiny. Now is the time for banks to evaluate and eliminate fees that may attract the CFPB’s attention in the evolving financial landscape.

Perficient’s Deep Expertise Can Help

In navigating these uncharted waters, Perficient has experts with decades of experience working for the most successful and compliant banks in the world. We specialize in not only thought leadership but also practical experience helping regional banks and credit unions seeking to understand and rectify potential “junk fees” in their fee structures. With profound expertise in the financial services sector, we can assist banks in identifying and addressing these areas of concern, ensuring compliance, and bolstering customer trust.

Learn More: Perficient’s Financial Services Solutions

As the CFPB intensifies its focus on “junk fees,” the financial industry must adapt and respond. This isn’t just a call for compliance; it’s an opportunity for banks to redefine their practices, fostering transparency and fairness.

Collaborating with Perficient enables financial institutions to take a proactive approach to tackling the issue of “junk fees” and other regulatory challenges. This partnership not only helps avoid regulatory scrutiny but also positions them as advocates for customer well-being in the continually changing financial landscape.

Connect with Perficient today to elevate your business practices.

In recent years, the Consumer Financial Protection Bureau (CFPB) has significantly broadened its oversight, extending beyond major banks to address concerns in various industries, such as payday loan providers, credit reporting agencies, and most recently, the medical debt collection sector.

The CFPB’s Dynamic Approach

The CFPB’s modus operandi often involves proactively addressing potential issues through press releases ahead of engaging in enforcement actions. Often when the CFPB issues press releases, the agency has already issued non-public information requests or consent orders in the space. Given that they don’t have enough staff to engage at all eligible institutions, their unique approach serves as a proverbial “shot over the bow” for the industries they are investigating. This prompts the companies involved in that industry to reevaluate and rectify their practices. If the CFPB sees a larger institution engaging in the practice, it often exemplifies them. The objective is clear: encouraging compliance with consumer protection regulations they deem important before punitive measures are implemented broadly.

The Impact on the Medical Collections Sphere

The recent CFPB press release is poised to send ripples throughout the entire medical collections industry. Whether managing medical debt collections in-house or outsourcing to third-party agencies, companies need to exercise vigilance. This focused scrutiny serves as a wake-up call, signaling that industry practices are under intense scrutiny.

Why Companies Need to Review Their Practices

• Legal Compliance: The rapidly evolving landscape of consumer protection laws demands constant vigilance. Understanding current regulations is crucial to avoid legal repercussions and enforcement actions.
• Reputation Management: With increased public awareness and scrutiny, maintaining a positive reputation is crucial. Unfair or aggressive debt collection practices can lead to severe reputational damage, impacting trust and customer relationships.
• Operational Efficiency: An internal review of debt collection practices can uncover significant opportunities for operational improvements. Like “robo-signing” created an enormous regulatory headache for banks in the last decade, similar practices or “robo-billing” and lack of debt validation plague the medical collections space. The CFPB’s article demonstrates that they have observed, designed, and executed operational practices that led to debts being collected that had already been paid, were not owed by the patient or family, were for inaccurate amounts and collections of medical bills began long after services were provided.

Success In Action

Use Case: Regulatory Engagement Success

Perficient staff recently delivered a presentation to various federal bank regulators, leading to a substantial reduction of over 80% in margin requirements for the client. This regulatory success allowed the client to take on more business, thanks to significantly lowered mandatory margin requirements.

Use Case: Optimized Processing Time

In a recent collections engagement, Perficient successfully implemented a Full-Time Equivalent (FTE) reduction initiative, identifying opportunities, streamlining processes, enhancing compliance, and mitigating risks across various business units. These efforts resulted in a significant achievement of $50 million in savings through the reduction of average processing time.

Related: Healthcare Consulting Services

The Perficient Advantage

In the evolving regulatory landscape, companies in the medical collections industry require a steady hand to navigate complexities. At Perficient, we offer a wealth of experience in both first- and third-party collections from complex banks and credit unions globally. Our team of financial services experts positions us as a trusted partner to assist firms in ensuring compliance while effectively managing delinquency and losses.

While supporting the need for compliance, it’s essential to acknowledge the potential challenges of the CFPB’s approach. The regulatory landscape is nuanced, and companies must adapt strategically. We understand the industry’s concerns and aims to provide guidance that ensures compliance while minimizing disruptions.

As the CFPB emphasizes consumer protection in medical debt collection, companies in the industry must take proactive measures. Contact us today to find out how Perficient can provide the necessary guidance and edge to your business practices!

In March 2020, the student loan forgiveness program was initiated, providing relief to many borrowers. However, in October 2023, loan payments resumed, presenting new financial challenges. While the temporary pause was beneficial, it left numerous individuals still grappling with the task of managing their additional financial obligations. Borrowers now confront the daunting prospect of resuming loan payments alongside recurring bills and debts.

Rising Credit Card Debt and Interest Rate Impact

Since early 2022, the Federal Reserve has raised interest rates 11 times, impacting both student loans and credit cards. Credit card interest rates have hit a record-high average of 22%. In the second quarter of 2023, the average credit card balance soared to a 15-year peak. The cessation of COVID-19 stimulus funds, coupled with credit score inflation, contributed to this surge. Delinquencies are on the rise, particularly among subprime borrowers.

Financial Institutions Face Uncertainties

Banks are contending with the repercussions of higher interest rates and inflation, resulting in increased loan costs. They are implementing cost-cutting measures, staff layoffs, and adjustments to loan loss reserves to cope with the prevailing uncertainties.

See also: Lessons Learned From the Fourth United States Bank Failure of 2023

How Perficient Ensures Business Sustainability

During these challenging times, our financial services team specializes in streamlining operations to reduce expenses. We excel in low-cost digital collections engagement and boast a proven track record of driving efficiency improvements that enable firms to reallocate up to 30% of their collections staff to other areas, thereby reducing losses.

Visit or contact us via Perficient.com today!