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Blog: Election Economics

Election Economics: How to Navigate Risk Decisioning in an Uncertain Political Landscape

How Political Outcomes Shape the Future of Lending and Financial Services
Elections are pivotal moments that shape the direction of the economy, often driving shifts that reverberate across industries, including financial services. The outcomes of national and regional elections will directly influence fiscal strategies, regulatory frameworks, and economic policies, which then impact interest rates, inflation, the employment landscape, and overall market stability. And of course, all of these factors are critically important to the world of financial services, where things like credit decisioning, fraud threats, risk management, and lending practices all depend quite heavily on the broader economic environment. Recent elections in the UK and Argentina have already demonstrated how shifts in political leadership drive significant economic policy changes, and of course, the highly contentious upcoming Presidential election in the US looms as a tipping point that will have influence across the globe. As these political events unfold, financial services providers need to remain agile, proactively adjusting to new realities to ensure stability (and profitability) amidst change.
Recent Elections and Economic Impact on Lending and Financial Services

Recent elections around the world have already triggered significant economic shifts, with far-reaching implications. In the UK General Elections in 2024, results have further shaped the ongoing Brexit process, influencing fiscal policies and regulatory frameworks that directly impact the financial industry. Uncertainty surrounding post-Brexit trade deals and regulatory realignment has already affected interest rates and inflation, creating tighter credit conditions for both consumers and businesses. And adjustments to the Bank of England’s interest rate policies or regulations governing financial institutions could further influence lending practices, with tighter borrowing conditions on the horizon for both individuals and small businesses.

In Argentina’s 2023 Presidential Election, a shift in leadership has brought about changes in economic strategy, particularly in the battle against soaring inflation. The new government’s attempts to control inflation and stabilize the economy are affecting the country’s monetary policy, leading to higher interest rates and tighter lending criteria. For financial institutions, this poses significant challenges, requiring lenders to quickly adjust their credit decisioning processes to accommodate economic instability. As inflation persists and the cost of borrowing rises, both consumer credit and business financing have become more difficult to secure, which further strains the economy.

The India General Elections earlier this year have also had effects on the fintech space. The results will influence regulatory policies surrounding fintech growth and digital finance, both of which are necessary for encouraging financial inclusion in underserved markets. Depending on the government’s support for these sectors, lending to traditionally underserved segments of the population could see either significant growth or stagnation. And changes in policy around digital finance could encourage new forms of lending, but they could also introduce more stringent regulations that will make access to credit much more challenging.

The 2024 US Presidential Election: A Global Ripple Effect

Of course top of mind these days, regardless of your location, is the upcoming US Presidential election. While it’s always something that has far-reaching effects, this year’s highly contentious ballot is poised to have sweeping global implications, on everything from global interest rates and inflation trends, to significant policy reforms on taxation, regulation, and lending practices. A key player in this process is the Federal Reserve, which closely monitors election outcomes and adjusts interest rates accordingly. If the newly-elected government pushes for changes in fiscal measures, the Federal Reserve’s response could shape borrowing costs, which in turn improves or challenges access to credit. For lenders and financial services providers, these shifts showcase how important it is to remain agile in the face of uncertain regulatory reforms and fluctuating market conditions. The global financial system will be watching closely as the election unfolds – because no matter who wins, there is bound to be significant changes that will reshape lending dynamics in the US and beyond.

Election-Driven Economic Currents: Navigating Interest Rates, Inflation, and Risk Decisioning

Election outcomes can cause shifts in all sectors of the economy, but some areas in particular directly impact lending and risk decisioning. One of the most immediate effects is on interest rates, which are often adjusted based on fiscal policies introduced post-election. As interest rates fluctuate, lenders have to reassess risk profiles and adjust their credit and risk decisioning processes to account for any potential volatility in repayment abilities of their customers. Inflation control is also directly linked to post-election economic strategies. Any policies that either stimulate or dampen the economy can lead to varying levels of inflation – which affects everything from consumer purchasing power and household debt to business investments and the stock market. Inflation can also erode creditworthiness, with rising prices and an increased cost of living making it harder for both individuals and companies to manage their debt obligations. This means that lenders are then faced with the challenge of adjusting lending practices to maintain profitability while managing increasing risks in their customer base (which requires systems and solutions that enable flexibility in decisioning processes).

The outcome of any election also influences overall creditworthiness as economic conditions shift in response. Changes in the employment rate, business investments, interest rates, and fiscal stability all contribute to changes in credit and risk profiles. This is where a more dynamic approach to risk assessment is critical, with the ability to leverage intelligent, proactive risk decisioning solutions. Using advanced decisioning technology and data analytics allows financial services providers to adapt easily, identifying risks earlier and making more informed decisions. This proactive approach enables lenders to protect their profitability and lending portfolios while still serving the needs of customers effectively.

Ahead of the Curve: How Advanced Risk Decisioning Solutions Mitigate Volatility

With elections comes uncertainty. And when there’s uncertainty, financial services providers need to proactively navigate shifting risk. Advanced risk decisioning solutions play a key role in helping you better predict (and respond to) risk, by leveraging real-time data and AI-driven analytics to identify emerging trends earlier and make smarter, faster risk decisions. Rather than simply reacting to sudden market fluctuations, proactive decisioning allows you to better predict future scenarios, preparing for possible fluctuations in interest rates, inflation, credit conditions, ability to repay, etc. Remaining agile and competitive is key to staying ahead of any uncertainty in the economy – election-driven or otherwise.

Holistic risk decisioning solutions also ensure a smoother onboarding process, with the ability to more accurately assess creditworthiness, even among rapidly changing market conditions. AI-powered decisioning software and solutions allows you to access and integrate vast amounts of data (everything from economic indicators and market trends to individual financial behavior), giving you a more accurate (and nuanced) view of a customer’s unique risk profile. Too often when economic conditions are volatile, the inclination is to be overly cautious. But that can stifle your business growth. With more proactive, agile decisioning, your lending portfolio remains stable (and profitable) even when external conditions aren’t.

Fraud prevention also becomes a key focus. During periods of political and economic uncertainty, fraud attempts often surge. With a holistic, data-driven approach to your risk decisioning, advanced algorithms and embedded intelligence can better detect unusual patterns and behaviors that signal fraudulent activity. Integrating fraud detection directly into the risk decisioning process allows you to greatly reduce losses, ensuring your operations remain secure, compliant, and resilient even among the unpredictability of major election upheaval.

Beyond onboarding, there is also the issue of managing ongoing customer relationships and maximizing value across the lifecycle. Ongoing account management is particularly important during periods of economic uncertainty. Advanced risk decisioning solutions empowers you to continuously, proactively monitor customer profiles and make adjustments easily. A flexible solution allows you to adjust credit limits and lending terms in real time as economic factors like inflation, interest rates, and consumer behavior evolve. Using AI-driven tools to track changes in individuals as well as broader market trends allows you to proactively mitigate risk, reducing the likelihood of defaults while maintaining a positive customer experience through personalized, flexible financial products and services.

Despite proactive, agile efforts to effectively manage your risk, post-election downturns are common, leading to increases in default rates and placing added pressure on collections and recovery strategies. Sophisticated (and more productive) collections treatment strategies are made possible with intelligent data and decisioning solutions. Leveraging advanced risk decisioning software allows you to segment delinquent accounts based on risk profiles, prioritize collections efforts, determine the best communications channels, and tailor recovery efforts to individual borrower profiles. Best of all, it allows you to anticipate defaults before they happen by closely analyzing customer behavior and economic trends to forecast likelihood of repayment, enabling you to approach debt recovery proactively and strategically. A more proactive approach not only helps to mitigate losses, but also supports a much more empathetic and effective recovery process, ensuring long-term management of your customer relationships.

Preparing for Election-Driven Economic Shifts in Financial Services

Intelligent risk decisioning solutions are key to staying ahead of post-election shifts. By incorporating AI and advanced data analytics in one holistic platform, these decisioning solutions enable you to:

  • Forecast and proactively mitigate potential risks
  • Make data-driven lending decisions
  • Improve onboarding processes
  • Reduce customer friction
  • Manage customer risks and relationships across the lifecycle
  • Detect and prevent fraud
  • Prioritize collections efforts
  • Adjust lending practices with ease
  • Continuously monitor the economic environment

Financial services providers that adopt forward-looking, proactive strategies (and which are armed with the right technology) will prove more resilient, positioning themselves for sustainable growth even in the face of political and economic change. Are you ready?

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Infographic: Unlocking the Embedded Finance Advantage

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Unlocking the Embedded Finance Advantage
How to Harness Embedded Finance for Enhanced Customer Experiences
Are you continuously seeking strategies to help you retain your current customers and grow your business? One approach to consider is embedded finance, which seamlessly integrates financial services (including payments, lending, insurance, and investments) into everyday non-financial platforms used regularly by your customers and prospects.
Read on to discover how to leverage the flexibility of embedded finance in order to:
  • Make your services more accessible and convenient
  • Greatly enhance customer experiences
  • Improve retention of your existing customers
  • Open up new avenues for cross-selling/upselling services
  • Grow your business
Find out more information on embedded finance and how it’s changing customer experiences.

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Provenir for Embedded Finance

Provenir for Embedded Finance

Maximize Value Through Seamless Financial Services Integration
Integrating financial services into non-financial platforms is expected in today’s digital marketplace. But success in embedded finance requires automated decisioning technology powered by real-time data and intelligence, allowing you to remain agile and responsive while providing simple, straightforward financing experiences. Provenir’s AI-Powered Decisioning Platform enables intelligent, dynamic, instant decisioning for credit and fraud in real-time, across the entire customer lifecycle.
Want more info on how Provenir enables fast, accurate decisions for embedded finance?

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Round-up: Top Organizations Leading in Embedded Finance

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Round-up: Top Organizations Leading in Embedded Finance

How these tech pioneers are seamlessly integrating financial services into everyday platforms

Embedded finance has quickly emerged as a game-changer in the industry, with a predicted global market size of $348.8 billion by 2029, at a growth rate of 30% CAGR from 2023-2029. By seamlessly integrating financial services into non-financial platforms, companies are able to streamline operations and enhance the customer experience, creating frictionless journeys and improving customer loyalty and retention. Major players are on both sides of the fence – both those successfully weaving financial services directly into their core offerings, and those supporting this wave of tech innovation with cutting-edge solutions and APIs that empower embedded financial services. We’re looking at both – how these industry leaders are dominating the embedded finance area and the crucial role their tech partners play in making this integration happen.

  • aliexpress
    Based in Asia, this online eCommerce platform brings together a ton of small producers who sell everything from clothing and accessories to electronics and sporting goods. Originally created by the Alibaba group over a decade ago, the website operates similarly to Amazon, but doesn’t produce anything of its own – instead its platform is a showcase for others, bringing a number of products into one site and facilitating easy payment options.
  • booksy
    Originally founded in Poland and now available worldwide, Booksy is a leading appointment management platform for wellness/beauty/health providers, allowing customers to book local appointments for haircuts, massages, and aesthetic services. With the integration of Stripe, they were able to embed payment processing directly into their app, including an omnichannel solution that allows Booksy merchants to collect payments in person, within the app, or at the time of booking, ensuring seamless payment experiences for customers.
  • uber
    The world’s favorite ride-share app, Uber offers in-app payments, ride insurance (to protect both riders and drivers), and instant drive payouts, ensuring a seamless payment experience for riders and immediate access to earnings for drivers. They’ve also expanded to offer food delivery options, as well as a variety of different ride types to appeal to a wider range of customers.
  • amazon
    The undisputed gold standard of eCommerce is Amazon, offering embedded finance in a variety of ways, including payment, lending, and Buy Now, Pay Later options. With integrated payment and finance options across a variety of global sites and sellers, Amazon enhances customer convenience and supports its wide range of sellers with quick financing and access to funds.
  • shopify
    Canadian success story Shopify simplifies payment processing for merchants in a variety of industries, offering them quick access to funding and financial management tools. Now a multinational organization with embedded offerings available on their proprietary eCommerce platform, their solutions include a variety of types of products that focus on everything from online storefronts and point of sale options, to returns management, shipping, order fulfillment, B2B, and financial management.
  • apple
    A name recognizable to the entire world, Apple is one of the pioneers of embedded financing, making Apple Pay a widely used option for everyone (read, millions and millions of people) who owns iPhones. With Apple Pay, Apple Card, and Apple Cash, they’ve integrated secure and convenient payment options directly into Apple devices (including watches), offering a frictionless payment experience for users.
  • starbucks
    The Starbucks app, which began as a way to improve customer loyalty by allowing users to earn rewards points on purchases, has quickly morphed into an extremely convenient rewards/payment system. You can reload funds to your mobile card at the click of a button, pay in-app for purchases, order ahead, earn rewards points, and then redeem them seamlessly, enhancing customer loyalty and ensuring a positive experience end-to-end for customers.
  • stripe
    An American multinational financial services company, Stripe offers a comprehensive suite of payment processing APIs and financial infrastructure for businesses, enabling organizations of all sizes to easily integrate payment services into their platforms. With millions of customers worldwide, including well-known brands like Marriott, BMW, and WhatsApp, their fully integrated payments products are used to optimize checkout conversion and launch new business models effortlessly.
  • plaid
    Similar to Stripe, Plaid works behind the scenes of some of your favorite brands, providing APIs for secure access to financial data and services that enable seamless connections between financial services and apps. Based in the U.S. but operating in a number of countries across North America and Europe, Plaid enables consumer apps to effortlessly connect with users’ bank accounts in a secure way.
  • marqeta
    Providing card issuing and payment processing technology, Marqeta is used by industry leaders in a variety of use cases, including on-demand delivery, expense management, retail, and digital banking. By enabling companies to create customized payment cards and solutions, they facilitate embedded financial services for their customers to allow them to deliver exceptional, brand-elevating customer card experiences.
  • walnut
    Providing seamless payment options for insurance premiums, along with instant, personalized insurance quotes and policy management through its online platform, Walnut Insurance is a prime example of embedded finance in the insurance industry. They offer value-added services that go beyond traditional insurance, including wellness benefits and services like access to mental health resources, directly into their platform, exemplifying the innovative use of embedded finance.
  • balance
    A platform focused on B2B trade platforms, distributors, and brands across the B2B supply chain, Balance powers the entire transaction lifecycle, with software and APIs that allow merchants and marketplaces to accept business payments, optimize AR, and extend trade credit. By focusing entirely on B2B, they’ve built a platform that incorporates all aspects of financing and payment processing to enable innovation and growth for their customers.
  • grab
    Southeast Asia’s leading superapp, Grab provides everyday services including deliveries, hotel bookings, gift cards, and ridesharing, while also embedding financial services like payments, insurance, and micro-lending. With a goal to enhance customer convenience and drive engagement, they offer services for consumers, drivers, merchants, and even enterprises – driving economic empowerment for everyone in the region.
  • mercado pago
    Based in Argentina and boasting one of the largest user bases in Latin America, Mercado Pago enhances eCommerce by integrating financial services that support seamless transactions and provide credit options to both buyers and sellers, including digital wallet, payment processing, and financing plans.
  • synchrony
    In part an online marketplace, Synchrony allows you to find deals on whatever your heart desires, and then provides you with various ways to pay, including credit cards, personalized financing offers, and Buy Now, Pay Later plans. They also offer individualized banking plans and products, financial solutions for businesses, and even healthcare financing for you, your family and your furry friends.

Companies across the globe are leading the charge in embedding finance into their services, transforming customer experiences, and driving growth. These examples (among many!) demonstrate the immense potential of embedded finance to streamline operations, enhance customer satisfaction and loyalty, and open new revenue streams. For those looking to explore embedded financing options, Provenir’s AI-powered risk decisioning solutions can enable you to integrate financial services seamlessly, manage risk effectively across the lifecycle, and deliver exceptional value to your customers.

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Embedded Finance: Enabling Seamless Financial Services

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Embedded Finance: Enabling Seamless Financial Services

Unlocking new opportunities and enhancing the customer experience
Embedded finance has been changing the way financial services are delivered, integrating them directly into everyday consumer activities. Imagine securing a loan directly from your favorite online store, or getting trip insurance coverage while booking a vacation. Many of us have utilized embedded finance services without ever having had a name for it. As more businesses adopt these integrated solutions, the potential for improved customer satisfaction, loyalty, and retention is significant – not to mention new revenue streams. We’re looking at the benefits, challenges, and future opportunities of embedded finance, offering you insights into how to leverage this trend for an enhanced competitive edge and a way to provide exceptional value to your customers.

The Power and Potential of Embedded Finance

Embedded finance, referring to the integration of financial services into non-financial platforms, is enabling businesses to offer banking, lending, insurance, and payment services directly within their existing products, whether those are applications, websites or other platforms. The trend is gaining traction rapidly, in part due to its ability to create more cohesive, seamless user experiences and streamline financial transactions. The value of embedded finance in 2022 reached $66.8 billion, but estimates put that figure at $622.9 billion by 2032, highlighting how it’s poised to become a dominant force in the industry. This growth is driven by the increasing demand for convenience and the desire for businesses to differentiate themselves in a competitive market by integrating innovative financial solutions. Companies across various sectors, from travel to retail and everything in between, are recognizing the value of creating super-apps or platforms that incorporate a variety of types of services (including financial) to enhance customer loyalty and create new revenue streams.

Uber and Shopify are just two big-name examples of organizations already leveraging embedded finance to enhance their services. Uber, the ride-sharing titan, offers instant payments to drivers, while Shopfiy allows for merchant cash advances and payment processing right in its proprietary platform. Likewise, retail giant Amazon offers its customers buy now, pay later (payment in installments) services right at checkout, and Tesla offers its car buyers insurance options, streamlining the process of getting coverage for their new vehicles. So why is embedded finance so popular?

Unpacking the Benefits of Embedded Finance

There’s a ton of benefits that embedded finance can offer to enhance your business operations and the experiences of your customers. Let’s take a closer look.

1. Flexibility
  • Adaptive Solutions: Embedded finance providers highly flexible financial solutions tailored to meet the specific needs of your customers. For example, you can offer customized lending products based on individual customer profiles, which can be seamlessly integrated into the purchases process. Adaptability like this ensures that financial services are more accessible and highly relevant to each individual customer, enhancing their overall experience.
  • Real-Time Access: A standout feature is the provision of real-time access to financial services. Your customers can instantly access loans, make payments, or secure necessary insurance without the delays associated with more traditional banking processes. This immediacy improves customer satisfaction while also increasing the likelihood of customers completing transactions and reducing cart abandonment.
2. Competitive Edge
  • Market Differentiation: In a crowded space, embedded finance is proving to be a key differentiator. Offering integrated financial services allows you to stand out from the competition, and provides you an edge over those who don’t.
  • Increased Revenue Streams: Open up new avenues for revenue generation with the integration of financial services like payment processing, lending, and insurance.
3. Enhanced Customer Experience
  • Seamless Integration: Simplify the user journey by integrating financial services into everyday customer interactions. Without having to leave an app or website to complete a financial transaction, your customers will enjoy smoother, more convenient experiences.
  • Personalization: Embedded finance allows for a higher degree of personalization, with financial services tailored based on customer data and behavior – and ensuring more relevant and appealing offers (i.e. a fitness app could offer personalized health insurance plans based on user activity levels).
Embedded finance is fundamentally changing the way businesses interact with their customers, offering unparalleled flexibility, competitive advantages, and enhanced user experiences. By embracing this trend, companies can not only meet the evolving needs of their customers but also unlock new growth opportunities.

Implementing Embedded Finance Offerings: A Step-by-Step Guide

So you’re ready to dive into the world of embedded finance and reap its numerous benefits… now what? Here are some tips to help you navigate the implementation process, from assessing business needs to choosing the right technology partner and executing a seamless integration.
Step 1: Assess Your Business Needs
  • Market Research: Conduct thorough market research to understand what exactly your customers need and what the market demands. Do your customers need more flexible payment options? Faster access to loans or insurance? Identifying precise needs will help you tailor your embedded finance offerings more effectively.
  • Internal Assessment: Take a close look at the existing capabilities you have within your business. What financial services do you already offer and what are the gaps? Conducting an internal analysis will help you determine what additional resources or technologies you need in order to successfully implement your embedded finance offering. Make sure you’re aware of strengths and weaknesses to create a more robust integration plan.
  • Define Objectives: Clearly outline what you aim to achieve with your embedded finance implementation, such as increased sales or improved customer retention.
Step 2: Choose the Right Technology Partner(s)
  • Determine Criteria for Selection: Selecting the right technology partner to set you on your embedded finance path is critical. Consider factors like:
  • Scalability: Ensure the decisioning platform you choose can grow with your business and handle increasing volumes or added complexity.
  • Security: Choose a partner with strong security measures and robust data privacy to protect customer data and financial transactions.
  • Integration Capabilities: The technology should easily integrate with your existing systems and platforms.
  • Case Studies: Look at previous examples of successful embedded finance partnerships – can your chosen tech partner offer the same seamless integration and robust experience for your customers?
Step 3: Implement Your Embedded Finance Plan
  • Develop a Roadmap: Create a detailed roadmap outlining each phase of the implementation process, including timelines, key milestones, and resources required.
  • Build a Pilot Program: Start with a pilot program to test the integration on a smaller scale and gather feedback.
  • Full Integration: Roll out the solution across your entire platform, ensuring all systems are integrated and functioning smoothly.
  • Monitor and Optimize: Continuously monitor the performance of your embedded finance offerings and make necessary adjustments to optimize the experience.

Tackling Embedded Finance Hurdles

Yes, the benefits of embedded finance are substantial. But that doesn’t mean it doesn’t come with its own set of challenges. Here are some common hurdles and the strategies to overcome them.
  • Regulatory Compliance: Navigating the complex landscape of financial regulations is most definitely daunting. Different countries and regions have varying rules and regulations governing financial services, all of which can impact how you implement and maintain embedded finance. Ensuring compliance is essential to avoiding legal issues and potential fines.

    • Stay Informed: Keep up-to-date with the latest financial regulations in the regions you operate in and be sure to engage with legal experts to understand all of the implications for your business.
    • Develop Compliance Programs: Implement comprehensive compliance programs to ensure all of your financial activities adequately meet regulatory requirements, and conduct regulator reviews and audits to maintain compliance.
    • Partner With Experts: Collaborate with financial services providers who have a strong understanding of the regulatory landscape in your region so you can navigate complex regulations more effectively.
  • Technological Integration: Integrating financial services into your existing systems can be technically challenging, requiring robust IT infrastructure, seamless data flows, and compatibility with your current platforms. And ensuring data security during integration is critical for protecting sensitive customer information.

    • Ensure Robust Infrastructure: Invest in a robust IT infrastructure that can handle the integration of financial services. This includes everything from scalable servers and secure data storage to reliable network systems.
    • Utilize API Integration: Use APIs (Application Programming Interfaces) for seamless integrations. APIs can facilitate data exchanges between your systems and financial services providers, ensuring smooth operations for your customers.
    • Implement Proper Security Measures: Utilize advanced security measures, including encryption, two-factor authentication, and regular security audits to adequately protect customer data both during and after the integration process.
  • Customer Trust: Building and maintaining the trust and loyalty of your customers is critical when you’re offering financial services of any kind. Customers need to feel confident that their data (including identity, account numbers, and transactional data) is secure and that services provided are reliable. Any incidents that breach this trust can have severe repercussions for your brand (and your bottom line).

    • Be Transparent: Be upfront and straightforward with your customers about how their data is used and the measures you have in place to protect it.
    • Provide Customer Support: Ensure you have robust customer support in place to address any concerns or issues your customers may have regarding your embedded services.
    • Perform Quality Assurance: Regularly test and update your financial services to ensure they remain reliable and secure. High-quality service delivery enhances customer trust and satisfaction.
Implementing embedded finance can transform your business, but it’s crucial to address any potential challenges head-on – and preferably before they pop up! Stay informed, invest in the right tech, and build trust with your customers so you can navigate these obstacles with ease and ensure a successful embedded finance integration.

The Future of Embedded Finance: What Lies Ahead?

As embedded finance offerings (and the tech behind them) continues to grow, the impact on various industries are becoming more profound – with trends surrounding embedded finance shifting, use cases evolving, and long-term benefits emerging.
  • Increased Use of AI: AI can enhance financial services by providing more personalized and efficient solutions, with everything from AI-driven chatbots offering instant customer support and machine learning algorithms that can analyze user to data to offer customized financial products. This level of personalization and rapid response improves customer satisfaction and engagement.
  • Expansion Into New Sectors: Embedded finance has been well-established in sectors like retail and transportation, but that’s only the beginning. Industries including healthcare, education, and real estate are exploring the potential of embedded finance solutions. Healthcare providers could offer financing options for medical treatments directly within their platforms, or educational institutions could integrate payment plans for tuition.
  • Smart Contracts: Self-executing contracts with the terms directly written into the code could make embedded finance even more accessible – automating transactions and reducing the need for intermediaries, making processes faster and more cost-effective. In real estate for example, smart contracts could help automate property sales, ensuring that all conditions are met before the transaction is completed – increasing efficiency and improving fraud screening.
  • Decentralized Finance (DeFI): By leveraging blockchain technology, DeFi enables financial transactions without traditional intermediaries like banks, leading to more decentralized and democratized financial services. This could enable peer-to-peer lending platforms to become more prevalent, allowing individuals to lend and borrow directly from each other, with embedded finance seamlessly facilitating these transactions.
  • Sustainable Growth: Organizations that adopt embedded finance can look forward to sustainable business growth. By integrating financial services, you can create new revenue streams and enhance loyalty of your customers. And offering financing options at the point of sale increases conversion rates and average transaction values, leading to higher revenues overall.
  • Enhanced Customer Loyalty: The convenience and personalization offered by embedded finance can significantly enhance customer loyalty. Access to tailored financial solutions, easily and securely, means your customers are more likely to return and recommend your services to others, resulting in a strong customer base and competitive advantage in the market.
  • Operational Efficiency: Automating various financial processes allows you to streamline operations, reducing the need for manual intervention, minimizing errors, and speeding up transaction times – leading to lower operational costs and greater efficiency. And reducing the time and resources spent on managing things that are now automated means more focus on core activities or strategic innovation.
Emerging trends and new innovations are set to further enhance the impact of embedded finance, making the future runway of opportunity long and bright. The benefits of embedded finance are clear (sustainable growth, improved customer loyalty, greater operational efficiency) – now all you need to do is ensure you have the right technology partners along for the ride.

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Roundtable: Navigating Regulatory Challenges and Affordability with Foresight in Financial Services

Provenir Financial Executive Club: Strategies for Excellence in Dynamic Decisioning

Roundtable: Navigating Regulatory Challenges and Affordability with Foresight in Financial Services

When: Thursday 10th October 11:30am – 2:30pm
Where: Hotels at SIX – Stockholm

In the current market in the Nordics, financial services providers are navigating through a period marked by a combination of high interest rates, increased regulatory pressure, and persistently high but potentially moderating inflation. But what does this mean for the year ahead, and how should lenders best position themselves to navigate this uncertainty?

Join us live on 10th October for this exclusive senior-level roundtable where will bring together industry experts to delve into the complex landscape of regulations and their impact on affordability.

Key highlights of the discussion include:

  • The crucial role of foresight strategies
  • Effective regulatory compliance and cost management
  • The critical integration of data and risk decisioning technology
  • Insights into future regulatory changes and how to adapt to evolving landscapes

Format:

  • 11:30am – Arrival. Drinks to be served during networking

  • 11:45am – Keynote from Chief Economist Lena Sellgren
  • 12:30pm – Roundtable discussion
  • 12:30pm – Three-course lunch is served
  • 2:30pm – Official close and summary

Register your interest here

Lena Sellgren

Lena is Chief Economist and Head of Analysis at Business Sweden, the Swedish Trade and Investment Council, with a background from Nordea, the Ministry of Finance and the National Institute of Economic Research. Lena has extensive experience in business intelligence and economic analysis. Prior to her role at Business Sweden, she was Chief Analyst at Nordea Markets. She has a solid experience of working in the public sector. She has been Head of Public Finance at the National Institute of Economic Research and worked for over ten years at the Ministry of Finance, including as Deputy Head of Tax Economic Analysis. In addition, she has been an expert in several public inquiries and for many years has been a Swedish delegate in working group meetings and bilateral negotiations within the EU and OECD. She has also been a board member of the Norwegian Research Council and an expert in the South Sweden Chamber of Commerce’s “Productivity Commission”. She is also a columnist for the German business newspaper “Handelsblatt”

The Provenir Thought Leadership Roundtable Series is designed to convene industry visionaries, C-level executives, and thought leaders in the financial sector for insightful discussions on redefining risk decisioning strategies. The series aims to cultivate a collaborative environment for sharing forward-thinking perspectives, exploring innovative approaches, and shaping the future of risk decisioning in an era of rapid technological evolution and changing consumer expectations.

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Tackling Tech Bloat: Slimming Down to Boost Efficiency, Security, and Innovation

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Tackling Tech Bloat: Slimming Down to Boost Efficiency, Security, and Innovation

How Major Banks and Large Financial Services Providers can Streamline their Tech Systems
Today’s technology can be both a vital enabler to progress and growth, and also a potential hindrance to efficiency. With the accumulation of outdated, redundant, or overly complex tech systems, larger financial institutions, including major banks, are feeling the pressures of tech bloat. And just like any other bloating, tech bloat is uncomfortable – hampering efficiency, escalating costs, and stifling innovation – which makes it a critical issue to address. For larger banks in particular, the urgency to streamline tech infrastructure has never been greater. With an increasingly competitive (and much more highly regulated) environment for financial services providers, eliminating tech bloat is essential to enhancing your overall operational efficiency, improving your security, and enabling your ability to remain agile.

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According to a 2023 survey by MuleSoft and Deloitte, large enterprises now use an average of more than a thousand applications across their organization.

So what exactly is tech bloat, and how can you slim down your stack? Read on to find out more.

The Silent Saboteur: Understanding Tech Bloat in Financial Services

Referring to the excessive accumulation of outdated, redundant, or highly complex tech systems that weigh down an organization, tech bloat in financial services is becoming increasingly common. This phenomenon stems from a variety of causes, but the biggest tends to be an abundance of legacy systems that have been patched and repurposed over the years. Of course many financial services providers require very specific needs to be addressed (including everything from core banking systems and risk assessment models, to cybersecurity software, workflow automation, customer relationship management, financial planning and forecasting, data sources, fraud and identity management, loan origination software, and payment processing). As the list of needs (and related tech) grows with your organization, so does the bloat.

But many of the software solutions you have will overlap in functionality, leading to inefficiencies in both operation and cost. A survey by Freshworks shared that “54% of IT professionals say their organization pays for software” that never gets used. And often these systems are not integrated with each other very well, creating numerous silos of information, complicating workflows, and making data access tricky. Not to mention the fact that extensive customizations and add-ons over the years, while useful at first, can quickly turn into burdens, limiting flexibility and making maintenance and updates difficult. And of course those updates are critical, because with constant regulatory shifts, financial institutions do regularly need to update their systems, which can result in a quickly tangled web of temporary fixes that, you guessed it, add more bloat (not to mention leave you more vulnerable to everything from data breaches to lapses in compliance).

Unveiling the Not-so-Hidden Consequences of Tech Bloat
Now that we’ve looked at what it is and how it starts… What impact does tech bloat really have on day-to-day operations? As it turns out, a lot – and those effects get compounded the longer your bloat hangs on.
Financial Implications: First and foremost, tech bloat significantly strains your financial resources. Maintaining and supporting any number of redundant systems is, well, redundant, leading to increasing operational and maintenance costs. And outdated systems tend to consume a disproportionate share of your budget, diverting necessary funds away from more strategic, growth-focused investments, and hampering your ability to invest in more innovative, efficient solutions.

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According to Freshworks, “the cost of trying to use unhelpful technology amounts to more than $84B annually in wasted time in the US alone, or $10M every hour of every day.”

  • Operational Inefficiency: A bloated tech environment slows down business processes and complicates workflows, with legacy systems and overlapping solutions creating bottlenecks. This inefficiency affects day-to-day operations, but also has a compounding effect the longer it continues, leading to longer turnaround times and a lack of flexibility and agility in your operations, ultimately adding friction to customer experiences.
  • Risk and Compliance Challenges: The more outdated systems you have to manage, the more the risk of errors, data inconsistencies, and compliance misfires increases. All financial services providers must adhere to stringent regulatory requirements, and the more bloated your organization, the more challenging it is to ensure compliance, leading to potential fines and reputational damage.
  • Security Vulnerabilities: Along the lines of compliance struggles, outdated systems are often easier prey for cyber attackers. The complexity of a bloated tech environment makes it much more difficult to implement robust security measures effectively, leaving you open to targeting by cybercriminals. Any breach (data, compliance, ransomware) can have severe consequences, including financial losses and significant damage to customer trust.
  • Innovation Roadblocks: Want a surefire way to stifle innovation? Maintaining and integrating multiple tech systems makes it extremely challenging to adopt new technologies, even if those technologies are ones you really, really want to utilize. In an industry where agility, flexibility, and continuous innovation are required to stay competitive, this hindrance to tech advancement places larger, more complex financial services organizations at a distinct disadvantage – making it difficult to explore new opportunities and deliver cutting-edge solutions to your customers.

Any of these consequences should be enough to address your tech bloat problem, but put them all together and you can see it’s not just about security or reducing operational costs – it’s fundamental to unlocking your potential for sustained innovation and sustainable growth. Streamlining your tech infrastructure allows you to overcome these challenges and position yourself for future success and customer loyalty.

Case Study:
Reducing Tech Bloat

Consider the case of Provenir customer NewDay. Some of their existing systems were proving costly in terms of release times and updates, and were due for decommissioning. By implementing more holistic risk decisioning software, they were able to significantly reduce processing time and improve quote response times.

  • Sub-1

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  • 80%

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    faster quote response

Winning the War on Tech Bloat: Strategies for Financial Institutions
So what can you do to streamline your operations and slim down for good? It sounds daunting, but what it really requires is a strategic, methodical approach (and the right technology partner).
1. Conduct a Technology Audit:
  • Identify Redundant and Outdated Systems: Thoroughly review all of your existing systems to pinpoint which ones are outdated, redundant, or no longer serve a critical function
  • Assess Integration and Interoperability: Evaluate how well your current systems integrate and communicate with each other, identifying gaps and inefficiencies
2. Streamline and Consolidate:
  • Prioritize Critical Systems: Determine which systems are essential for your core operations and focus on maintaining and enhancing those first
  • Phase Out or Replace Redundant Solutions: Gradually eliminate or replace systems that are no longer necessary or that duplicate functionality
3. Invest in Modern, Integrated Solutions:
  • Adopt Cloud-Based Platforms: Leverage cloud technology to improve scalability, flexibility, and cost-efficiency
  • Emphasize Integrations and Scalability: Invest in solutions that can easily integrate with your existing systems and scale as you grow (or can scale as you continue to eliminate other existing systems)
4. Enhance Data Management and Governance:
  • Centralize Data Repositories: Consolidate your data into centralized repositories to ensure consistency, accessibility, and security
  • Implement Robust Data Governance Frameworks: Establish strong data governance practices to manage your data quality, privacy, and compliance
5. Foster a Culture of Continuous Improvement:
  • Encourage Innovation and Flexibility: Promote a mindset that embraces new technologies and innovative solutions
  • Regularly Review and Update Technology Strategy: Continuously assess and update your technology strategy to align with evolving business needs and tech advancements in the industry
6. Partner with the Right Tech Providers:
  • Collaborate with Established Decisioning Software Companies and Consultants: Engage with tech firms and consultants to leverage their expertise and innovative solutions (and be sure they have experience with legacy migrations, complex integrations, and reducing tech bloat)
  • Leverage Industry Expertise to Guide Transformation: Utilize the knowledge and experience of industry experts to navigate the complexities of technology transformation (i.e. does your new tech provider have an experienced Professional Services team that can help guide you?)
Fighting off Future Bloat
Now that you’ve slimmed your stack, how can you ensure that your tech bloat doesn’t return with a vengeance? Adopt a forward-thinking, agile approach. Agile methodologies are crucial, as they promote flexibility in technology development and deployment, allowing you to adapt quickly to changing consumer/industry needs and emerging industry trends. Agile methods encourage iterative improvements, which can help ensure that all of your systems remain both current and effective. Which is also why it’s critical to stay aware (and ahead) of tech advances in the industry. Keeping up with cutting-edge solutions and tech advancements allows you to proactively enhance efficiency and the customer experience. Look towards building a sustainable technology roadmap; with long-term planning that focuses on scalability and adaptability, you’ll ensure that your tech infrastructure can grow and evolve with the organization. Prioritizing this flexibility and continuous improvement and innovation will help you safeguard against tech bloat and maintain a streamlined, efficient, customer-centric tech environment.
Provenir’s AI-Powered Decisioning Platform

Part of fighting the bloat battle is selecting the right technology partner – one that can enable flexibility, scalability, and an end-to-end decisioning platform that you can build and grow your business on. Provenir’s AI-Powered Decisioning Platform brings together the key capabilities you need to turn decisioning into a differentiator, allowing you to deploy accurate, fully automated risk decisioning across the lifecycle, while also gaining actionable insights to optimize strategies and enhance performance across the entire organization. Featuring solutions for data, decisioning, case management, and decision intelligence, across onboarding, fraud & identity management, customer management and collections, Provenir’s platform is a one-stop solution that eliminates silos, brings teams together, and enables sustainable, customer-centric growth.

Want more info on how Provenir’s dedicated team of Principal Consultants and Professional Services experts can help you reduce tech bloat in your organization?

Contact Us

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Finance Forward: 10 Breakthrough Innovations Reshaping The Future of Financial Services

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Finance Forward: 10 Breakthrough Innovations Reshaping The Future of Financial Services

Explore how cutting-edge tech will redefine the industry
The past twenty years have seen incredible advancements in technology of all sorts (do we even remember life before the smartphone?) – and the world of financial services is no exception. But innovation is far from over. The financial sector stands on the edge of even more cutting-edge technology, with increasingly sophisticated tech emerging that will enhance decisioning accuracy, improve operational efficiency, and ensure maximum customer satisfaction and engagement. What’s ahead for financial services providers? While it’s impossible to predict exactly what the next twenty years will look like, we’re looking forward to what may be in store in the near future, based on the tech innovations and market-shaping forces in play today.

1. Evolution in Ways to Pay, Borrow, Lend and More

There’s a variety of tech advancements on the horizon that could reshape how we pay for things, how we borrow money, and the landscape of financial services and products in general.
Some of these include:
  • Biometric Payments

    Payments authenticated through biometric data including fingerprints, facial recognition, or retinal scans, enabling a seamless (and secure!) way to pay
  • Voice-activated Payments

    Payments initiated through voice commands via smart speakers or other voice-enabled devices, greatly enhancing convenience for users
  • Invisible Payments

    This includes transactions that occur automatically in the background (one level up from our automated payments for subscriptions for example), with IoT-enabled purchases that reduce friction
  • Peer-to-Peer (P2P) Lending

    These lending platforms will continue to evolve, using blockchain for transparency and security
  • On-Demand Loans

    Instant, micro-loans available on-demand via mobile apps, tailored to individual needs with flexible repayment terms
  • Tokenized Assets

    Tokenization of real-life assets (i.e. real estate, art) enabling fractional ownership and lending, and providing investors with new opportunities

The connected vehicle payments market could reach $600 billion by 2030.

2. The AI and Machine Learning Revolution

Already integral to processing large datasets, ongoing advancements in artificial intelligence (AI) and machine learning (ML) are set to continue to redefine risk decisioning and the entire user experience. Future algorithms will leverage advanced neural networks and deep learning to enable near-real-time decision-making by not only analyzing complex variables (including behavioral patterns and unstructured data), but also predicting results with uncanny accuracy. These advancements in intelligence will also further enhance personalization possibilities, facilitating the shift from static to dynamic risk assessment and accommodating for life changes and real-time behavior – greatly increasing the inclusivity and fairness of financial services offerings (and the customer experience!) along the way. Advanced analytics will also help financial services providers understand on a more granular level how people are using products, enabling you to make improvements, track the customer journey, and interaction points. Likewise, AI enables us to break down silos across different datasets, understand consumer behavior much more dynamically across different systems – and allow you to tailor new products and services accordingly. The applications when it comes to financial services are endless, including AI-driven financial advisors that can provide highly personalized financial planning and wealth management services, tailored to individual goals and behaviors.

As we’re already witnessing, Generative AI will continue to have a massive impact. It is certainly making life easier in many ways (chat bots, personalized email and marketing campaigns, dynamic customer management, etc.), but it will also mean greater ease in testing products and models as new data sets are generated (which used to take an incredible amount of time when done manually). Generative AI could also help test different use cases for products and UAT testing (which is traditionally very difficult and time consuming). We can also use Generative AI to translate videos and documents in real-time, or even do live translations in meetings, increasing the serviceable markets of financial services providers who may have previously been limited by language or region.

AI in Banking market was worth $6794.27 million USD in 2023, and is expected to reach $36765.29 million USD by 2023 (CAGR of 32.5%)

3. Quantum Computing: The New Frontier

Quantum computing promises to fundamentally change the capacity to process information by performing calculations at speeds unattainable by traditional computers, enabling the ability to execute complex risk simulations and fraud decisioning and detection algorithms. This speed enables quicker, and more informed risk decisoning for financial services providers. Quantum algorithms could simulate market reactions to economic events or stress test financial portfolios under a variety of conditions, providing insights at a speed and scale that just isn’t possible with today’s computation methods.

Globally, the financial services industry’s spending on quantum computing capabilities is expected to grow 233x from just US$80 million in 2022 to US$19 billion in 2032, growing at a 10-year CAGR of 72%

4. Blockchain and Decentralized Finance (DeFI)

Offering a decentralized and secure platform that can transform traditional banking infrastructure, credit approvals, and monitoring systems, blockchain technology can make big waves in risk decisioning, with advancements in peer-to-peer lending, smart contracts, and fraud screening measures. With transparent and fixed record-keeping, the technology can streamline processes and reduce operational costs, automating credit decisioning and other transactional processes. And with blockhain’s inherent transparency, the reliability of financial data is improved, greatly enhancing fraud and identity management. When it comes to the increasingly important aspect of identity verification, blockchain can also be useful – enabling Self-Soverign Identity (SSI) and Decentralized Identifiers (DIDs). SSIs allow individuals to own and control their own digital identities, stored on a blockchain for maximum privacy and security, while DIDs use unique, blockchain-based identifiers that can be verified across different platforms without exposing personal data.

5. Rise of Central and Digital Bank Currencies

The potential adoption of digital currencies, including those issued by central banks (CBDCs) could dramatically alter the financial services landscape. Impacting how credit is managed and issued, these digital currencies offer new mechanisms for transparency and efficiency in financial transactions, with faster transaction times, reduced costs, and improved access to financial services, especially in underbanked/underserved communities. When it comes to risk decisioning, digital currencies can provide more streamlined and integrated data flows, enabling better tracking of financial behavior and transaction histories, ensuring more accurate risk assessments.

134 countries and currency unions, representing 98% of global GDP, are exploring a CBDC

6. Integrating IoT into Banking

The integration of the Internet of Things (IoT) in banking could provide continuous data streams to credit risk models, offering real-time insights into a potential borrower’s financial activities and habits, and ensuring more dynamic (and accurate) credit risk decisioning and lower default rates. For instance, data from smart home devices could inform lenders about a customer’s energy consumption patterns, which might correlate with financial stability or risk levels. This level of integration can lead to even more personalized risk assessments, potentially improving credit access and inclusion while mitigating risks for lenders.

IoT In Banking And Financial Services Market size is projected to reach USD $30925 Million by 2030, growing at a CAGR of 50.10% from 2023 to 2030.

7. Cybersecurity: Staying Ahead of Threats

With increased reliance on digital technologies comes increased cybersecurity risks. Robust security measures are critical, and future developments will include predictive and proactive security strategies to safeguard against continuously evolving cyber threats. The financial services industry’s vulnerability continues to grow, requiring innovative tech for protection like AI-driven threat detection systems that can predict and neutralize threats before they do damage. Proactive cybersecurity will become a critical component of risk management, ensuring that both customer data and financial assets are adequately protected. Advanced cryptography can also help with data security, including zero-knowledge proofs (allowing users to prove identity without revealing personal info, greatly enhancing data privacy and security), and homomorphic encryption, which encrypts data in a way that allows computations to be performed without decrypting.

Financial institutions are the second most impacted sector based on the number of reported data breaches; ransomware attacks on financial services increased from 55% in 2022 to 64% in 2023.

8. Sustainable and Social Impact Lending

Environmental and social governance (ESG) is a hot-button topic across industries, and can greatly affect financial services providers. Risk decisioning models will need to reflect the growing consumer and regulatory demand for responsible lending and banking practices, and could even influence the overall strategy of financial institutions towards more sustainable and socially responsible operations. With a rise in conscious consumerism and corporate responsibility driving the integration of ESG into financial decision making, lenders can use ESG scores alongside traditional metrics to assess credit and fraud risk. This approach aligns with global sustainability goals but also greatly appeals to a growing number of consumers (and investors) who place high value on organizations that prioritize ethical considerations in their operations.

Global sustainable finance product issuance totalled $717 billion in the first half of 2023.

9. The Impact of Regulatory and Ethical Developments

As technological capabilities expand, so does the scrutiny around their implications. AI and advanced data analytics in particular will require the need for robust regulatory frameworks to ensure these technologies are used ethically and responsibly – including data privacy, preventing bias in AI algorithms, and maintaining transparency and explainability in AI-driven decisions. Financial services providers will need to navigate a world where regulatory compliance is about much more than just following laws, but also about maintaining ethical standards and ensuring ongoing public trust, especially in decisions that affect individual creditworthiness and privacy.

By the end of 2024, Gartner predicts 75% of the global population will have its personal data protected by modern privacy regulations.

10. Identity Verification

The most critical aspect of offering loans or any other financial service is determining who you are dealing with and what the risk is. The way we identified individuals and their potential risk two decades ago was monumentally different than where we are today, and in the future this process promises to be even more seamless – and all-encompassing. We can expect even more dynamic verification codes to reduce the risk of fraud, highly-accurate DNA-based identification, genetic markers to be added to biometric identification systems, and more inclusive/accessible verification solutions that adhere to yet-to-be-established global standards for digital identity. Also possible are multimodal biometrics, combining multiple identifiers including behavior (typing patterns, mouse movements, gait) to continuously verify identity in real-time. Likewise, we can use wearable devices like smart watches and fitness trackers, as well as smart environment interactions (connected devices including smart homes, cars and workplaces) to verify identity, potentially reducing friction in the process.

Western Europe and Asia Pacific will potentially account for 50% of digital ID verification spend by 2028.

Future Innovation and The Customer Experience

Technology has always had the power to drive significant change in all aspects of society, and future tech advancements will continue to alter how financial institutions operate and interact with their customers. A common theme running through all of these innovations is the ability to personalize products and offerings, highlighting the extreme importance of the customer experience. A prime example of this is dynamic, responsive onboarding – where financial services providers are tailoring the onboarding experience to individual customers by matching data checks (including identity verification, AML, KYC, and more) to the event risk and the responses of the customer. Depending on the consumer’s answers in an application, the actual application itself will change dynamically – populating additional responses required or minimizing friction with fewer questions if lower risk is determined.

Today’s consumers will no longer stand for long wait times, inadequate customer service, and mass-marketed products. Instead, a competitive edge requires rapid response times, omnichannel offerings, customized products, and frictionless experiences – all enabled by automated, real-time decisioning.

But the concept of ‘decisioning’ itself will also evolve. Currently financial services providers utilize specific triggers that result in a decision being made, whether that’s from the end-consumer applying for a product, or from a provider proactively analyzing data and making a decision to offer a new product. But with the increased availability of data, extremely fast processing speeds, and the enhanced use of AI to analyze data and behaviors, decisioning will become much more fluid. Rather than trigger points causing a decision, are we in for a future where decisions around customers and products/services are just continuous? Seamless? Always happening? This too will result in more hyper-personalization and a customer-centric approach in all aspects of financial services.

Done well, personalization at scale for banking customers can lead to annual revenue uplifts of 10%

As these technologies develop, Provenir continues to lead the charge, offering an advanced decision intelligence platform that is adaptable, efficient, and strategically forward-thinking. Discover why choosing Provenir is the best decision for managing risk in a technologically evolving landscape.

Ready to lead in the future of financial services?

Contact us today to explore our cutting-edge risk decisioning solutions.

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Moving the Needle: Top 10 Trends Driving the Financial Services Landscape in 2024

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Moving the Needle:
Top 10 Trends Driving the Financial Services Landscape in 2024

What are the trends impacting the financial services industry this year? In this article from Global Banking & Finance Review, EVP of North America for Provenir, Kathy Stares, shares her expert insights on everything from evolving lending practices to new competition, and changing fraud risks and compliance needs. 

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What is a decision engine and how does it help your business processes?

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