The news: Three bank failures have led to three acquisitions. Now, the acquiring banks must figure out how to merge two sets of clients, two differing employee cultures—and probably the most risky, two technology stacks. Here’s what any bank should think about when planning for a tech stack merger, per American Banker.
Make a plan: A bank merger requires serious planning, but creating a rigid, step-by-step years-long agenda isn’t the way to go. Banks must create a plan with a clear long-term vision that’s also flexible enough to change with technology, according to consultants from Forrester.
But keeping the tech platforms separate for an extended period of time has drawbacks. If both banks offer similar lines of business, keeping them separate could delay cross-selling opportunities until the consolidation is complete, according to consultants at Cornerstone Advisors.
Focus on the riskiest pieces: A tech stack merger carries considerable risk. If it fails, the bank can take a huge reputational hit and suffer dented customer loyalty. That’s why banks should dedicate a lot of time and energy to those areas that most affect customers.
Employees are key resources: Merging two employee cultures is difficult, and long-term employees of the acquired bank who find new jobs present a major risk to the tech merger process.
The bottom line: Banks undergoing a tech stack merger, or even a technology upgrade, must plan for all scenarios before execution. They only have one chance at getting the transition right, and customers won’t let them forget if they get it wrong. Having a well-thought-out plan that’s flexible and timely will prevent a bank from becoming the next M&T Bank or Truist Bank—both of which suffered from the repercussions of bad tech mergers.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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