Banking On Acquisitions

If there’s one thing bankers know how to do, it’s acquire. Pundits are once again predicting that banks will be at the top of the charts for M&A activity.

Despite their wealth of experience, bankers continue to fumble through post-acquisition integration from time to time. We offer five lessons from the big leagues that bear repeating:

  1. Keep the management team that knows what it’s doing. Bank executives mistakenly use acquisitions to make wholesale “upgrades” to the organization. In the worst cases they use a one-from-column-A-and-one-from-column-B approach. Wake up. A working team is 1000 percent more valuable to your operation that a collection of capable individuals. If you were planning to terminate someone on your team, go ahead and consider a replacement from the acquired staff. Otherwise, keep your team together. Why?
  2. Speed trumps talent in this game. Your most important job is to get the engine back in the airplane before you all hit the dirt. Think of the post-acquisition integration process as a race. If you are stopping to consider who should be sitting in the co-pilot’s chair or which route your plane should fly, you’ve already lost. Make accountability clear; avoid committee decision processes; move or get out of the way. Why?
  3. Customers go elsewhere if you dither. Your competition knows what’s happening in your organization, and they will take advantage of the fact that you are distracted. As other banking firms work on embedding themselves in customers’ lives, you lose if you are spending your time on internal processes and politics. Research shows that, on average, acquiring banks fail to keep the market share they pay for. The exceptional banks complete post-acquisition integration quickly and make customer retention and acquisition a priority during that time. How?
  4. Integrate systems ASAP. Gone are the days when IT is an afterthought for high-touch relationship bankers. It’s now the central nervous system of the organization. Implement the acquiring bank’s systems in the new operations. Of course you’ll get control of the financial picture as quickly as possible, and place an equally high priority on your 360 degree view of the customer. Why?
  5. Tatoo the purpose of the acquisition on everyone’s forehead. I am using strong language here, but for good reason. In the heat of everyday problems, people can forget what’s important. You are acquiring in order to be a better bank, not just a bigger bank. To stay focused on your strategy, your customers, and your value, start every conversation with “Why are We Here?”

Many great banks are on the acquisition trail. And M&A events can be powerful inflection points, depending on how they are handled. We hope you take the lessons above as they are meant—as gentle nudges from your partners who believe in you.

By | 2017-09-19T13:37:04+00:00 April 21st, 2016|Banking Technology|0 Comments