M&A Integration: A Focus on Processes

Merger and acquisition integration of technology requires a close look at the different processes and best practices of the Financial Institutions involved. Most FIs have similar processes, but they may go about them differently with varying levels of efficiency.

Often, the acquiring institution converts the processes of the acquired FI completely without first thoroughly reviewing and determining best practices. If changes are made later, it will require a retraining process for many employees.

“Thinking through this element of a merger as early as possible in the process allows the bank to increase its efficiency and avoid training twice,” said Gladys Rodriguez, PRI Consultant/Project Manager.

When a “best practice” process is determined, the system functionality of the acquired and acquiring institutions can then be compared to uncover opportunities to streamline or automate processes going forward.

FIs should consider how they can truly understand the breadth of what the technology can do so they can maximize efficiencies. Typically, an institution is only utilizing about 40 percent of its system functionality. An M&A integration is an excellent opportunity to utilize much more. In-depth process functionality mapping is a simple but often overlooked exercise that will bring many dividends in efficiency down the road. 

During integration, institutions will review exception processing. It is important to identify the exceptions in the process and determine if they are truly necessary. Often, an exception process has been ingrained in the culture over the years without a clear (or recent) evaluation of its necessity. If it is necessary, the acquiring institution must understand how it fits into the system functionality so they can properly train for it.

Clear communication is a crucial element in M&A process integration. Reviewing procedural changes and discussing implementation timing with the teams at both FIs must be prioritized to ensure a smooth transition.

“The banking industry has advanced over the past 10 years, especially in terms of technology. Old processes fit the old technology, but FIs need to understand the functionality of today’s technology and update their processes accordingly,” Rodriguez said.

Profit Resources specializes in identifying profitability improvement areas for financial institutions through revenue growth, cost control, streamlining processes, and effective use of technology. Contact us to learn more about our personalized approach to propel growth and improve profitability.