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Foundations for merger success

According to a recent American Banker article, “The Covid-19 era has given all banks a greater sense of urgency to reduce their overhead costs, and that urgency could jump-start merger discussions. Low interest rates have cut into net interest income, and there are concerns that fee income is nearing a plateau. That could force more banks to go out and find a buyer as the year progresses.”

The need to reduce costs has become evident in the recent rise in overall bank efficiency ratios. Higher efficiency ratios indicate higher overhead costs and the need for scale per

The ratio’s upward trend indicates future productivity gains may be increasingly difficult to achieve.

Given the current market dynamics, we find many banks pursuing merger strategies. The question for these institutions becomes: what steps can we take to ensure the success of these initiatives?

From FIS’ experience in collaborating with our financial institution partners, banks should consider the following foundational elements for their ultimate success. 


Simply stated, scalability is the ability to increase productivity within an organization as it gets bigger.  Banks need to grow to become more efficient, to offer more products at competitive price points, and to ultimately increase value for their shareholders.

If your bank wants to rapidly integrate an acquisition into your existing platform, a leveraged services delivery model is often best at providing scalability on demand. This model enables banks to share in leveraging continuous technology investments – helping them all to minimize their capital expenditures. In this time of digital proliferation, shared investment becomes particularly critical to an organization’s ability to compete.

Banks with strong partnerships can leverage the conversion methodology, proven tools, and experience of their core partner provider.

Digital product investment

New core conversions must address the broad adoption of digital banking, and any new platform should reflect your technology partner’s consistent investment in this area.

Remaining competitive requires financial institutions embrace this fundamental change to banking delivery models. A new banking platform that embraces digital solutions should provide significant benefit by enabling key outcomes such as: 

  • Simplifying transformation and modernization efforts
  • Harnessing cloud computing to provide a highly scalable account and transactional platform
  • Offering a robust portal of APIs that enable rapid integration and new product development
  • Providing exceptional digital user experiences


Beyond the new digital technology in your conversion, most banks seek to enable a transformation of their people and business processes. These initiatives demand skilled leaders who provide firm governance to ensure bank and partner resources meet key commitments while providing the  expected deliverables.

These senior program and project managers should comprehend and adhere to your bank’s established governance methodology – while being seasoned enough to provide reliable judgement and sensitive executive communications.


A strong technology partner should provide conversion subject matter expertise to help supplement the bank’s staff in resource-intensive activities such as complete data mapping, data conversion verification, operational analysis, and the especially critical readiness review preparation. The bank’s technology partner should also provide skilled project managers to help manage the bank’s conversion/merger responsibilities. In a time of an M&A effort, a financial institution’s need for experienced bankers – ones who have been through many a consolidation – can become acute.


Platform conversions and organizational consolidations dramatically increase the need to educate bank employees. Training becomes critical to ensure a smooth transition. Tight timelines increase the pressure on employees and managers who must make every effort to ensure staff is fully prepared on conversion day. Many banks have reduced their training staff, and/or they cannot scale to meet the peak training demands a merger creates.

Training can vary from general banking guidelines for new hires, to specific processes and procedures for new digital products.  

The following video provides an example of just one type of general, online training: Banking 101 available through a technology partner. Banks actively seeking mergers should look to outside resources to augment their training staff.

Process Improvement

Core conversion initiatives are comprehensive projects that involve all areas of the financial institution. Subject experts from the functional areas within the combining banks can provide the impetus for teams that identify, develop, and implement new workflows that leverage digital technology and artificial intelligence.

Finding resources who can identify productivity improvements typically includes an initial in-depth evaluation of the financial institution’s business processes and their alignment with core processing technologies. 

As bankers seek the requisite expertise needed to obtain the gains of a pending merger or acquisition, they should consider a partner with extensive experience in scalability, digital investments, program governance, staffing, training, and process improvement. Relying on accomplished experts, resources with a proven conversion methodology and track record, goes a long way toward ensuring an acquisition’s anticipated value achieves realization.


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Maria Schuld

Maria Schuld

Head of Regional and Community Banking


Member since

11 Feb 2021



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