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Post Merger Integration Recipe for Success in Financial Services

I recently read an article written by Ann All titled “Simple Concepts Key to Complex Integration Projects” which discussed some of the hasty mergers and acquisitions since the financial crisis. It also discussed some of the recent successes at Wells Fargo and their integration of Wachovia contributed to  having business involved in the integration strategy, keeping it simple, acknowledging IT’s emotions and insecurities, and having key metrics to monitor progress. Industry consolidation is on the rise globally as companies seek to expand market share, enter new markets, and grow their customer base through mergers and acquisitions. Take a look at what the experts are saying.

  • According to IDC, the number of banks worldwide will shrink by 5% in the coming year due to industry consolidation.
  • The Wall St. Journal reported that in the US, consolidation in the financial-services sector will be more likely with the passage of financial-reform legislation.
  • PriceWaterHouse Coopers predicts:
    • The UK building society sector will be one of the ‘hot’ areas for M&A activity over the coming 12 months and that further deal activity in the sector is almost inevitable.
    • In Germany, the market is ripe for consolidation, EU competition rules and the divestment of non-core and non-performing assets are giving the German merger market a renewed boost.
    • In Spain, rationalization and divestment in the Spanish financial services sector is opening up acquisition opportunities for competitors and new entrants.
  • IDC Financial Insights predicts to see a notable increase in mergers, acquisitions and consolidation activities as signs of recovery from the global financial crisis gather pace, Asia/Pacific banks will become more aggressive in gaining size through inorganic growth and will feel more confident in revisiting regionalization plans.

Even more compelling was a 2009 Gartner by Kristin Moyer article titled “The Looming Failure of Post-Merger Integration” which stated that by 2012, 50% of the post merger integration activity in the banking industry will fail to meet initial expectations caused by the size and scale of IT complexity of recent acquisitions, little to no due diligence or planning, and that many large banks who have grown through M&A have yet to complete those integrations when a new one is announced.”
While much of the initial focus after a deal is announced is on rationalizing, integrating, and consolidating networks, transaction systems, and business applications, a significant portion and risk involves managing data which requires mature data management and governance frameworks and processes.  Therefore, IT and Business executives must consider data management as a strategic core competency supported by capable and proven data integration platform to access, cleanse, standardize, migratesynchronize, deliver, and archive data in support of major IT projects, meet expected time frames,  and shareholder expectations. Visit us to learn how Informatica can help financial services companies with their M&A needs.

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This entry was posted in Data Governance, Data Integration, Data Quality, Financial Services, Mergers and Acquisitions and tagged , , , . Bookmark the permalink.

One Response to Post Merger Integration Recipe for Success in Financial Services

  1. gnaneshps says:

    Interesting to read about the IT complexity challenges in Merger and Acquisition activity in post Integration phase. Just read an excellent white paper on strategies for successful merger integration http://bit.ly/pGoP25

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