Many have predicted that 2019 will be the year of M&A for the banking industry and with Synovus completing its acquisition of FCB Financial Holdings, followed by the high profile merger of BB&T and SunTrust, that prediction certainly seems to be coming true.
While 2018 was a relatively quiet year for M&A, Q4 did see a spike in the number of institutions being bought and sold. This is particularly true among middle-market banks that view M&A as a good use of their extra capital and cash reserves left by the corporate tax cut. Likewise, some banks are seeking to benefit from the systemically important financial institution (SIFI) threshold increase, and want to put that capital to good use.
As many bankers understand however, conducting a smooth M&A is never as easy as it sounds. The due diligence process alone requires a tremendous amount of time and effort to prepare for consolidation, but does not necessarily equal a successful transition. In fact, one of the most often overlooked aspects of a successful merger or acquisition are front-line employees.
Most bankers would likely agree that tellers, back-office staff, IT, loan officers and every other department function as the lifeblood of a bank. They ensure customers are happy, regulations followed and keep deposits flowing. Yet, it’s these employees who are so often put at the bottom of the priority list during the M&A process. While it’s important for executive management to focus on crafting the best deal possible, it’s equally critical for leadership to establish a seamless transition of operations and onboarding.
Improper or inefficient communications are one of the most apparent impediments to a successful M&A, which can range anywhere from adding a few new branches to doubling a bank’s size overnight. Instead, banks must be prepared to centralize all employee communications within one easily accessible system that can be used to deliver news and announcements directly to staff from any workplace device. Not only does this reduce email inefficiencies, it creates a central database for employees to review current and past news.
Of course, when merging multiple (two, three or even more) financial institutions, there can be an almost insurmountable amount of data and documents being shared. While many institutions use a file network to exchange information, intranets can help banks eliminate document duplication by providing a single resource for bank leadership to share policies, procedures, training materials and other important resources with employees. This ensures staff members use only the most up-to-date versions, which means nothing falls through the cracks and eliminates problems at their source, rather than discovering them well-after the merger is complete.
Once employees have everything they need operationally, bankers must consider the role their corporate culture plays in driving a successful M&A well after the deal is done. Crucial to this effort is ensuring employees are engaged with the bank’s unique mission and culture, whether it’s a newly developed mentality or long-standing one from the purchasing institution. This way, all employees are on the same page moving forward and collaborate as a team, rather than individual, siloed branches.
Communicating corporate cultures start at the top, with bank executives and senior leadership engaging employees through a centralized communications resource, such as the intranet mentioned earlier. With such technology, leadership can distribute everything from articles and blogs to videos that share the corporate culture and mindset with staff members.
Such content should be distributed frequently, and directly, to employees. Rather than having staff search for a blog or video, it should live in a centralized location that employees see or access right at the start of their day. This helps better engage employees by making it a part of their daily lives. From there, they will be more inclined to take the content to heart, and use its lessons in their everyday engagements with customers and coworkers.
Although aligning and combining resources tends to increase profitability, ease regulatory burdens and enhance the level of service provided to customers, there are significant complexities inherent to any merger or acquisition. Bankers that have been through the process will tell you that the ability to effectively organize, distribute and manage the flow of information through their institution is essential to creating a productive, and positive, workplace environment in the long term.
Mark Anderson is CEO of Johnson City, Tenn.-based Banc Intranets, a leading provider of secure, web-based intranets and directors portals for financial institutions that centralize employee onboarding and training, streamlining day-to-day operations.