Onebank is managing the merger of two banks to minimize customer impact. A five-phased strategy is proposed: 1) Develop the operational stack for the merged bank; 2) Migrate data to the new stack; 3) Integrate operational systems; 4) Conduct user acceptance testing; 5) Perform dress rehearsals with select customers. Key risks include increased customer attrition and inability to offer innovative products. Mitigation strategies include understanding customer needs, integrating the best pre-merger products, and training staff on the new systems. Stakeholder communication is also critical throughout the merger process.

1. Onebank – Minimizing
Customer Impact of Bank
Mergers
A whitepaper on managing the increase of M&A activities between banks, with lowest
impact to the banking customers
Sinjo Alex
Head of Delivery & Technology Services,
Reflections Global

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INTRODUCTION
Mergers and acquisitions have been very prevalent in banking industry across the world. Based on the
economics and investment scenario, The merger rate can vary from year to year. The below chart shows
the merger rate over the past four decades.
Mergers of banks have been happening for many decades now. Based on the economic scenario such as
GDP growth and financial stress in the banking industry, the merger rate has been fluctuating between
1% to 6.3.%. The past trend was that with increasing GDP growth, the merger rate goes up. Post
COVID-19 , with GDP growth bouncing back across countries, more bank mergers might be considered
for taking advantage of the economic growth scenarios. For further reading on bank merger trends,
please refer to “Bank merger trends” article

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Many benefits have been drawn from banking mergers and acquisitions, in terms of increasing lending
capacity, stronger, balance sheets, better operational efficiency and better management of capital.
However, another important aspect would be to focus on the customers by providing the best
products, operational systems, customer service etc.
Let us call the merged entity as ‘Onebank’. Apart from branding and promoting the merged entity,
rationalizing the best products have to be given strong focus across every banking portfolio like retail
banking, corporate banking, wealth management, global markets, payments, risk & compliance, human
resources etc. Further, onebank shall bring the operational and customer service systems to be
amalgamated for the merged banking entity. For a seamless and improved experience for the banking
customers, onebank shall consider selected end user representatives to test and rehearse the working
of the merged entity thoroughly before it is rolled out to the unified customer base. This whitepaper
describes a proven methodology that may be adopted.
Goals
The goal of this white paper is to outline the steps to be followed in amalgamating the operational
systems and customer service successfully. The process outlined here targets minimizing the merger’s
impact to the banking customers in the pre-merger time. The customer shall experience a smooth
transition of all his banking products, while experiencing a better value and customer service from the
merged banking entity.
Strategy & Process
To achieve the above stated goals, a five phased strategy may be considered.
1. RGB operational stack readiness
The process recommended is to develop an operational stack including the IT systems for
supporting various banking products offered by the merged bank. The suggested strategy is to
identify the good and bad from the pre-merger entities and combine them into a single target
infrastructure for the merged entity.

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This becomes the target stack for the merged entity. The priority of the merger go-live program
shall be to identify the target stack and develop it.
2. Data migration
Data migration is another important aspect of the go-live of the merged bank. The data from the
pre-merger entities must be transformed and certified to match the target stack of the merged
entity.

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Starting with the process of product normalization, customer data rationalization etc., the data
migration team must define various rules of transformation and logic to validate the data in the
target stack. The data migration team also must set up a process for data validation, certification
audit and generate reports to be made available to various stakeholders including the internal,
external audit, central regulatory authority etc.
3. Operational System integration
The process of operational systems integration shall be done as various operational systems are
developed, customized and/or configured to serve customers with the new offerings of the
merged banking entity. When the operational systems are ready, it would be mandated to
integrate the synthetic data into the respective operational systems and test the endpoints of
integration with other systems. Processes shall be established at system level and user level
support services by setting up a support desk. This support desk shall develop standard
operating procedures for the merged entity.
4. User Acceptance Testing
The strategy for user acceptance testing (UAT) are as follows:
● Testing of operational systems and impacted product/services/functions
● Testing of migrated data for accuracy and appropriate fitment into data buckets in the
target stack.
● Certify the target stack for the merged entity with new data and the migrated data to
work in harmony.
Risk based testing may be adopted as one of the preferred methods for the UAT process. This is
based on the operational system assessment in line with the complexity of business, failure
probability, new or upgraded functionality requirements impacting the user journey.
5. Dress rehearsal
Dress rehearsals are the first point of selective onboarding of customers to assess the target
stack performance. The strategy here is to open the new target operational system parallel with

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the pre-merger bank systems. Dress rehearsal can also be initiated portfolio-wise. This process
should be time boxed with clear exit and go-live criteria. The process starts with identification of
specific customers, communicating the impact, accepting willingness to validate the merged
entity user journey and experiences. The inter-bank interfaces and payment systems are verified
by associating with buddy banks.
Plan & Execution
Planning and executing bank merger program is a very complex program management. There are a lot
of moving parts and many stakeholders. These stakeholders are not only from the banks being merged
but also outside the bank such as central regulatory authority, buddy banks, cards etc.
The main teams involved in this program are
1. Merger Governance Committee (MGC) - MGC is the appellate authority to approve rules and
regulations of the merger. All aspects of the merger including legal, regulatory, financial,
operational, risk management and program management, to name a few, may be periodically
reviewed and decisions to be taken and communicated through the Program Management
Office (PMO) to across the merger team. MCG shall include central bank and associated bank
(sometimes called as buddy bank in a merger scenario) representations. This committee is
generally chaired by top management executives such as the CEO or CIO of the merged entity.
2. Program Management Office (PMO) - PMO team is responsible for planning, tracking, reporting
and coordinating across various teams involved in the merger program and all the stakeholders
involved. PMO shall be primarily responsible for tracking the “Onebank” plan execution by

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coordinating across teams, keeping the communications from MGC and cross teams, Tracking
and reporting progress and milestones, Keeping track of evidence for future regulatory audits
etc.
3. Merger and Acquisition (M&A) strategy consulting team - Once the bank merger is finalized this
team start with defining the Goals, business case and business requirements that drive the M&A
program.
4. IT and Infrastructure team - This team is responsible for managing and maintaining all IT
hardware and software including the IT infrastructure, banking electronic outlets like automated
teller machines (ATM), point of sale (POS) machines, card systems, core banking platform, back
end financial and other processing systems, analytical and governance reporting systems,
monitoring and risk management applications, human resources, procurement applications,
etc..
In creating a onebank, IT and Infrastructure team take a major role in building the backbone of
the banking system to process customers transactions, associated regulatory and governance
requirements. It's important for them to understand the end goals of how businesses conceive
and service the various banking products to its customers so that the experience of bank
customers can be greatly improved, and the various processes of product servicing can be
greatly simplified. For Onebank roll out, few of the subfunctions like the Identity and access
management (IAM), Data and migration, application integration etc are very critical for the
success and may need to be extended beyond the normal working hours of the bank. Hence it is
important to ramp up capacity of these sub functions to gear up for the onebank roll out.
5. Integration Testing team - Integration Testing Team is constituted to technically test all the
features, functionalities and integrations of Banking platform infrastructure and platform.
6. User Acceptance Test (UAT) team - This team is structured portfolio-wise for testing the various
products and services from the onebank. To perform a successful UAT program, subject matter
experts (SMEs) from various products and services are brought into a team to work dedicatedly
for validating and approving the system functionalities to provision banking product related
services in an efficient and simplified manner while offering the highest customer experience
from onebank. Apart from the portfolio wise UAT team, following teams but not limited to, are
constituted to complete successful UAT program
a. UAT test management team - This team help to define and coordinate all testing
b. UAT bank support desk team,
c. data validation and certification team,
d. Back-office support and bank reconciliation team
After the Integration testing team has completed the technical level testing of banking testing

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and integrations, the UAT team receives code drop and golden data for conducting the UAT.
7. Customer Support Desk team - On successful completion of UAT a Dress rehearsal to go live is
performed with a selected set of customers, branches and back-office system functioning
parallel to the premerger bank(s). During the dress rehearsal phase a customer support team is
ramped up to support the customers and branch staff will be involved in the dress rehearsal.
This team is highly trained and equipped with standard operating practices (SOPs), workarounds
and support procedures to quickly turnaround the issues reported by customers and branches.
8. Branches and command center team - Selected branches are set up to perform banking
transactions across various products and services as a regular banking activity. The activities
across branches, buddy banks, merchants, affiliates and central banks are monitored and
coordinated by the command center team. All the issues were flagged by the command central
team and reported to PMO and MGC for escalations and halt the dress rehearsal if needed or
Onebank go-live to their customers may be done.
Post dress rehearsal the diamond data is synchronized and go live of onebank may be declared across all
the branches, products and customers.
Risks & Mitigations
Bank M&A is a very complex process. Many risks of varying severity can impact the success of creating a
onebank. However, from a customer perspective the most severe risk would be failing to get enhanced
banking experience and best services. The impact of not addressing this risk would be increased
customer churn and attrition. If successfully done, the onebank can naturally attract more customers
and increase the shareholder value much larger than the financial benefits generally achieved by any
bank merger. Following are Top 5 risks and mitigation for customer retention and growth perspective.
Risks Mitigations Preventive Actions & Remarks
Increase in customer
attrition/switching after the
merger
Understand the customer needs
from Onebank, the merged
entity and drive the M&A
strategy in line with expectation
and attract more customer
Implement best of the breed
products and services that were
bringing customers from each of
the merged entities.

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Lack of Onebank’s (merged
entity) capability to offer
unique and innovative banking
products for the customer
base.
Constantly seek to fill customer
needs and innovate products
based on past customer
experiences from both the
banks being merged
Banding of products and
services from the newly formed
Onebank. Communication to
customers on the branded
products and onboarding the
customers to the new offerings
from Onebank.
Inability of Onebank’s (merged
bank) processes, systems, and
staff to serve customers with
the new products and services.
Onebank to create a single stack
of banking applications,
mapping all the products and
processes to service their
customers. All the banking staff
to be trained in the new stack
and ready to service customers
before onebank is launched.
Having a well-defined data
strategy for Onebank is
absolutely the key success factor
for launching onebank. This
needs to be well defined and
integrated across banks and not
siloed.
Inadequate integration of the
Onebank into the larger
national and international
banking ecosystem
Evolve partnership with other
players in the banking and
nonbanking service providers to
serve customers using
automated and efficient ways to
enhance the banking experience
with onebank.
Involve Buddy Banks (Banks
which have close working
relationships nationally &
internationally), agents,
resellers, merchants, partners
etc.
Inability of the Onebank to
follow all regulatory
compliances and audit
requirements.
Consider having regulatory
framework compliance and
further auditing as part of the
merger initiatives. Capture and
record impacted areas of
merger for frequent review with
the banking regulator and
record for future audit needs.
As the customer base is
increasing and new products
being introduced it would be
important to implement better
fraud detection, anti-money
laundering (AML) etc.
Stakeholder Communication
This specific section is included considering the very importance of stakeholder communication
especially to the customers of both the banks that are being merged. This shall start from the moment
the merger is announced. A merger communication team shall be formed as part of the PMO. All
communication across all stakeholders shall be based on a well-drawn-out strategy. The strategy shall
be comprehensive to guide the communication process across all phases and levels in the merger

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process. This team shall organize periodic announcements through various channels based on the
nature of communication. All the communications shall be presented to the MGC and if needed, to the
onebank's executive board before the announcements. It would be also important to take feedback
from the stakeholders to pivot or adjust during the merger process.
Conclusion
The bank merger needs to be considered as an organization change management initiative which not
only affects the investors and employees but also the outside stakeholders. The impact of this is of great
concern to bank’s customers as their lives and business are associated with the success of the merger. It
is important to include attributes of customer impacts in defining goals and critical success factors for
the bank’s merger. It is important to have a well-defined governance process to measure customer
impacted areas and items like the few mentioned below
● product and services,
● integration into banking ecosystem,
● Branches and other banking channels,
● well-connected customer care,
● having an effective technical stack,
● Data migration and management
● Communication strategy
● Governance and compliance
There were many bank mergers and acquisitions in the past and many more to happen in future. It is
important to learn from our past and add to our learning to make more successful ones in the future.