Tuesday, October 23, 2012

Mergers & Acquisitions in banking


The study is exploring the relationship between intergrating Information Technology (IT) and banking mergers and acquisitions (M&A), revealing a significance of IT-related elements in banking M&A integration. The purpose of the research is obtaining the knowledge of IT integration process, its driver, dynamics, and theoretical models and frameworks. 

The study is important in contributing to the knowledge on best practice for IT integration within M&A in banking. Blueprint layout and integration model can be used in guiding and supporting banking M&A transactions. It is important because it is widely considered a critical resource and an enabler in the business of modern banking. On the other hand, it is also a very important element of the post-merger integration, oftern underpinning the realization of a significant part of the projected M&A gains.


Not only using different cases to test how IT –related advantage in M&A and collecting reports from sixty four company reports, white papers and other relevant works but also from interviewing four London- base high ranking bank officials who supervised IT integration in a number of M&A transactions (Citigroup, Nomura, UBS, Deutsche Bank, Lloyds, and Royal bank of Scotland) writer found out some important results that would help people who are still consider about IT – related advantage in M&A.

First, IT – related advantage as a frequent element of the M&A gains. This advantage is achievable and properly enforced guidance for IT integration exists. Even though it might be not enough guidance, the integration might still result in significant unplanned gains if the staff in charged are experienced and keen to deliver, the IT – related advantage then follows as a bonus.

Second, there are some issues for banks or even other enterprises have to face with by using IT. It will be:
-         Lake of clear business strategy
-         Aggressive targets that overstretch organizational and technological capabilities
-         Lake of personnel with relevant experience involved in a timely manner
-         Power struggle between management of the merging organizations.

Third, it takes a number of years after the official completion date for the merged IT infrastructure from previous banks or enterprises before merging. Specially for banking industry, IT capability by large equals the business capability raise some serious implications.

This article would help practicing managers distinguish that M&A IT integration in banking from other types of IT integration process will need some tasks to support the business operations post-merger as quickly as possible. According to “portfolio best of breed” mangers have a chance to minimize the business risks associated with the prolonged IT integration and balance in term of the delivery time and quality.

Key success factors of M&A IT integration is create a clear link between the business strategy driving the merger and the priority of the IT integration tasks, enlarge staff experiences, and motivate employees. Moreover, it will complete the right standard as quickly as possible, whilst the main constraining factors are overly aggressive targets and quality of management decisions.

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