Making the Most of Digital During M&A

By Carrie Nelson03.19.2019

Merger and acquisition (M&A) activity in the credit union space has been on the rise, and this trend is expected to continue in 2019 and beyond. In addition to being a great way to grow credit unions’ assets and extend geographic reach, M&A also presents a valuable opportunity for institutions to reevaluate and solidify their digital strategy before merging what was once two separate organizations.

The credit unions who prioritize their digital strategy as part of M&A activity can establish a platform that encapsulates the new member base’s preferences and speeds time to market for new capabilities, key differentiators in the current environment. Digital is one of the biggest areas upon which members judge their credit union experience today, making it one of the most important decisions for credit unions in 2019.   

Weighing the Options

Credit unions have several options for what they should do regarding their digital platform during M&A. The acquiring credit union must evaluate both its current digital offerings and those of the credit union it’s absorbing, looking at aspects such as platform capabilities, user interface, data insight and what features members prioritize from each.

While the option of maintaining two separate solutions may be tempting to avoid change, it creates a significant burden. Such an approach would leave the credit union with two apps to maintain, two platforms to test and more challenges for the contact center – and on top of it all, a significant financial burden.

Consolidating users onto a single new or existing platform will create more work in the initial stages, but it is ultimately a wiser choice for the long term. A single platform reduces cost and complexity and enables credit unions to more nimbly and rapidly adopt new features, functionality and ease in taking on future M&A activity. Credit unions with a single platform can move quickly from introduction of new feature and functionality to production for members, which is important in today’s digital landscape for member retention, growth and staying digitally relevant and competitive.

Transferring members to a new digital platform is a big undertaking but it can be done in a minimum of six months. To avoid any unnecessary delays and make the best use of time, credit unions who have an established, agreed upon migration plan from the onset are the ones who win the race.

Best Practices for Migration

Consolidating members from two previously separate credit unions onto a single platform isn’t easy, but there are several steps that can make the process as smooth as possible.

1. Clearly define the objective.

Though this seems obvious, it is a step that is often overlooked. After the merger is complete, it is important for the credit union to carefully determine the objective of what it hopes to accomplish with its digital platform, for both its existing member base and the newly acquired members. This must be well established so when challenges arise, the team will be able to refer back to the end goal to help guide next steps.

2. Determine what features credit union members prioritize.

The acquiring credit union must identify the digital features and functionality that are most important to its new combined user base. To most effectively determine those features, the credit union should analyze usage data from both offerings. For example, if the previous digital platform offered its members personalized budgeting suggestions and that feature was widely used, that capability should also be incorporated into the new platform. While acquiring this data is often easier said than done, this step is instrumental, as credit unions must offer the features that their members desire most.

3. Identify a core team.

A core team must be appointed and key roles established so that all employees involved will be clear on their responsibilities from the beginning. For example, the call center should be involved early, as they will inevitably receive calls and requests to manage when the migration occurs. Member service is especially important during this transition time, so this department must have enough time to prepare. CIOs also have a crucial role in migration, as they must oversee the transfer of data and terms and conditions.

Credit unions that do not have a strategic plan established for their digital offerings prior to the beginning of a merger risk additional cost, headache and a poor member experience. By clearly defining the objective, determining key features and identifying the core team, credit unions will be better positioned to make their merger more seamless for both employees and members. While mergers can be overwhelming, they present a strong opportunity for credit unions to solidify and enhance their overall digital strategy to better serve members both today and in the future. 

Carrie Nelson is senior vice president of support and services for D3 Banking Technology, which provides digital banking platforms for financial institutions.