Skip to main content

Stacking your tech in an M&A world? Focus on these three key areas

October 2, 2020
clock 5 MIN READ

COVID-19 has changed a lot about how we think and interact with technology, including how we can operate “business as usual” in a remote environment.

This involves answering questions like:

  • Do we have an executable business continuity plan (BCP)?
  • What are our risks and how scalable is the plan?  

Now, more than ever, these issues are increasingly placing pressure on banks to invest in technology when they can’t build their own. So is the growing chorus of consumer demand for an interactive, digital wealth management experience. Mergers and Acquisitions (M&A) activity continues to evolve in the wake of the current crisis, and there is more urgency to look to new technology in order to manage risk and stay relevant. 

When banks merge, the focus is often on the retail side of the business, while the wealth management business can be an afterthought.

We are operating in the age of technology-driven deal flow, and a growth-by-acquisition strategy is increasingly popular among banks. A unified, modern technology can absolutely create scale, as well as impact other considerations like regulatory requirements and BCP execution, increased operational efficiencies, and virtual integration and training for workforces and clients. All of these needs may increase with organization growth. So, looking under the tech stack hood is critical. 

Examining three key areas can ensure you have a solid technology base that will grow with your business.

1. Surveying the land

It’s important to scope the full technology landscape for merging firms—especially in the wealth management business units. When banks merge, the focus is often on the retail side of the business, while the wealth management business can be an afterthought. These tech stacks can be complex, potentially built with many disparate systems and processes. 

Multiple systems equate to multiple vendors, each requiring extensive due diligence and oversight. Managing these relationships strains time and energy that would be better spent focusing on managing clients and employees. Businesses can potentially drive greater efficiency when they identify overlaps in functionality, eliminate redundancy, automate workflows, leverage straight-through processing and reconfigure vendor relationships. 

In order to determine which technology platforms (and strategic partners to keep, and which to sunset, banks needs to do a careful evaluation of the current technology investment. This type of evaluation requires examining the technology in all business units in both firms, as well as looking at each platform’s scalability, data aggregation capabilities, and deployment requirements in a remote work environment. 

2. Meeting client and employee expectations

Considerations should also factor in the technology that’s most valuable and least disruptive to employees and clients. 

Outline clients’ expectations and employees’ needs (such as front-, middle- and back-office tools that offer productivity gains). This makes it easier to identify those technologies that will support those needs remotely. 

For clients, it’s not just about the standard investment performance view anymore. Clients want to interact with their wealth and be empowered to make investment decisions, especially in times of crisis. They need transparency without the requirement of a face-to-face meeting. Not only do clients expect a robust web-based user interface, but they also want easy-to-use mobile applications that allow them access tools like dynamic reports that map their portfolio performance to their unique financial goals. They expect to get comprehensive views into their holistic financial well-being.  

Equally important, the technology should be compatible with—but also ease and enhance—business workflows for employees. Consolidating the view of a client’s investments and wealth reduces the number of systems that employees must log into, and it also provides them with a comprehensive view into a client’s financial progress. 

Enabling a mobile workforce means something much more practical now. “Can I work from home?” “How efficient can I be?” “What applications do I have to meet with clients virtually through web-based video conferencing?” These are some of the biggest questions our industry has faced during this pandemic.  

3. Easing the transition

A merger represents two distinct business cultures coming together, and it’s crucial to ensure employees rally together under a shared purpose. Any change is hard, especially during a crisis. In a large-scale organization, change can feel crippling, especially if the firm loses sight of its most important asset—its people. But there are also opportunities to be had, even in our current environment.

Managing the technology integration components of M&A requires important considerations and big decisions, which are critical to get right. But managing the impact to your people will be the real difference between a successful end result or a tumultuous start to the new organizational entity. Disruption to business operations can, and probably will, occur. That’s normal when dealing with transformational change. How a firm navigates and communicates with employees throughout the change is a chance for it to shine and, ultimately, it is how success will be measured. 

When evaluating industry partners, look for those that can help you direct the transition and enable better integration of technology, people and culture.

Firms don’t have to go at it alone 

When evaluating industry partners, look for those that can help you direct the transition and enable better integration of technology, people and culture. 

For example, new technologies translate to increased educational needs. Reinventing the tech stack requires employee training, as they need to know the tech in order to be comfortable with providing client service. A confident employee translates to optimal customer service. 

In a post-COVID-19 world, M&A activity could be uncertain and potentially uneven. Some businesses can thrive while others may be forced to cut back as the industry has been disrupted. Still, one constant remains for wealth management firms of all sizes: They must continue to evolve. The consumer’s demand for a dynamic, web-based wealth management experience, putting employees at the center of your strategy, and managing the organizational risk will remain paramount. Technology’s role today only continues to increase in importance as the pandemic’s effects wash over all aspects of M&A, and keeping up in a flexible, smart way helps enable success for the long run. Let’s start with looking under the tech stack hood. 

A version of this article was originally published in BAI and has been updated with COVID-19 insights. 

Greg Rodgers

Vice President & Managing Director, New Business Development, SEI Wealth Platform, North America

Success stories

How we problem-solve the impossible