In the same manner as the case study that I have received from Do You Know Accenture Competition that related to a process for managing a merger for a Regional Bank, here is my solution if I assigned to be IT team leader in Accenture to manage this project.
Before starting to give an answer, let me explain the nature of the problem which is managing merger bank process. As stated in the case study, there is ABC Group which is the fifth largest financial services provider in Southeast Asia offers consumer banking, investment banking, Islamic banking, asset management, and insurance product and services. ABC Group has a plan to merge two bank, Bank X and Bank Y which locate in Indonesia. This merger purpose to achieve the vision of ABC Group to be “Southeast Asia’s most valued universal bank”. The merger process will be create a new bank entity, named “ABCXY” bank by total assets of more than USD 10 billion and also among the top five in terms of distribution network in Indonesia.
I would give analysis to provide core strength mapping of Bank X and Bank Y. The mapping is described in the following table.
|Particular||Bank X||Bank Y|
|Core Strength||– Six largest bank in Indonesia- Strong corporate market player||– Tenth largest bank in Indonesia- Strong consumer & commercial market|
|Customer Profile||Corporate sector||Consumer & Commercial sector|
|Consumer Niche||Credit card (merchant)||Credit card (issuer)|
|Funding||Higher cost of fund mainly from corporate affluent and mass affluent customer||Wide retail deposit use through payment platform|
|Network Architectures||Hub & Spoke topology||Star topology|
Based on the core strength mapping of these bank, merger process will be conduct by combining both the core strength of bank X and bank Y. The new bank entity “ABCXY” highly expected to be strong corporate market player and also strong consumer and commercial market. Thereby, customer size will be larger than before, which means “ABCXY” bank has huge customer base, about 3.3 Million in total. Geographic spread will also be a wider area. By all of those fact, the merger process will be manage by our team carefully to provide best result based on desired achievement by client.
This analysis will be used as a consideration in managing IT integration and operation of “ABCXY” Bank that will be guided by Accenture’s Merger Integration Framework and Methodology.
Based on this framework and methodology and also some considerations, I decide to prioritize the second area or step which is Conduct Integration Planning to manage the case study. The decision making doesn’t mean that our team ignore the first step which is Establish Merger Framework, but we give more attention to the process that will be gained desired output or target. Our team also ensure that the first step have been done well so that the input for second step could give best result for executing integration plan.
Manjari Mehta from University of Houston state on his paper that Accenture found that 75% of senior management underestimated the critical role of IT in achieving merger success. In their study of the 57 mergers in the late 1990s, only 16% conducted significant IT due diligence in the per-merger phase (i.e. before the merger deal was announced). With such little planning, it is not surprising that post-merger integration faces severe implementation difficulties. By this fact, our team will be ensure that due diligence conducted carefully and also the other process in first step.
Now, I will explain our priority area (Conducting Integration Planning).
a. Targeting Operation Model
Based on the best practice that given by Accenture, for selecting the target IT system better to decide on one of two system, not a hybrid system. Thereby, our team will choose one of those bank client, bank X or bank Y. By reviewing the core strength of both of bank, we will choose bank X to be the target operation model. ]This decision making is based on some consideration which is :
a. Bank X is a strong corporate market player. As stated before, ABC group offers some financial services, but it doesn’t have corporate banking. By selecting Bank X as the target operation model, we desiderate that core strength of bank X will strengthened ABC Group, especially in “ABCXY” bank.
b. Bank X is the sixth largest bank in Indonesia. By this fact, we can conclude that bank X will give better achievement for bank “ABCXY” than bank Y.
c. The customer niche of bank X is credit card, especially merchant system. If this IT system are adopted in “ABCXY” bank, it will be predict that the larger volume of customer will be service better with better information and communication strategy of bank X.
2. Defined synergies by team
This step will be conducted by using synergies management. It is critical to identify, quantify, and validate synergy initiatives. This step will be helped to do if our team creating the architecture of new IT integration system, including the team structure, enabling teams, and cross cutting process.
By reviewing the network architecture of both of those bank, I conclude that star topology and hub and spoke topology doesn’t have much differences. Overall, both of the topology has same criteria. They have advantage and disadvantage. By using synergy management, our team decide to create new network architecture of “ABCXY” bank by combining both of star topology and hub and spoke topology to be multiple hub & spoke “Dandelion”. This network architecture promises each of business (or bank branches) may have semi-auto with an over arching tie back to a central group. Here is the picture of Multiple Hub and spoke topology.
From this topology, we can see that all of network strategy that Bank X and Bank Y have, aren’t being throw away, but they are combined to gain new network architecture topology. Bank X as the targeting operation model will dominate the IT system. Whereas bank Y will adopt the new topology as a result in merger to be “ABCXY” bank. This synergies only can be success if our team develop the good synergies management. So, our team will conduct this step carefully by giving attention to the people that will be involved.
3. Synergy Tracking Approach
Synergy Tracking Approach will be conducted by our team by balancing the synergies process with desired target and synergy management that have been created before.
4. Integration Plans / Key Milestone
Here is the integration plan / key milestone that will done by our team (this is the result of benchmarking with Bank Niaga-Bank Lippo Merger to be CIMB Niaga Bank).
1. Identify target operation model and synergy area
2. Plan an “integration masterplan” with IT integration team and stakeholder that involved in this merger process.
3. Commence Human Resource Roadshow
5. Redeploy resources based on aligned functions & implement the aligned processe, procedure, and policies.
6. Develop and executing training plan
7. Continue to execute internal and external communication.
8.IT enhancements, data conversion.
5. Established customer and employee programs
This step will be conducted by make some meetings or program to make “ABCXY” bank possible to give a socialization to their customer and employee programs. By routine meetings and gatherings, we optimize that the new integration system will be received well by both of customers and employee of our client.
6. Update Integration Map
We don’t forget updating integration map from first step until the closing of second step. By doing this, we could ensure that the execution of integration plan will be successes.
All of this step will be ensured have done well. Our team don’t forget to communicate all of the progress to stakeholders and people that have been involved. By good communication,we hope that this merger process will be successes.
1. Mehtah, Manjari et al. 2004. A Framework for Assessing IT Integration Decision Making in Merger and Acquisition. University of Houston. Houston.
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.97.1911&rep=rep1&type=pdf [cited : December 19, 2010]
2. Web Strategy by Jeremiah Owyang
http://www.web-strategist.com/blog/2010/04/ [cited : December 21, 2010]
[cited : December 21 2010]
2. Accenture. The Heureka! Project Post-Merger Integration Bank Austria / Creditanstalt
3. Accenture. Getting Ahead of The M&A Curve to Drive High Performance
4. Accenture. Accenture Merger & Acquisitions and Merger Integration Services.