While bank merger activity declined by 60%1 in 2020, as compared to 2019, due to several factors including a global pandemic, the banking industry is experiencing a reversing trend in 2021 as bank merger and acquisition activity picks back up.
Key factors when planning a successful merger.
Primary drivers of mergers tend to revolve around scale, efficiency, and competition within the market. However, as stated in the recently published article, 4 critical areas to understand before your bank’s merger by Rick Hall, additional key factors that should not be overlooked when planning for a successful bank merger include:
- Cultural alignment: Both sides of a merger must understand their own culture, the other’s culture and how well they fit together — particularly when it comes to a merger of equals.
- Consumer behavior: Acquiring banks must understand their new customers’ behaviors. How do they use their banks? What payment modes do they use? Most importantly, can the newly merged bank deliver on new expectations?
- Pricing decisions: Profitable acquisitions require careful pricing and fee migration strategies; otherwise, the merger could alienate the customers who made the deal worthwhile from the start.
- Differentiation: Banks must differentiate themselves using technology, or they’ll fade out of consideration for acquisition.
For more on these four key factors and the impact on successful mergers, read the full article as recently published in BAI Banking Strategies: 4 critical areas to understand before your bank’s merger by Rick Hall, Managing Director of BKM Marketing’s Banking and Financial Services Practice.
1 https://www.americanbanker.com/news/what-will-drive-bank-m-a-in-2021
