Bank Acquisitions: It’s About the Data

As a Test Manager at Olenick & Associates, I’ve had the pleasure of working through three acquisitions for a large bank and it is my conclusion that it all boils down to data. In this blog post I hope to enlighten you on some of the nuances I’ve encountered along the way and how to ask the right questions for your project.

First and foremost, each acquisition is different, at least in the sense of which types of products/services the acquired bank brings to the table; for example, deposits, savings, loans, brokerage, trust, etc.  As a Consultant in this scenario, I ask, “Which products does the acquiring bank need to continue to service from the acquired bank?” – despite that the acquiring bank may not even sell/service these products today.

I also ask:

  • Which products/services will the acquiring institution merge into its own product lines?
  • Which products/services will it sell to another bank?
  • Will some products/services be outsourced to 3rd party vendors?

No matter the answers to any of my questions, the one common thread in the acquisition is DATA. In any acquisition, but especially banks and financial institution acquisitions, it is imperative that data remains secure and is migrated and integrated into the acquiring institution without any errors.

How do we ensure the acquired bank’s data is extracted, translated, and loaded (ETL) correctly into the acquiring bank’s and 3rd party vendor systems? 

 

  • There are a lot of systems involved in banking and they are integrated with each other. For the most part, you cannot test the ETL on just one system at a time. It must be tested on most of the systems at the same time. This usually means this is one of the largest, or the largest project, in the entire acquisition program.
  • From a systems standpoint, getting all of the acquiring bank’s systems ready to service the acquired bank’s customer’s financial needs is the prerequisite to the actual acquisition. I am not saying any of these projects are less important, or less complicated, then the ETL project for the acquired bank’s data. However, once the acquiring bank’s systems are ready to accept the acquired bank’s data, they cannot service the acquired customers until the acquired bank’s data is loaded. If the ETL does not work correctly when it is time to “Go Live”, then the acquiring bank cannot service the financial needs of their new customers.
  • The ETL project is one of the last projects in the acquisition to be formally tested. This is because all of the systems have to be ready to accept the acquired banks data to formally do a full ETL test.
  • Tools Commonly Used: Quality Center for requirements trace-ability, test case status, defect management, and metrics reporting & Excel for more detailed metrics reporting

In the end, no matter how big or small an acquisition may be and even what industry it is in, the data has to be extracted, translated and loaded correctly, in order for the entire acquisition to be a success. Without the data there is no acquisition.

For further investigation of bank acquisitions and the importance of data during the acquisition program, check out the articles below and don’t’ hesitate to reach out to Olenick for support in your future mergers and acquisitions.
http://www.olenick.com/banking/
http://www.arkansasmoneyandpolitics.com/amp/May-June-2014/Making-Change/

 
By Ken Stawarz, Senior Associate – Olenick & Associates, Chicago

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