Core Advice For Post-Merger Integration

Credit union merger veterans share their experience and best practices for merging core processing systems and people.

 
 

A credit union’s core processing system lies at the heart of its operation, and combining that central data depository and transaction nerve center is typically the last step in completing a merger.

Integrating data can be a challenge, but credit unions that follow a well-crafted plan that accommodates uncertainties can create a successful, welcoming transition for staff and members.

CU QUICK FACTS

Corporate America Family Credit Union
Data as of 12.31.14

HQ: Elgin, IL
ASSETS: $576.9M
MEMBERS: 67,629
BRANCHES: 19
12-MO SHARE GROWTH: 0.2%
12-MO LOAN GROWTH: 5.4%
ROA: 0.52%

“Not to suggest that an accurate data load is in any way unimportant, but taking care of the people gives us the space we need to take care of all the other thousands of minor details,” says Peter Paulson, president and CEO of Corporate America Family Credit Union ($576.9M, Elgin, IL).

Here, Paulson joins senior managers from Genisys Credit Union, ICON Credit Union, and Clearview Federal Credit Union — who among them have nearly a dozen mergers under their belts — in sharing advice for how to ensure smooth core system integrations.

A Written Plan

Integrating data for a merger is a months-long process that involves multiple steps and stakeholders who have to work in sync. To make sure everyone’s singing from the same song sheet, there must first be a song sheet.

Corporate America Family uses a guide that includes details like “What affiliation will be loaded for the members? One for each sponsor company or one denoting ‘merger?’” The document also details the cut-off dates for services at the merged credit union. These are just two examples from the six-page document the Illinois credit union has used during its three recent mergers.

CU QUICK FACTS

Genisys Credit Union
Data as of 12.31.14

HQ: Pontiac, MI
ASSETS: $1.9B
MEMBERS: 149,121
BRANCHES: 25
12-MO SHARE GROWTH: 5.5%
12-MO LOAN GROWTH: 14.0%
ROA: 1.68%

In suburban Detroit, Genisys Credit Union ($1.9B, Pontiac, MI) offers a detailed list of merger best practices gleaned from its own creation six years ago as a merger of similarly sized T&C Federal Credit Union and USA Credit Union. 

Those four pages of outlined best practices include details ranging from data checking and cleanup to vacation blackouts to phone support for the week the new credit union goes live. There’s also a heavy focus on the people involved in the process.

“If you plan well, the surprises should be minimal,” says Genisys president and CEO Jackie Buchanan, who became EVP/CIO of Genisys in that 2009 merger and now is guiding the enterprise through another merger conversion it plans to complete the last weekend of July.

If you plan well, the surprises should be minimal.

Jackie Buchanan, President/CEO, Genisys Credit Union

Meanwhile, ICON Credit Union ($227.4M, Boise, ID) used an Excel spreadsheet — its “Merger Project Plan” — during the six-month process that concluded on June 1, 2014, the live date for its merger with Boise US Employees Federal Credit Union. That spreadsheet tracked the progress of every step along on the way, including comparing how each credit union handled specific tasks, conference calls, member communications, data mapping, and vendor coordination.

De-Conversion Facts And Fees

CU QUICK FACTS

ICON Credit Union
Data as of 12.31.14

HQ: Boise, ID
ASSETS: $227.4M
MEMBERS: 22,393
BRANCHES: 9
12-MO SHARE GROWTH: 37.3%
12-MO LOAN GROWTH: 33.4%
ROA: 1.31%

Vendor de-conversion fees come into play when one system stays and one system goes, and they can be costly.

“Depending on the remaining time in the agreement, we’ve seen de-conversion fees close in on $100,000,” says Paulson at Corporate America Family. “And it seems like the decision to merge is always right after you sign that five-year deal.”

He adds Corporate America Family received a bill for almost $200,000 for the debit card conversion during its latest merger.

“It’s clearly a revenue stream for vendors, and they tend to be very inflexible,” the veteran credit union executive says. “But if you happen to be with the same vendor in a merger, that can make a difference.”

That’s what happened at ICON, where the Idaho credit union was merging data from one Fiserv platform onto another and adding other ancillary services.

“We used that leverage to zero out what could have been $350,000 to $400,000 in exit fees,” says ICON COO Michelle Wall.

And even after a credit union pays its vendors to go away, it still needs their cooperation to ensure a smooth transition for their exit.

CU QUICK FACTS

Clearview Federal Credit Union
Data as of 12.31.14

HQ: Moon Township, PA
ASSETS: $950.0M
MEMBERS: 88,598
BRANCHES: 14
12-MO SHARE GROWTH: 10.4%
12-MO LOAN GROWTH: 18.2%
ROA: 0.43%

“Maintaining data accuracy and consistency, as well as gaining the support of third-party vendors, are our biggest challenges in moving member data,” says Mark Brennan, president and CEO at Clearview Federal Credit Union ($950M, Moon Township, PA).

The suburban Pittsburgh credit union has completed four mergers in the past five years. According to Brennan, Clearview has stayed with the same core system the whole time while leaving systems from at least three competitors.

“Vendor contract buyouts are a consideration for a merger, but they have typically not been a reason to merge or not merge,” he says. “And we’ve been fortunate that we haven’t had any excessive contract buyouts.”

Mixing Bits And Bytes

Each of the four credit unions cite investment, experience, and customization as reasons for keeping a core platform. They also recommend following a coherent process for bringing merged data into its new home.

For example, Corporate America Family runs a set of Crystal reports against its Fiserv XP2 core system to create accounts for thousands of new members in a short amount of time. It also ensures the merged credit union’s data files are as clean as possible before it imports them, which includes checking for things like missing Social Security numbers.

Everyone does things a little bit their own way, so even though we ask, there are always surprises.

Andy Bowen, Vice President of Technology, Corporate America Family Credit Union

Other things to look out for include missing collateral in loan files and similar information that can be lost through mismatched file fields. Trust and retirement accounts also can be tricky to move from one system to another.

And simply searching the data of the other credit union can yield the unexpected. For example, one credit union Corporate America Family merged with used all caps to indicate a deceased member.

“They didn’t know that was unusual,” says Andy Bowen, Corporate America Family’s vice president of technology. “Everyone does things a little bit their own way, so even though we ask, there are always surprises.”

Such surprises also can include overlapping account numbers. During one large post-merger data integration, Genisys had to assign new numbers to some members, which brought up another challenge.

“We needed these members to read their mail and understand what was changing,” Buchanan says. “They didn’t always do that.”

A Communications Mix

Best Practices To Ensure The Best Possible Merger

  • Start with clean data. The merging credit union needs to review and update its membership and product data for consistency.
  • Early vendor notification. Some vendors require six months or more notification if the merger will require support. Mergers that include a mass reissue of credit and debit cards is one example, says Brennan at Clearview.
  • Set up a Secure File Transfer process prior to the operational merger for easy exchange of files.
  • Set up a secure email so the two credit unions can easily send emails containing sensitive data.
  • Convert passwords or figure out another way to simplify a new online banking system for members.
  • Make sure project managers are managing the project and not taking on too many tasks themselves.
  • Build in time for the unexpected on the weekend merged data goes live.
  • Celebrate. Have a party. Eat pizza. Play music. Genisys celebrated with an off-site party at which the Genisus Band played song parodies about the conversion. "Yes, we have a Genisys Band," says CEO Buchanan.

Indeed, member and internal communications are central to the merger’s ultimate success. During its merger last year, ICON used its merger project plan to keep up with the timelines for each of the moving parts of the process. ICON also posted regular communications on its website about when the Boise US Employees members would become ICON members and what that would look like.  

This is just a small sample of the information available from credit unions to other credit unions. Detailed merger best practices from Corporate America, Genisys, and ICON are among the tactical documents, templates, and policies available in Callahan’s Executive Resource Center.

Paulson at Corporate America Family also advises leaders to be sensitive to what staffing changes look like to members.

“Members at the credit union you’re merging can be protective of their own staff, the people they’ve been seeing and working with,” he says.

The People Part Of The Data Integration

The right people can make a big difference in seamless integration. Buchanan at Genisys says a few skillsets are crucial to have on board. Project management is one. Another is a developer who understands core data enough to manipulate it into new formats when needed.

And what about after the merger? Most smaller credit unions disappearing in mergers don’t have much, if any, IT staff of their own, so mixing those cultures is not typically an issue. But don’t overlook the skills they might have, especially among those multi-taskers. Wall, the COO at ICON, says leaders met with each Boise US Employees staffer and found, for example, a teller who wanted to be a loan officer.

Ultimately, successful integration after a merger will help ensure the merger remains successful years down the line.

“Since the merger, former Boise US members are using their new ICON branches more than their original branch,” says Robert King, ICON’s vice president of information technology. “That shows this merger has been a success.”

 

 

 

May 11, 2015


Comments

 
 
 
  • Great article!
    Jen
     
     
     
  • Thanks, Jen. Getting so much hands-on, actionable, how-to detail from those outstanding credit unions made doing this piece a breeze! Hope it's useful for anyone else taking on the merger challenge.
    Marc Rapport