Merchants & Manufacturers Bancorp. has a busy docket over the next few months: convert a handful of acquired banks, and do the job thoroughly enough to keep customers from becoming disenfranchised and fast enough to be ready for more conversions if the opportunity arises.
One of the key pillars in its strategy is drawing on the larger trend in financial services toward establishing relationships with a single technology vendor for IT services across the enterprise-or at least forging broader relationships with fewer vendors.
MMBC believes the best strategy for integrating recently acquired dispersed operations is to centralize head-office functions such as human resources operations, technology, auditing and compliance. The bank has hired Metavante as the sole provider for its growing network of community banks, since many of the acquired banks, while having different core systems, also had relationships with Metavante on some level. Don Rowland, MMBC's president and CEO, says that familiarity gave MMBC a head start in conversions. "You need to have all banks on the same system," says Rowland, who adds that MMBC is facing five conversions over the next four months.
Dan Shannon, vp and general manager of consulting and professional services for Metavante, says MMBC's case was complicated by three different core banking platforms that resulted from an aggressive series of acquisitions by the bank.
MMBC's goal is to make all policies and procedures the same across its network, while keeping the autonomy for its community banks, which brand themselves separately. "It's a global customer view, understanding the customer and account relationships across the whole company," Shannon says.
As part of the merger conversions, MMBC is also developing a more advanced Internet banking platform, and a contact-management strategy that strives to coordinate customer service. That includes business-intelligence software, and a data warehouse that can be used for analysis and customer satisfaction studies.
The project also involves compliance technology, with software to handle anti-money laundering, Patriot Act and Sarbanes-Oxley compliance and enterprise-wide risk management. "They need to spend more time making sure they're managing their risk and automating their risk mitigation," Shannon says.
The centralization is designed to allow for a consistent feel for consumers accustomed to dealing with their community bank, combined with the continuity designed to minimize the changes heaped upon consumers. Maritz Research says that more than half of all households have experienced a bank merger in the past five years, and about 20 percent of those affected by mergers say they're worse off afterward. MMBC hopes consistency will shave that percentage. "If a customer walks into the door and gives us a financial statement, all of that information doesn't have to be keyed in again," says Rowland, adding that information will already be available in the central mainframe. "That's where you gain efficiency."
MMBC operates six banks in Wisconsin, one bank in Minnesota and one bank in Ohio, with residential mortgages offered through CBG Mortgage, investment services through Link Community Financial Services and tax preparation through Keith Winters & Associates. MMBC has a history of growth by acquisition, one factor that's resulted in a diverse technology bench. First organized in 1982, the Midwestern bank has acquired Lincoln State Bank, Franklin State Bank, Pyramid Bancorp and its subsidiary, Grafton State Bank. Shannon says the complexity of MMBC's technology infrastructure stands opposed to the institution's need to focus on banking, which is heightened in an uncertain economic climate where simply adding bulk by buying other banks isn't enough to maintain adequate growth.
And the pressure's on Metavante as well. Acquisitive banks looking to centralize their platforms are forcing tech companies to add to their own bench to keep pace. "Midsize banks can afford to buy and consolidate their market share, and expand their scope," says Alenka Grealish, manager of the banking practice at Celent Communications. "They don't want to be slowed by integration, so they can move into their next acquisition before the current dries up. You want check imaging, Web banking and other platforms that can integrate."
Grealish says tech companies are keen to becoming a bank's sole integrator. "Metavante, Fiserv and Fidelity are all in a strong position to be that superprovider," he says.
