Finansliv, Sweden: Cognizant’s Head of Banking and Financial Services in Europe Says IT Integration Strategy Should be Aligned with Business Strategy to Ensure Successful Merger

“Worldwide, mergers and acquisitions in the banking sector have become increasingly common,” says Sriniketh Chakravarthi. “Alongside this re-evaluation process, banks are starting to simplify their operational infrastructure accordingly with the principal objective being to reap the benefits of economies of scale to compete more effectively and offset rising regulatory pressures. But what are the factors that help determine the outcome of a successful bank merger and what do banks need to do to effectively integrate and operate their IT landscape?” Excerpts:

“As banks move forward with mergers and acquisitions, while still having to manage global enterprise risks as well as statutory and regulatory obligations, they are tasked with integrating technologies from various areas both within and outside their business.

This involves, for example, not only aligning IT and business strategies, but also actually integrating infrastructure components such as data centers, operating platforms and enterprise applications. Any glitches or disruptions during this process can negatively affect customer service and levels of trust, critical aspects of a bank’s reputation and, therefore, the bottom line. So it is essential that banks work to mitigate exposure in key areas related to inter-connectivity, regulatory compliance, credit—and collateral—quality, innovation and liquidity.

In order to ensure a smooth transition, the IT department should be involved from the very beginning of the process and the IT integration strategy should be aligned with the business strategy to ensure a successful merger. The current technology landscape offers plenty of alternatives such as cost-effective open source options, SaaS models that allow a consumption-led commercial infrastructure as well as the emerging Business-Process-as-a-Service (BPaaS). These options allow banks to consume complete services without having to worry about new technology investments.

Ultimately, however, the use of a single, agile IT landscape further strengthens the cultural integration of the merged institutions and enables the bank to offer a consistent service to its customers. Only then can banks be safe in the knowledge that their combined IT infrastructure is flexible enough to absorb future changes and meet the demands of the business, its customer and the regulators.”

Click here to the blog in Swedish.