Mergers, mergers, mergers. It is no secret that the credit union industry landscape has faced significant consolidation over the course of the last decade. As a core data processing partner, we have averaged eight mergers per year for the last ten years; that is more than double the previous decade, and this trend shows no signs of declining as the requests keep rolling in.
Whether you are considering a strategic alliance or find yourself in the position of assisting a peer in a financially vulnerable position, here are a few key things to consider.
Communicate with your vendors
Not to paraphrase Jerry Maguire, but help us help you! Even if you are in the early stages of the process or just starting the conversation, let your data processing partner know you are considering a merger or have one underway. Don’t be fooled—a data merger is nearly just as involved as a full-blown core conversion, and in some ways is more complex, so please note they take just as much lead time and resources.
Remember, in a merger scenario we are dealing with two groups of data (and data processors) and 3rd party vendor relationships. Project calendars fill up months, even years, in advance, and although we recognize there are always exceptions (emergency mergers, etc.), the sooner you start communicating with us the better so we can work together to meet your objectives.
And never fear, in the event that we are unable to meet the desired merger date there are options. Did you know you can still move forward with your legal merger date and the data merger can take place later? Ask us for references on how that has been executed successfully on multiple occasions with several of your peers. Depending on the scope of the project, a manual merger may be a viable solution as well.
Keep working while waiting for approval
Now that we have established that early notification is key, there are important tasks that should be completed promptly. No one enjoys the paperwork or red tape associated with regulatory agencies, but we all know they do not move quickly so do not drag your feet on this! Securing regulatory approval followed by a prompt membership vote (if applicable) is vital…your merger cannot move forward without these critical components.
From a data processing perspective, it is often a balancing act to ensure the data merger project is underway yet the train doesn’t get too far down the tracks, and everything comes to a screeching halt because these crucial elements are not completed. However, do not let this delay you in notifying your data processing partner and securing project resources.
What else can you be doing during this interim period? Start reviewing and comparing products, services, disclosures, and fees! Will you be retaining any products or fees from the non-surviving entity? Are there any services or integrations being utilized that need to be added to the surviving credit union? What products do you plan to merge? Completing this review and starting these discussions early in the project is very beneficial and can really help expedite the process.
In conclusion, we realize merger projects are full of red tape, politics, and their own unique complexities. As your partner, we are here to help and hope that you find these tips helpful to avoid potential pitfalls on the data processing side of things. If you are considering a merger, don’t hesitate to reach out and start the conversation—we’d love to hear from you!