On 6th March 2018 AnnanTech Ltd. and Kingston Business School presented their collaboration’s findings to a lively group of professionals from banking and academia. The research focused on studying the specifics of information technology (IT) integration in mergers and acquisitions (M&A) in banking.

Amanda Annandale (Director, AnnanTech), Brett Annandale (CEO, AnnanTech) and Dr Serhiy Kovela (Kingston Business School) embarked on the project with the view to systematise rather patchy public knowledge on IT integration in banking M&A and propose a comprehensive guidance for practitioners in this field. The result of such an approach is a rich and deep picture of issues currently prevailing on this subject. It combines a systematic literature review of both academic and practitioner-oriented sources with a variety of views from a diverse body of leading industry practitioners representing 181 years of hands-on experience in M&A IT integration projects in banking.

The event kicked-off with Amanda Annandale introducing the project and its contributors to the audience. Next followed the report by Dr Serhiy Kovela covering factors shaping the M&A activity in banking in recent decades. Specific topics covered were:

• Banking industry drivers and trends for M&A in banking globally (since 1990’s to date)
• General and technology-related issues prominent in the M&A integration process
• Principles guiding the M&A integration in banks
• Design of the target operating model for the merged business

Amanda Annandale then discussed the optimal structure of the M&A IT integration process and the implications of applying it for divisions and individuals involved in the integration process. She also outlined the institutional changes banks needed to implement to successfully deliver the M&A IT integration. Amanda also explored whether full integration was always a desired and practical scenario for banks engaging in M&A. Lastly, she identified the appropriate degree of IT due diligence and approaches to risk management within the M&A IT integration projects.

Brett Annandale finished off the presentation by discussing the elicited base principles and criteria for creating a composite framework catering for a broad number of banking M&A IT integration scenarios and proposed an initial version of the framework.

The event also featured an independent contributor Simon Burrows, Managing Director at Payments Fintech, who discussed the legislation and policies related to the IT integration projects in banking M&A. Special attention was paid to recent significant developments in this space, such as PSD2, GDPR and Open Banking.

The briefing was well attended and attracted an audience from both from the practitioner’s world, banking industry specialists and consultants, and academia including Kingston’s Vice Pro Chancellor Professor Martyn Jones. The Q&A section stirred up an interesting and revealing discussion, which further reinforced some of the findings presented on the day.

Post-event impressions:

Dr Serhiy Kovela

“These are some simple facts about banks, M&A, and IT integration: M&A is always on the table for banks, crisis or not; banks’ operations and increasingly strategy rest firmly on IT capability; M&A IT integration best practice is rarely shared across organisations; as a result, the industry does not learn – the recent TSB IT disaster is but a latest case of this. The industry therefore needs an openly-available and community-led flexible IT integration guidance to inform practitioners and protect end-users of banking services.”

Amanda Annandale

“There is a huge gap between the planning of an IT integration and the reality of designing and then merging very complex legacy IT infrastructures. The gap between planning and practical implementation needs to be addressed – adapting to an evolving landscape and complexity, if ignored risk the merger’s success in real terms.”

Brett Annandale

“Post 2008, the plethora of stringent banking regulation has hugely impacted the Financial Services Sector to such an extent it can impact whether a merger happens or not. Therefore, it is critical to have a systematic and flexible framework to apply the appropriate level of regulation at the right time within the merger process.”

Prof Martyn Jones, Deputy Vice-Chancellor Kingston University

“One of the highlights of the research‎ year was attending the event organised at Fortnum and Mason by AnnanTech, to listen to the research findings of a study conducted in partnership with Kingston University on M&A through the lens of IT integration. The research was relevant, current and insightful and I will follow Dr Kovela's follow-on work, as I believe he has found a rich stream of work, which will be of great benefit to scholars and practitioners alike.”

Acknowledgements

The team are expressing their gratitude to the event co-sponsor, IBM UK, and to all the contributors and attendees for constructive feedback and engaging questions. We hope that the study is a start of a broader dialogue within both professional and academic communities and the beginning of further collaborative work in this important area.