Let Customer Needs Drive Technology Choices

The vetting process revealed that most of their technologies had equivalent functionality, so Davis and her team applied the customer impact litmus test and ended up favoring First Union systems so that fewer customers would be at risk for disruption. But there were a few notable exceptions. Wachovia’s image archive system was deemed more advanced, so First Union’s archive was migrated to Wachovia’s. The combined bank also scrapped both institutions’ outdated teller systems in favor of new technology that shaves 25 to 30 seconds off each transaction. But upgrades were considered carefully, since they added time and risk to the integration process. "We needed to make sure we delivered what the customer wanted and didn’t get carried away with what would be slick," says Wachovia CIO of Retail and Channel Technology Joseph Monk. In three or four months, the team had made its selections, and of about 100 decisions, only one or two were even contested.

"Just doing a merger is difficult, let alone trying to upgrade systems," says Tubin. "The easiest way is just to stick with what you have. With that type of merger, the acquiring bank just gets big data files of customers from the acquired bank and maps and moves them to its own systems." And in fact, that’s exactly what most acquiring banks do?including Southwest Bank of Texas and Citizens. Citizens CIO William Wray says one set of core systems generally offers no competitive advantage over another, so it makes sense to minimize infrastructure costs by moving the smaller bank to the larger bank’s systems.

But bigger is not always better. Fleet was widely criticized for foisting older, clunkier (but already paid for and amortized) technology on BankBoston when the two banks merged in 1999. Although it was a business decision necessitated by the need for speed, that choice annoyed many of the affluent, tech-savvy BankBoston customers accustomed to more sophisticated ATM features. And former BankBoston tellers weren’t happy being forced to use branch technology that was older than what they were used to. Tubin, who describes Fleet’s approach as pure "acquisition mentality," sums up the logic this way: "What you have is nice, but it’ll be a lot easier if we take your customers, move them to our systems and worry about moving to better systems later." Fleet’s disgruntled customers went elsewhere as the customer attrition rate reportedly soared as high as 25 percent.