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Stacking your tech in an M&A world? Focus on these key areas


Consumer demand for an interactive, digital wealth management experience continues to place pressure on smaller banks to invest in technology when they can’t build their own. Much of the mergers and acquisition activity in the industry is driven by this urgency to look to new technology to stay relevant, while larger banks and advisory firms seemingly innovate and scale with ease.

We are operating in the age of technology-driven deal flow, and the growth-by-acquisition strategy is increasingly popular among community banks. A unified and modern technology can indeed create scale, but additional considerations – such as regulatory requirements and increased costs – come with size. For this reason, looking under the tech stack’s hood is critical.

Surveying the land

It’s important to first scope the full technology landscape of the merging firms – especially in wealth management business units. When community banks merge, the focus is often on the retail side of the business, and the wealth management business can be an afterthought. These tech stacks can be complex, potentially built with many disparate systems and processes.

Multiple systems equate to multiple vendors that require extensive due diligence and oversight. Managing these responsibilities puts a strain on time and energy that can be better utilized if the focus is primarily on managing clients and employees instead. Identifying functionality overlaps, eliminating redundancy, automating workflows, leveraging straight-through processing and reconfiguring vendor relationships can drive greater efficiency.

By carefully evaluating the current technology investment across all businesses in both firms, as well as considering a platform’s scalability, data aggregation capabilities and deployment requirements, it’s easier to determine which technology platforms to keep – and which to sunset.

Meeting expectations

Considerations should also factor in the technology that’s most valuable to employees and clients, while being the least disruptive. By outlining client expectations and employee needs (such as front-, middle- and back-office tools that offer productivity gains), it’s easier to identify the technologies that will support those needs.

It’s no longer just about the standard investment performance view. Clients want to interact with their wealth and be empowered to make investment decisions. Not only do they expect a robust web-based user interface, but clients also want ease-of-use mobile applications that allow them access to their holistic financial well-being, including dynamic reports that map their portfolio performance to their unique financial goals.

Equally important, the technology should be compatible with – but also ease and enhance – the overall business workflows for employees. Consolidating the view of a client’s investments and wealth not only reduces the number of systems employees must log into, but it also provides a comprehensive view into a client’s financial progress.

Mobile applications also allow advisors the flexibility to get away from their desks to meet with clients in person or virtually through web-based video conferencing tools – an important requirement in the current environment.

Easing the transition

A merger represents two distinct business cultures coming together, and it’s crucial to ensure employees rally together under a shared purpose. Large-scale organization change can feel crippling, especially if a firm loses sight of its most important asset – its people.

Managing the technology integration components of M&A requires important considerations and big decisions, which are critical to get right. But managing the impact to your people will be the real difference between a successful end result or a tumultuous start to the new organizational entity. Disruption to business operations can – and probably will – occur. How a firm navigates and communicates with employees throughout the change is really how success will be measured in the end.

New technologies also translate to education needs. Reinventing the tech stack requires training for employees, as they need to be comfortable with the tech before they can to be comfortable providing optimal client service.

M&A activity will not likely decrease – markets are converging and the needs of wealth management firms of all sizes continue to evolve. But the unchanging consumer demand for a dynamic, web-based wealth management experience and putting employees at the center of your strategy are the two constants. Technology’s role today only continues to increase in importance, and keeping up in a flexible, smart way helps enable success for the long run. Let’s start with looking under the tech stack hood.

Greg Rodgers is a managing director for the SEI Wealth Platform in North America.