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Strong company culture is key to a successful bank merger

To get a better grasp of your culture during M&As, you must ask what your financial institution is quantifiably good at.


The havoc wreaked on the economy by the pandemic hampered bank mergers and acquisitions, but M&A activity bounced back in 2021 and this year is expected to be a busy one as well.

In my experience working with banks involved in a merger, culture is overwhelmingly cited as key to success. Culture affects relationships with customers and other stakeholders that are key during a merger. Research suggests 8% of acquired bank customers leave after a merger, compared to 5% in the industry as a whole. This doesn’t have to be the case.

To have a successful M&A and maximize stakeholder retention, it’s crucial for acquiring banks to develop a plan to effectively establish their culture, and be open to elements of the target bank’s culture. After all, in many cases with overlapping networks, employees and customers had the chance to choose you — but they didn’t. Part of this was because of what they needed from a bank and how they wanted to bank.

A fewer-than-desirable number of bank leaders appreciate the role of corporate culture during due diligence, as they are more focused on financial and regulatory aspects of the deal.

Think of corporate culture as an organization’s value statement; it’s formed over time and gradually cultivates public trust. Without a commitment to culture, it’s hard for stakeholders to feel connected to a company or understand its value — which is critical amid fundamental changes such as M&As.

Bank mergers can’t prosper unless leaders truly understand whether their combined companies’ cultures have synergies. Customers have other banking options to choose from, and a lack of culture dulls a bank’s competitive edge, costing money in the long run.

To get a better grasp of your culture during M&As, you must ask what your financial institution is quantifiably good at. If culture isn’t a leading factor, your bank might be left behind when it comes to delivering true value. Getting ahead of that curve with a strong, positive culture helps convince customers and other stakeholders to continue working with you.


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Here are other things to consider when thinking about your bank’s culture during an M&A:

Separate your values from your culture

Values help create culture, but they are not culture itself. Even if your bank has great values, that doesn’t mean it has a great culture. Instead, culture is a series of beliefs and actions across the company. Think about your leadership style, your employees’ mindsets and how your policies support your goals and demonstrate your values.

Incorporate cultural changes into the whole organization

You need a systematic approach to change or build your bank’s culture, so consider using this three-step process: First, take time to understand the current culture. Second, design the ideal culture and identify what you need to move it forward. And third, incorporate that culture in a way that’s easy for everyone to practice.

Use culture to support talent

Many industries are facing worker shortages, which means competition for talent will increase in the foreseeable future. So how can you attract top talent? People want to work in inclusive and welcoming workplaces. A bank that prioritizes culture attracts employees organically and distinguishes itself from competitors. Culture informs the changes that make this type of workplace possible.

Enable personnel to own company culture

If bank employees understand and buy into the importance of culture now, they can maintain it in the future. Teach employees the skills they need to innovate and move the company culture forward. Most importantly, make sure you reach employees across all levels to ensure success.

Although culture seems like a dispensable part of your bank, it’s vital for any company’s survival — especially during a merger. Large changes like M&As test companies in immeasurable ways, so help your bank stand the test of time with a strong and immovable culture.

Rick Hall is managing director of the banking and financial services practice at BKM Marketing.