Today’s financial marketplace is challenged by increasing regulation, high expectations for fast and mobile financial services, and new fintech companies joining the already competitive arena. For many institutions, a good strategy to stay on top is pursuing mergers and acquisitions. Community banks with small asset sizes might merge with other small institutions whose branches complement one another, and larger banks may acquire smaller ones whose services fit their offerings.
Due to their many benefits, mergers and acquisitions are on the rise. A poll of Abrigo’s recent mergers and acquisitions webinar audience found 35% in the process of acquiring and 41% considering merger and acquisition activity in the near future. Nationwide, the outlook on financial mergers and acquisitions is also trending higher. When these consolidations go smoothly, benefits include:
- enhanced market power
- more room for expansion without the cost of brick-and-mortar investments
- the ability to provide a variety of services
- a more diverse customer base to draw from.
But it’s essential that your institution prepares well before embarking on a consolidation venture. This includes making sure that you:
- know your target bank inside and out
- have internal processes streamlined to avoid extra hassle during integration
- understand the short- and long-term impacts of a long-term investment like a merger or acquisition
It may be wise to consider Bank Secrecy Act (BSA)/anti-money laundering, asset/liability management (ALM), or exit pricing advisory services to help with these issues and more.