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Three steps for bank merger technology integration success

A well-designed technology integration strategy can drive value in bank mergers.

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Bank merger tech integration strategy to enhance deal value & reduce risk.

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How merging banks can develop a tech integration plan

Bank mergers are expected to accelerate in 2025, fueled by more favorable regulatory shifts and declining interest rates. However, banks engaging in M&A today must contend with a substantial increase in technological complexity, including critical factors such as process automation, digital enablement and AI adoption. Like bringing together two households under the same roof — each with their own set of routines, preferences and belongings — integrating technology requires meticulous organization and planning. Without a sound tech integration strategy, banks risk significant value erosion, customer dissatisfaction and a loss of shareholder confidence. 

By following three key steps, the EY team has found that banks can reduce these risks and turn tech integration planning into an asset.

A well-designed technology integration strategy should consider the collaboration plans between the two businesses. Traditional methods often focus too much on technology alone, rather than combining business and technology. To define how the new business will work, a core group of leaders from product, customer service, and technology should be formed, representing various business lines like retail and commercial banking. Leaders should evaluate the business environment, including financial products and customer segments, aligning the new operating model with principles that enhance customer experience and expected revenue synergies. 

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Technology integration strategies

To determine the technology integration strategy, banks can consider the underlying deal thesis: 

  1. A large entity acquiring a smaller entity
  2. A merger of equals
  3. Capital infusion

The team can then examine which of the following three technology integration strategies align with their objectives:

Adopting an application and platform disposition framework is a key accelerator for choosing the optimal technology stack for the combined entity. This framework is especially useful with the best-of-breed strategy.

Data migration strategies

To determine the optimal data migration strategy, consider speed, customer impact and execution risk. Data migration strategies include:

Technology leaders can then leverage frameworks and tools to accelerate the development of integration roadmap. For example, with forward or reverse integration strategies, a data factory framework supports a smooth data transfer from old systems to new.

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The two primary ways to achieve technology value creation are through technology synergies and capability enhancements. 

In our experience, technology synergies can range between 15%–30% of the combined IT spend depending on the integration strategy adopted. Synergies can be realized both on run-rate technology costs and one-time project savings.

Capability enhancements arise from aligning the right capabilities with business strategy, leading to improved customer experience, operational efficiency, productivity, employee satisfaction and risk management. Banks can further enhance these capabilities by utilizing AI to identify new revenue opportunities through better cross-selling and data integration.

Integration leaders can assess both short-term and long-term models to evaluate overall synergies, associated costs and timelines for achieving them, considering ongoing savings, additional costs and one-time savings and expenses related to the merger.

Areas of focus for tech-driven value creation and cost synergies include:

  • Technology organization optimization
  • Platform and application rationalization
  • Infrastructure integration
  • Tech vendor and license consolidation and negotiation across both merging banks

By focusing on technology value creation, bank leaders can demonstrate the merger’s benefits to stakeholders, build a robust technology ecosystem and position the organization to meet long-term transformational goals.

Here is the list of contributors of the bank merger report:

  • Murali Krishna Arcot, Senior Director – EYP, Ernst & Young LLP
  • Subhakam Misra, Senior Director – EYP, Ernst & Young LLP
  • Ketan Parekh, Senior Director – EYP, Ernst & Young LLP
  • Vikram Prabhudoss, Senior Director – Tech Consulting, Ernst & Young LLP
  • Gaurav Jani, Senior Director – Tech Consulting, Ernst & Young LLP

Download the 3 key steps for bank merger technology success report

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The team

Atul Sharma

Principal, Strategy and Execution, EY-Parthenon, Ernst & Young LLP
Strategy, value creation and M&A leader focused on private equity and financial services sectors. Traveler. Explorer. Photographer. Runner.
Los Angeles, CA, United States

Manpreet Ramana

Principal, Technology Consulting, Ernst & Young LLP
Global technology strategy and transformation leader. Focuses on large transformations related to platform modernizations, post-merger integrations, divestitures and transformation value creation.
New York, NY, United States

Aabid Abbasi

EY Americas FS Technology Growth and Innovation Leader
Strategic thinker who helps banks modernize. Father. Cricket enthusiast. Global traveler.
New York, NY, United States

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