11/20/2019

Navigating the Murky Waters of Mergers & Acquisitions

Barry Adcock November 20th, 2019

The mergers and acquisitions (M&A) train that left the station in 2018, fueled by things like tax reform, interest rates inching up, and FI-friendly regulation keeps on chugging along. American Banker reports that the pace of M&A slowed slightly in 2019, but even so, more than 180 mergers were announced as of the end of September.

A survey by the Conference of State Bank Supervisors that was conducted this past spring revealed that a quarter of banks had made an acquisition bid within the past year, which is up an astonishing 20% from this time last year. More than 14% of banks had received an offer during that time, which is also up in double digits from this time last year.

Survey respondents reported the most common reasons for entertaining an offer:

  • Cost of regulations
  • Struggles with economies of scale
  • Succession planning

As well as the most common reasons for acquiring:

  • Achieving economies of scale
  • New market entry
  • In-market expansion

All of this is disruptive to financial institutions. We get it. M&As bring with them all kinds of uncertainties – like how the new, combined bank is going to perform, culture clashes, redundancies in positions leading to the possibility of layoffs, engagement of employees who are rattled by the whole process — the list goes on. Something else that needs to go on, in the midst of all of this disruption, is business as usual. Financial institutions, whether they’ve been acquired or done the acquiring, need to keep their eye on the ball and make sure the day-to-day business gets handled.

Deluxe recently underwent a reorganization to more closely align with what financial institutions need from a partner today. We’ve transformed from a check company into a tech-enabled solutions partner that can deepen customer relationships, with the talent and skill of each and every one of our employees. With a renewed focus on our core competencies, including cloud-based and marketing solutions, Deluxe has the expertise to help banks navigate the uncertainties of M&As by focusing on key areas, like retention, acquisition, branding strategy, communication strategy and operational efficiencies.

Deluxe can help banks power through M&As by keeping the focus on strengthening business-as-usual. Let’s do a deeper dive into each of those areas.

Retention

Today’s consumers are empowered with more purchase information and competitive options than ever before. And because they still view banking relationships as more transactional than emotional, it’s often difficult for people to build a connection with their bank. Financial institutions must focus on new ways to engage and retain customers and maximize the long-term value of each customer relationship.

Rewards drive engagement. Incentive-based engagement programs are among the most powerful tools for driving loyalty and customer profitability. They allow you to motivate and reward profitable behaviors like increasing account balances, using online bill pay, and setting up direct deposits. You can also reward customers just for signing up, getting them engaged from the start.
Deluxe Rewards helps promote meaningful behavioral change without the high cost of a traditional program. Designed to engage and motivate customer behaviors, it creates emotional connections through incentive-based engagement, deepens brand affinity and promotes long-term loyalty. It’s all about creating longer, more profitable relationships.

Acquisition

Deluxe Marketing Solutions can help target and pursue new customer or household relationships. When a customer or prospect is thinking about buying a car, expanding their business or buying a home – our data, proprietary models and full-service campaign services can connect you with them.
What we deliver to our clients:

  • Actionable insights. The best marketers start with great data and insights. We’ll work with you to develop marketing campaigns that use data, analytics and reporting to connect with your target audience.
  • Strategic advising. Based on deep industry knowledge and decades of experience in data-driven marketing, we’ll help you build campaigns that achieve optimal RPO.
  • Quick, flexible approach. We pride ourselves on creating both off-the-shelf and customized solutions and meet our customers’ unique needs.
  • Full-service marketing support. Our multi-channel approach includes data management, modeling, fulfillment and performance tracking.

We can help you find the right customers — before your competition reaches them — and deliver a tailored and engaging marketing message. We supply our clients with multi-sourced and curated data assets, data analytics (including custom and off-the-shelf models, advanced segmentation, insight scores and more), and the proven strategies needed to locate and target the most highly qualified leads. This all means more satisfied and profitable customers for your company. We deliver a rare combination of data, analytics and technology that will help you acquire the right customers as well as grow and retain your existing customers.

M&A Branding Strategy

Whether you’re a new business or an existing one needing a brand refresh, Deluxe can help financial institutions introduce new brands and strengthen existing brands. We can help you with:

  • Custom marketing products. Everything you need to get your brand in your customers’ hands, from promotional items and apparel to retail packaging and print marketing.
  • Business services. We’re your one-stop-shop for financial solutions and marketing expertise for your business, including logo and website design, web hosting, domain names, email and social media marketing and more.
  • Checks and business supplies. You need to have brand consistency across all of your communications, and that means checks and banking products, forms and office supplies.

M&A Communication Strategy

M&As don’t just unsettle and disrupt bank employees. They disrupt customers, too. Imagine if you banked with one institution your entire adult life and all of a sudden it merged with another bank. Is your money secure? What changes are coming down the pike? What sorts of features or services are going to disappear, and what might you be gaining? Is the new institution stable?
In M&As, it’s vital to have clear communication with customers, so they don’t simply take their banking elsewhere. Deluxe can help you communicate to impacted customers with our overall marketing and print capabilities.

Operational Efficiencies

Deluxe can help consolidate operations or improve efficiencies as your financial institution grows as a result of an acquisition.

Our powerhouse Payments division works with industry leaders to accelerate access to working capital, improve straight-through processing, and drive profitable growth through in-house, hosted or BPO solutions for receivables management, remote capture, payment processing services and treasury management onboarding.

With more than a century of experience, we help financial institutions, corporations and nonprofits succeed through innovative digital and traditional financial services. Today we are paving the way for a new future that transforms how Treasury Management operates and performs. Our intelligent Treasury solutions facilitate business in the cloud with improved cash visibility and forecasting to drive bottom-line value, scalability to do more with less, and better financial controls to mitigate risk for banks and businesses alike. Deluxe is uniquely positioned to be the best partner to build this future for our clients, because of our strategic investments and our deep understanding of our clients and their customers’ needs.

For more information about how Deluxe can help you stay the course through choppy M&A waters, contact us. We’ve got this.

This content is accurate at the time of publication and may not be updated.