The Merger Compliance Issue You May Not Have Considered

2022 will clearly be a challenging year for bank mergers, with the marketing and communication tools requiring extra attention and effort.

Government agencies continue to review bank mergers more closely; one area impacted by the growing oversight climate is the marketing and communication banks use to announce mergers and welcome newly acquired account holders. These tools are the first items and messages that account holders and staff encounter, but are far too often, they are the last thing bankers review in the process of completing a merger.

When we discuss merger communication planning and execution with our clients, both pre- and post-purchase, we spend the most time talking about the following three issues:

1. Getting solid, manageable, actionable data from the acquired institution
We find that many financial institutions that are acquired have been anticipating such a transaction for a number of years. As such, core systems and files may not be completely up to date; investments in technology upgrades and certain housekeeping details may have been deferred or even scrapped.

On the top of that list is the master customer information file, or MCIF, or scrubbing the core database for customer contact details and transaction history. The prime culprit is e-Statements; their popularity has reduced the number of mailed physical statements, which generate a change of address notification if they’re returned. Fortunately, there are a number of tools and strategies available to fix this problem. We also encourage our clients to explore this during the pre-purchase phases, in case updating the data requires a costly solution that needs to be negotiated into the final deal. We believe regulators may want to know that customers have received these disclosures – having the right address is a big part of that.

2. Weaving customer advocacy into welcome materials
The new compliance culture is driving more concise and clear messaging for the account holder; the primary contact points coming through online or web communications, along with printed welcome material that goes out with the disclosures. This does not mean “dumb down” your messaging; it is our opinion that this includes presenting the account holder with impact points and advocacy in the clearest possible terms. This is a direct response to the new wave of consumer awareness and advocacy that we see in other parts of banking, like mortgage.

Specifically, in the welcome materials, there is a balance between brand and awareness messaging and instructions for the new account holder. Banks must adjust this combination to create an even mix of both. When in doubt, perfect the message towards the account holder. We advise our clients to consider including strong presentations concerning:

• What is changing and when.
• Different methods for getting questions answered or product help.
• Clear explanations of the features and benefits offered to the account holder.
• Introduction to new services like digital banking.

Serial acquirers should pay close attention to this; they can fall into the trap of dusting off the material from the last merger, making a few adjustments and moving along. It is our observation that material that may have been delivered more than six months ago may not meet current regulatory oversight needs. (Check out our article in the first quarter 2022 issue of Bank Director magazine for more on this important issue.)

3. Personalization
We struggle to understand why financial institutions send out large – more than 30 pages, in addition to the disclosures – welcome information kits. It is not only much more expensive than necessary and environmentally unfriendly – it makes it harder for the consumer to find the information that applies to them.

There are two parts to this. First, print-on-demand materials means creating welcome kits can be as economical as static materials in all but the smallest mergers. Second, this setting allows you to target the right message to the right household or business. This allows the acquirer to get solid data, complete account mapping and tackle the most challenging task: programming the algorithms to make sure the right material gets to the right household or business.