Credit unions mull tech in wake of merger plan

The recently announced merger of two West Coast credit unions will present complex IT issues, but the real challenge may be integrating and deploying the two organizations’ human resources, officials said.

This week Coast Capital Savings based in Victoria and Surrey Metro Savings of Surrey, B.C., announced a plan to combine and create Canada’s second-largest credit union in terms of assets, and the largest credit union in terms of membership.

Joel Rosenberg, Victoria-based senior vice-president of Coast Capital’s information technology group said based on his organization’s experience after a sizeable merger with Richmond Savings in early 2001, the biggest integration challenge will likely be combining and re-deploying people and processes. Since the IT groups support many products, including personal banking, insurance, wealth management advising and retail real estate sales, Rosenberg said “the business drives IT here, not the other way around.”

During the merger with Richmond Savings, he said the two organizations gathered a group of about 65 employees – from both the business and IT side – and examined all their respective IT practices. Only then, Rosenberg said, did they start auditing systems to develop and integrate the technology.

Craigg Ballance, a Toronto-based partner with the E-FINITY Group of consultants and a former financial service IT executive, said auditing processes can be one of the trickier aspects of mergers.

“In an equal merger sometimes it can be difficult because you’ve got to decide who’s the boss. In a buyout or takeover this is less difficult. For instance when TD took over Canada Trust it was a much more autocratic thing where TD called the shots,” Ballance said.

Ballance also agreed that “the organizational effort is more difficult than the actual conversion point itself – getting the team right, getting people assigned to the jobs, scheduling things. It’s not that hard to develop a project timeline anymore.”

Obviously, Ballance said, timelines are set to ensure the least amount of unfavourable customer impact, but he said there can also be significant political pressures on IT decisions, such as the scheduling of the actual systems changeover.

“Executives may try to make the project a big enough amount of work to convey that they are doing enough, but not to sound like they will take too much time, and expend too much money,” he said.

Rosenberg said mergers also make an ideal time to perform system-wide upgrades, and build on each other’s technological strengths.

“(Last time) Richmond was at the point where their system was old and tired and needed to be replaced. They had taken steps to make sure the system was stable, but when the merger came along the Pacific Coast Savings’ system had tons of capacity so it was a matter of bringing them across. But then you had to make all the changes in the technology to support the new business practices of the organization,” Rosenberg said.

Rosenberg said bringing in experienced financial service integration consultants proved very helpful in the initial stages of the previous merger.

“They came in not to drive the project – we’ve always found that you need to have the people who are going to own it at the end of the day be accountable and responsible for driving the project – but they were very valuable in laying out a process, suggesting ‘Have you thought of this, have you thought of that’. They were engaged fairly broadly up front, but as the transition period went on they disengaged, and by three-quarters of the way through the project the team within the company continued it on through fruition,'” he said.

The biggest lesson learned form the previous merger, Rosenberg said, was to slow this one down a bit. Not because of technological issues, but to lessen the shock to 2,000 employees, all of whom have a desktop.

“At an executive level we wanted the last merger to happen fairly quickly – we didn’t want it to stretch for years and years and lose the benefits of why we did it in the first place. But this time we’ll slow that process down from nine months to maybe 15 months or 18 months, more so the people can keep up with the technology. Our staff has been great but people can only absorb what they can absorb. They’ll do it but we don’t want to pressure them,” he said.