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29 January 2020

M&A: Who’s thinking about the customer?

By Henry van Belle, I-AM’s Middle East Managing Director

First Abu Dhabi Bank was founded in 2017 following a merger between First Gulf Bank and National Bank of Abu Dhabi/I-AM

by Kudakwashe Muzoriwa

Mergers and acquisitions seem to be on the agenda in the banking sector globally—but perhaps nowhere more so than in the Middle East, where there look set to be at least another ten banks to merge over the coming 18 months.

Why the urge to merge?

The reason for the trend seems two-fold. On the one hand, the sector is mature and cluttered, where larger banks identify their smaller competitors as a good way to gain market share quickly. On the other, with government budgets focused on economic diversification, there is little appetite to support struggling banks.

Not surprisingly, there is a lot of chatter in the financial press. The theme: What’s in it for the banks? Apart from the obvious upside in terms of growth (access to new products, markets and customers), the focus is also on the potential pitfalls: inaccurate valuations, the actual cost of integration, cultural integration issues… the list is long.

The elephant in the room

At no stage, however, have I seen any reference to the banks’ customers. What does M&A mean for them? And is anyone thinking about how the resulting entity can benefit from putting the customer at the heart of its strategic planning?

After all, this is far from an altruistic matter: if you keep your customers happy, they’re likely to stay; if you frustrate them, your competitors are just next door.

It’s clear that M&A presents multiple challenges (layoffs, systems integration, culture) and opportunities (getting rid of what doesn’t work, adopting what does). But the more a bank can go into a merger with a clear understanding of the challenges and opportunities—and a clear plan of how to solve or leverage them—the better the outcome will be for all stakeholders, not least the customer.

Putting the customer at the heart of your strategy

Companies like I-AM are typically retained at the stage when the banks’ strategists have agreed on the terms of the M&A, the due diligence has been conducted and their attention has turned to how the new entity will look, feel and behave.

A design consultancy’s task is to create a new brand and deliver a branded customer experience: one that people will both remember and want to recommend.

A popular definition of the word ‘brand’ is the impression you give your customers wherever they come into contact with your organisation. Before establishing how a bank might go about delighting its customers, it’s worth looking at the number and range of customer touch-points to consider when it comes to M&A:

  • Communications — How to craft the message of why this merger is good for your customers
  • Creating a new name — How can you be sure your new name will appeal to your various target audiences without ­alienating some of them?
  • Brand identity and the new language used to communicate — What will make you stand out from your competitors and cut through the noise?
  • Branch network and format strategy — How can you get the most out of what you have while introducing the most relevant innovations, reducing your cost-to-serve, and keeping your customers happy all at the same time?
  • Branch design consistency — You are soon going to be confronted with the double-challenge of not just the legacy of your own branch network, but also that of your new partner – and then you’ll have to merge them, all while trying to offer a consistent experience to your customers
  • Digital channels — As with your branches, you’ll now have two (probably more) sets of solutions. Designing a seamless customer experience across all channels is crucial
  • Culture—How to ensure that all employees (particularly from the acquired bank) ‘live’ the new brand, rather than resent it. An ‘us and them’ scenario is bad for your staff and bad for your customers.

Understanding – and knowing how to address – these different elements will go a long way towards creating a holistic brand experience that adds significant value to your organisation.

Who are we designing for?

The foundation of any design strategy is a robust understanding of the needs and wishes of the people to whom you offer your products and services: the customers themselves. Customer behaviour changes from sector to sector and from market to market—it can also change from bank to bank and from segment to segment within a bank.

This means that one-half of a merger’s customers may have different needs, wishes and expectations to those of the other half – not to mention the fact that preferences change from individual to individual.

A good first step is to conduct a thorough system analysis, reviewing the available services and understanding how they’re offered to customers. Observing how existing customers use these services in real-time banking situations, both virtual and physical, significantly adds to the insight you gain.

These sessions can help identify pain-points with the existing offer while interviewing customers to understand what they do and do not like about a particular experience, and what they’d replace it with if they could, also adds value.

A shared vision

There are various players within the bank who have a stake in the experience that is ultimately offered to customers – and their objectives are not always aligned. It’s essential to bring these players together at the start of a project in order for each department to have input into the strategy and be able to sign-off on the road map for the project.

The role of Technology

I’m grateful to receive a healthy number of project briefs from various banks around the region. Most banks have similar objectives (gain more customers, engage with them better, reduce the cost to serve them) so it’s unsurprising that many of the briefs focus on similar themes.

‘Innovation’ seems to be the most common. There is good reason for that: technological innovation has completely transformed the banking sector (and most others) in recent years. Ensuring that your bank keeps up-to-speed with the latest developments is crucial. However, innovation for the sake of innovation is an easy trap to fall into.

Here again, going back to the customer’s perspective is a good starting point. So, too, is being able to ask – and answer – the right questions. It’s easy to be impressed by a flash piece of kit in one of your competitor’s branches, but understanding the purpose of technology is essential before making an investment.

Some of the questions to consider include: Who’s going to use it? What are they going to use it for? What problem does it solve? Do the benefits justify the investment? Where should it be located within the customer journey to ensure it’s used effectively? What should be the relationship between staff and technology?

Success not failure

I was amazed by the recent (or current in some parts of the world) trend of talking about – and celebrating – failure. ‘Fail fast and fail often’ is the mantra. While I understand the thinking behind it (‘if you’ve never failed, you’ve never tried’), when it comes to embarking on a project as important as M&A, failure should not be on the menu.

Structuring the project in the right way with clearly defined objectives, bringing in the right partners at the right time, being able to adapt and evolve as you progress are all critical. Remembering that it’s your customers who buy your products and services is a good place to start.





CPI Financial was established in Dubai in 1999 to meet the needs of an ever-expanding financial community, offering a comprehensive portfolio of market-leading products and services tailor-made for the banking and financial services sectors.

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