Question 1

MANAGING A MERGER FOR REGIONAL BANK

1. Establish Merger Framework
   
   

• In this stage we identify all the components of Bank X and Bank Y, need to be integrate.

ACTIVITY	RESULT
Identify values, vision, mission, business goals	Vision, mission and business goals
Identify hierarchy of business units and responsibility	Mapped business units and responsibility
Identify products and services	Listed products, service and it’s values
Identify business process	Structured and detailed process (Rich Picture or Flow Chart)
Understanding existing IT	IT Blueprint

• Establish PMO, consist of selected and competent persons from both Bank X , Bank Y and other service company (ex. Project Management Team from Accenture). Every person in this department, should comprehend about business process and the standards.
• Associate selected and competent persons from organization structure of Bank X, Bank Y (include persons of IT Department) and Project Team from Accenture. This is to establish a Integration Team for merger.
• Formulate guiding principles from points of background and the intention of merger.
• The integration feasibilities are :

• Similar customer and transaction : services and application possible to be integrated
• Bank X is a strong corporate market player whereas Bank Y tends to focus more on the consumer and commercial markets : the integration will result powerful bank, based on experiences
• Bank X is 6^th largest bank and Bank Y is 10^th . Merger will result the 5^th largest bank in Indonesia with more than 10 billion assets.

• Communication can be implement by

• Meeting
• Interview
• Continuous Reporting
• Seminar
• Advertising or publication

Communication is addressed to :

• Top Level Executive and Board Directors
• Project Management Officer
• Integration Team
• Shareholders
• Employee
• Customer

• Integration Road Map

• Analysis and Pre-planning
  • Identify values, vision, mission, business goals
  • Identify Organization Structure (business units)
  • Identify BP in both Bank X and Bank Y
  • Identify products
  • Understanding existing IT
  • Identify ‘strong’ factors of both banks
  • Define PMO
  • Define Integration Team, consist of internal and external
  • Define guiding principles
  • Define Integration feasibility

• Integration Planning

• Define the steps of integration involve the Bank X and Bank Y possible integrate components, Top Level Management, Board Director, PMO, Integration Team and employees

• Implementation

• Define the method of implementation
• Combine business process and IT
• Training for employee
• Business process and IT orchestra : deploy the integrated business units, system, operations and IT in Bank XY
• Socialize to customer

• Development
  • Monitoring and improving the implemented integrated system in Bank XY

2. Conduct Integration Planning

• Target Operating Model

Emphasize on essential and front line transaction, such as :

• Opening and closing account
• Deposit
• Withdrawal
• Transfer
• Payment
• Credit card / loan => issued and billing

• Integration Plans

• Reconcile the values, vision, mission and business objectives of Bank X and Bank Y. The result is the new values, vision, mission and business objectives of Bank XY. These must be agreed by the new Top Level Executive and Board Directors.
• Reconcile and integrate the business units and the responsibility of both banks.
• Reconcile the products and services. If this produce transformation of former products or services , do publication to customer and supply them with the new products or services. To assure the customer remain understand and able to use the new system.
• Reconcile and integrate the business process. Eliminate all excessive, irrelevant or unsuitable process to the new values, vision, mission and business objectives, products and services of Bank XY.
• Reconcile and select the applications which are proper to support the new business units, business process and services of Bank XY.
• Reconcile all existed technologies (ATM, SST) of Bank X and Bank Y, become Bank XY new system technology.
• Determine the possible and suitable network for the new system. If the new system of Bank XY is decentralized, then convert all the systems to be decentralized.
• Determine the proper network for the new system of Bank XY. If the new system is decentralized and cover vast area, hub and spoke is better choice. IT department and Integration Team possibly convert the star topology into hub and spoke topology.
• Simulate the new system, business units, business process and IT. Assure them integrate properly and aligned. If there is any lack or bottle neck, Integration Team and PMO should roll back the previous activities and re-analyze.
• Train the employees

This is the example :

TRAINING ROLE	TYPE of TRAINING	TRAINER	TIME of TRAINING	RESULT
Employees	Introducing Bank XY	Integration Team	1 day	Understanding nature of Bank XY
(Adjust to the related department)	Introduce business process	PMO and Integration Team	1 week	Able to run the business process
(Adjust to the related department)	Applications in Bank XY	Integration Team and IT Division	1 month	Able to use the applications in Bank XY

• Implement successful integration of new system business units, business process and IT of Bank XY. The implementation will be done with phased conversion method. Consider the Bank X and Bank Y have large transaction and customers, should keep handled by both banks.
• Publication about the new Bank XY system to all customers, stakeholders and society.

Because of transaction in Bank X and Bank Y is identical, so we can choose from existing applications and 1 type network relevant to new business process and the integrated application. Instead of make a new application and new network.

3. Execute Integration Plan

DEPLOY INTEGRATION PLANS AND RESULTS

ACTIVITY	ACTIVITY EXECUTOR	TIME of ACTIVITY	RESULT
Reconcile the values, vision, mission and business objectives of Bank X and Bank Y.	New Top Level Executive, Board Directors, Integration Team	2 weeks	Bank XY values, vision, mission and business objectives
Reconcile and integrate the business units and the responsibility of both banks.	New Top Level Executive, Integration Team	2 months	Bank XY integrated business units and the responsibility
Reconcile the products and services.	Integration Team	2 months	Bank XY new products and services
Reconcile and integrate the business process.	PMO and Integration Team	4 months	Bank XY business process (Rich Picture or Flow Chart)
Reconcile and select the applications which are proper to support the new business units, business process and services of Bank XY.	PMO and Integration Team	2 months	Bank XY applications
Reconcile all existed technologies (ATM, SST) of Bank X and Bank Y	Integration Team	3 months	Renew and integrated technologies for the new Bank XY system
Determine the possible and suitable network for the new system	Integration Team	2 months	Chosen network (hub and spoke)
Simulate the new system, business units, business process and IT	PMO, Integration Team, employees	2 months	Failure factors or Successful integration project.
Train the employee	Integration Team, employees, external trainer (if needed)	2 months	Qualified and talented employees
Implement successful integration of new system business units, business process and IT of Bank XY	New Top Level Executive, Board Directors, Integration Team, employee	3 months	New way of whole business of Bank XY
Publication about the new Bank XY system to all customers, stakeholders and society	Marketing Department	2 months	Understanding and appreciation to Bank XY

Note : The time of execution of a few activities are overlaps.

Based on the activities in previous table, establish the KPI to measure the achievement.

Here is the example :

KEY PERFORMANCE INDEX

KPI NAME	VALUE	TARGET	MAKSIMUM VALUE	COMPARISON
Reconcile the business process of Bank X and Bank Y	4 months	4 months	4 months	100/100
Train the employees	3 months	2 months	2 months	70/100
Reconcile and integrate the technologies (ATM, SST)	$3500	$3000	$4000	90/100