What to Look for in a Vendor During a Bank Merger or Acquisition

November 17, 2020

Compliance Lender Services Outsourcing Lender Challenges

Bank merger acquisition vendor

As a bank or credit union, going through a merger or acquisition is a complex process. You’re combining staff, customers, systems, and many other things that make change difficult. While the merger or acquisition might ultimately be better for the business, it can feel like a headache during the transition.

Working with a third-party vendor is beneficial to help navigate essential processes, such as validating portfolios, training employees, and maintaining client services. The right vendor can be your guide to successfully moving your business into its next phase.

The banking industry is preparing for another wave of M&A activity to hit community banks. Below we break down what to look for in a vendor when your financial institution is undergoing a merger or acquisition. 

For more information, you can also download our bank merger checklist.


Performs their due diligence

A good vendor will review the newly acquired loan portfolio and make sure there aren’t any missteps, “bad” loans, or other troubled assets. While it’s your lender services vendor’s responsibility to help you handle any bad loans you might inherit, you also need the full picture.

A high number of bad loans could be a signal that you’re acquiring an unreliable company with bad lending practices. If your institution is being acquired, you can trust the businesses you’ll be working with if they value a vendor who performs a thorough review.


Runs on accurate systems

A vendor that utilizes a reporting system focusing on accuracy and data is critical to the operational aspects of any institution. Mergers and acquisitions mean there will be a lot more work for your team; if your current vendor solution can’t keep up, the workload will feel even greater.

If you’re evaluating a vendor and their reports appear to be outdated, or the data sounds difficult to access, stop right there. This is a sign that the vendor does not value accuracy or efficiency and will not be much help during your transition period.


Prioritizes client services

Client services are one of the most important areas to maintain during a merger or acquisition. In order to retain customers and keep everyone happy, an outside vendor should make client services a top priority. A good vendor’s goal is to make the transition as smooth and seamless as possible. Watch out for vendors who are only focused on new clients, not the ones you’ve been building relationships with for years.


Is cost-effective

Outsourcing certain services to an outside vendor frees up money and time internally, allowing for those resources to be allocated elsewhere. While outsourcing is an investment, it shouldn’t break the bank.

Avoid vendors who seem like they’re pushing their services onto you or making suggestions that will increase your costs exponentially. You want a vendor whose solutions can scale to fit where you are now, where you’ll be after the merger or acquisition, and where you’ll be 5, 10, or more years down the road.


Tracks data differently

With the help of technology, there have been numerous advancements in how we can track important loan data. An outside vendor that introduces a new and effective way to track data and deliver this information into your system is hard to come by but incredibly beneficial.

Mergers and acquisitions can be an exciting and stressful period for banks and credit unions. An outside vendor can help take some of the work off your plate to ensure your customers receive not only uninterrupted service but an even better customer experience.


Learn how Info-Pro can help support your financial institution during an upcoming merger or acquisition. Contact us today.