Martin Davis Unites the Wells Fargo and Wachovia IT Shops
When two organizations as focused on customer service as Wells Fargo and Wachovia join together, it comes as no surprise when customer-centricity forms the cornerstone of their ensuing IT integration efforts.
According to Wells Fargo's Martin Davis, head of the Technology Integration Office with the $1.2 trillion asset San Francisco-based bank, minimizing the impact of the merger of Wachovia on the customers is the primary concern.
Davis, previously the CIO at Wachovia, acknowledges to BS&T that the customers might be touched in some way by the changeover to the combined company, such as changing account numbers. However, as with any merger, the goal is to make the transition as seamless as possible. For IT, this means ensuring the reliability of all the banks' systems, he says.
"What matters to the customers is the availability of the systems," Davis explains. "If you're going to deliver excellent customer service from an IT perspective, you have to make sure all the platforms are up. This is the No. 1 focus of the IT shop and it's no different for Wells Fargo than it was for Wachovia."
Neither bank was a stranger to M&A. Wells Fargo merged with Norwest in 1998, while Wachovia was involved with one of the largest mergers--First Union--in 2001 and acquired brokerage A.G. Edwards in 2007. Davis says members of both teams are bringing this expertise to the table. However, it is Davis, the alum of acquired Wachovia, who is overseeing the integration.
"Both banks tend to approach [IT integration] in a similar manner," he says. "But the culture at Wachovia was more process-oriented. We met [Wells Fargo] in the middle so it wouldn't be too heavy on process. Wachovia was more centralized and we decided early on to run the integration from a centralized perspective. The expertise has been very complementary."
In the experience of Celent senior VP, banking, Bart Narter, however, the dynamic usually runs other way around in acquisitions -- that is, the bank with the more centralized operating philosophy tends to be the acquirer. "It's interesting that the bank with the more centralized approach is being acquired. Usually acquirers have very centralized IT," the Boston-based firm's Narter says. "Wachovia is very strong in operations."
A Hybrid Approach
In addition to the expertise in integration, both banks bring a significant number of applications and platforms to the table as well. Paring them down is no different from the culling that takes place during any other merger, according to Wells Fargo's Davis. In this area, however, he says the business side is taking the lead on making these decisions. Once the lines of business make up their minds as to which business operating model to use, IT moves forward with it.
In general, it was decided that Wells Fargo's technology would form the backbone of the combined bank's consumer and community banking platform, including branch and online. However, "We are also blending the best of both platforms from a customer service model," adds Davis. "As we look at the business model the lines of business want to leverage, we also look to see if there is something from the Wachovia system we can use to enhance it. So there is some development effort required when we want to add a Wachovia feature [to an application]." For example, there is one case where a Wachovia platform became the dominant appliance -- the brokerage platform, which Davis says simply scaled much larger than Wells Fargo's.
This move to use a Wells Fargo-centric IT infrastructure comes as no surprise as the dominant bank's systems usually win out post-merger. Plus, says Narter, "The IT shop at Wells loves to build their own stuff and offer a best-in-class experience. They're big enough to be able to do this."
In the end, the idea is for Wells Fargo to have a 360-degree view of all its customers. "Both companies were well positioned relative to knowing our customers and now we're bringing that together," he says. "We want to make sure when we finish the integration that we have full visibility into our banking relationships. It's going to be a common platform." First Manhattan Consulting Group (New York) VP Paul Sussman says the merger integration is presenting the new entity with the perfect opportunity to achieve this holistic customer view, especially given each bank's history in customer relations. "You have Wachovia's ability to maintain great customer service coupled with Wells Fargo's ability to source new business to its customers," he remarks. "And this is on top of the cost savings and risk management advantages they'll get from having integrated customer data."
Of course it's a work in progress, and some Wachovia applications may run in parallel for a while as the integration proceeds. However, the end state is a single Wells Fargo platform using the existing core technology, which, Davis says, "already performs well."
He notes the integration should conclude at the end of 2011. "This [end date] was driven by what's right for our customer base. We want to take our time and ensure there's minimal impact on the customers."
Still, the bank is looking to accelerate the migration of specific platforms. For instance, the mortgage platform was one of the first converted. Davis says many drivers shape the company's integration plan, including the current business climate. "Look at the interest rate rally over the last six months," he remarks. "We wanted our mortgage platform in great shape to take advantage of this for our customers."
Furthermore, Wells Fargo also announced in June it was working with its card processor, First Data (Greenwood Village, Colo.), to help bring Wachovia's credit card customers into the Wells Fargo fold.
Yes, customers are king, but so is cost in a project of this scale. Cost savings and synergies were likely major considerations of the "rescue" acquisition strategy by Wells Fargo. According to Davis, so far the bank is on track, even "exceeding" its expected efficiencies.
With companies the size of Wachovia and Wells Fargo coming together, having two or three versions of everything is par for the course, he says. "So this is a great opportunity to find efficiencies in software, hardware, tools, solutions and processes, and to streamline the organization to take cost out," Davis explains. "We are due to exceed our 2009 goals." Cost is followed very carefully by Davis, as he has joint accountability to the head of the financial group for the technology and operations functions at Wells Fargo.
"If they're exceeding their anticipated savings at this point, then they've probably been very effective at consolidation," notes First Manhattan's Sussman. "Also, I think there's more of a focus on being a cost efficient and standardized organization now versus a year ago. The need is a bit greater and so is the value of savings."
Focusing on a Common Future
Not to be lost in all the talk of customers and platforms is the IT staff. Staff issues can become tricky during merger and acquisition activity as IT workers can take a personal stake in the systems they've operated for years.
Davis agrees mergers can be emotional times for IT professionals who have put years of expertise into a platform. "The key is to try to make them realize their value is tied not to a particular platform but to the organization. We get our pros motivated about what's ahead. Building up the new franchise gets people excited. It's an opportunity they may never see again in the U.S. Once they focus on the integration and executing it, they become focused on the new firm and start to forget about the legacy firms."
As with any merger, there has been some turn over in the IT department. Since IT is so vital to the union's outcome, however, Davis says these losses have been minimal. Additionally, both banks had contract programmers and offshore resources that allowed for greater flexibility with staffing models during the merger.
Plus, when the integration is complete, he anticipates that IT will be in greater demand than ever as the business units look to initiate new projects.
However, Davis is taking things one day at a time and never loses sight of the larger picture. Meetings are held weekly where the integration team examines lessons learned about what went well and what could be improved. "We're not waiting until the end of the project to do a postmortem," he states. "There's a tremendous amount of teamwork coming together here. As long as we stay focused on the similarities instead of the differences, that's a good way to springboard the new corporate culture."