Is UAE’s Banking sector ripe for M&A and what role could BPM play?

The merger of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) anticipated to be completed by the first quarter of 2017 is seen as a precursor to more mergers in U.A.E’s financial services industry. The speculators point to there being too many banks serving a relatively small U.A.E. population of about 9 million people. The possibility of other bank mergers such as merger between Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB) have also been reported in the news. Mashreq Bank’s CEO and head of the national banking industry association, Abdulaziz Al-Ghurair, also recently stated that Banks in U.A.E. are open to mergers in the near term and deals involving Dubai lenders cannot be ruled out. Due to these reasons we do anticipate increased M&A activity in U.A.E’s banking sector in the near term.

The world’s worst kept business secret is that most mergers fail. Per a KPMG study, eighty-three percent of mergers do not boost shareholder return. Although there may be many reasons for this high failure rate, the role of business process management (BPM) is too often overlooked as a facilitator to reduce risk. Here are some ways that BPM can reduce risk and be an enabler in the successful planning and execution of a merger:

  1. Business Operations Integration: Each organization may have their own innovative and unique processes to achieve business goals before the merger. For instance, customer on-boarding may be handled quite differently at each organization. Proper documentation of business processes will enable the transition team to gain a common and comprehensive understanding of the process without having to rely on someone’s memory for this. An in-depth understanding of the “AS-IS” processes at merging organizations is crucial in rationalizing and reengineering them to a unified “TO-BE” state. The proper documentation, rationalization, and reengineering of business processes to integrate business operations can be accomplished using BPM.
  2. People Management: People management is another challenging aspect of a merger between organizations. BPM provides a framework for the identification of the necessary user roles and describes the participation of these in competing tasks or deliverables for each business process. This can enable the transition team to identify the necessary resources, clearly delineate their areas of responsibilities, and manage cultural challenges much more effectively.
  3. Effective KPIs & Internal Controls: Choosing appropriate process KPIs and metrics that align with strategic goals for the merger is crucial for the measurement and realization of an increase in shareholder return. BPM can provide guidance in creating a business performance framework that dynamically links the valuation of business to process execution thus ensuring alignment with strategic goals. BPM can also be used to ensure new risks are identified, and proper levels of controls are established for the newly merged organization.
  4. Systems Integration: A seamless and unified systems experience can be accomplished using the workflow and advanced integration capabilities of any modern intelligent BPM software technology. Tailor-made BPM solutions can be developed that perfectly align with the unique “TO-BE” business processes and integrate disparate systems ranging from legacy in-house developed systems to various commercial of the shelf (COTS) products.

BPM can play a key role as an enabler for a successful merger between organizations. Should your organization require expertise in BPM to plan and execute merger activities, contact us at info@polariseme.com

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