April 25, 2024

Advancing Digital Excellence

Pioneering Technological Innovation

How BMO merged its technology with Bank of the West’s

5 min read

The technology teams at BMO Financial Group were in a form of stasis from the date the bank agreed to buy Bank of the West until the date the deal was approved.

“For 13 months prior to regulatory approval, BMO was doing a ton of work with strategy sessions, but we were still competitors with Bank of the West, so we were not allowed to have any discussion about data,” said Angela Sim, the chief technology resiliency, experience and operations officer at BMO. “The moment the regulators gave us the go was prime time for us to move very quickly.”

When one bank acquires another, efforts to integrate technology must be put on hold until regulators have given the green light. Once that happens, technological challenges arise that must be solved in a short period of time, from decisions about which systems to keep to how to mitigate problems on conversion day. Although bank M&A dipped in 2023, the trend shows signs of reversing in 2024 — with or without the blockbuster Capital One-Discover deal — meaning more banks will have to make these same decisions.

The Toronto-based BMO, which has roughly $956 billion of assets, announced its intent to buy Bank of the West, a subsidiary of BNP Paribas in Paris, in December 2021. It completed the acquisition on February 1 of 2023 and scheduled the conversion for Labor Day weekend seven months later.

According to BMO’s leaders and some analysts, the transition went smoothly.

At a Scotiabank financial summit shortly after conversion, Scotiabank Managing Director of Equity Research for Canadian financial services Meny Grauman asked BMO CEO Darryl White how it went.

“His main point was that if something went wrong, you would have heard about it,” said Grauman in an interview. “Nothing big enough hit my radar screen that would impact the financial guidance they provided.”

In a report on Canadian banks he authored this month, Grauman wrote, “We continue to have a high degree of conviction that BMO will be able to outgrow peers in fiscal year 2024, and likely fiscal year 2025 as well. The key driver here is synergies from the Bank of the West deal.”

BMO had to complete more than 25,000 tasks to integrate Bank of the West data — for instance, converting customer files from Bank of the West to BMO —  as it nearly doubled its U.S. retail presence with 500 additional branches and 1.8 million more customers. More than 3,000 employees from both institutions were divided into 16 “streams” of work, including wealth, personal and business banking, commercial and engineering. Some BMO employees expanded their roles to cover cloud computing, but most others involved shifted priorities to the integration. The two entities limited their use of outside consultants to areas where special skill sets were needed.

“We thought that deep business BMO and Bank of the West knowledge were important to bring together,” said Sim.

There were numerous data challenges to address, from figuring out how much data they could move prior to conversion day to merging customer information sets without tripping over mismatched field types and potential duplicates.

“One of the areas you want to plan for is, what will you do with your data?” said Colin Kerr, principal advisor in banking at Celent. “Applications come and go but data is the bank’s asset.”

Since BMO largely kept its own systems — “There was not sufficient time to compare both and figure out the best path ahead,” said Sim — the bank used the 13 months preceding approval to double the capacity of its mainframe. BMO also added more servers, network capacity and storage capacity. 

At the same time, BMO prepared a cloud framework through Amazon Web Services that could move data from Bank of the West to BMO the moment regulatory approval was given.

Using the cloud “reduced our dependency on in-house infrastructure and gave us agility,” said Sim.

Once regulators approved the deal, BMO conducted four mock conversions and one “dress rehearsal” between March and August 2023 to work out the sequence and timing of the actual conversion, which would take place over 83 hours, and ensure business, technology and operations teams were trained correctly. During these mock conversions, BMO used chaos engineering — in other words, it introduced failures into systems to test their resilience — to gauge the maximum capacity BMO systems would need if most new and existing customers conducted transactions on Tuesday morning after Labor Day.

“We were well provisioned for any capacity needs for that first week,” said Sim.

While the first three mock conversions were remote, the fourth dry run and the dress rehearsal took place onsite in Naperville, Illinois, and Toronto, with a subset of BMO’s vendors on hand as well.

“We found there was a chemistry created by being in person,” said Sim.

About 40 vendors, including IBM, AWS and Microsoft were present for the final conversion.

“In a good conversion, one thing you’ll see an awful lot of is not just testing, but dry runs of that migration date,” said Kerr. “How do you make it as bulletproof as possible?”

He notes that having vendors onsite is a best practice, from the core platform to networking support to cybersecurity.

“Having an escalation path if you’re in a crisis mode and under a time crunch to get it fixed, and knowing who to get a hold of as quickly as possible is important,” said Kerr.

The bank took it as good signs that post-conversion, 90% of password resets from incoming Bank of the West customers were completed through self-service, and call volumes remained below its forecast. BMO declined to elaborate on what the forecast was.

“Even BNP, who we bought Bank of the West from, called us up and said ‘how did you do it so well? I need to learn from you,'” said Sim.


Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © All rights reserved. | Newsphere by AF themes.