Acquirer's IT Challenge: Blend in Sellers, Keep Innovation Going

Stick to the playbook.

That's the best way to ensure the smooth integration of a newly acquired bank, said Sean O'Connell, the chief information officer of Bank of the Ozarks in Little Rock, Ark.

"It's not much different than what football teams do every Sunday: execute from a playlist," O'Connell said in an interview.

With M&A activity surging this year, the insights of — and lessons learned by — Bank of the Ozarks' information-technology team could be useful to many financial institutions. The $9.3 billion-asset bank has been an aggressive acquirer of late, buying six banks since the beginning of 2013. It announced two additional deals just weeks apart from each other this fall, agreeing to pay more than $400 million each for C1 Financial in St. Petersburg, Fla., and Community & Southern Holdings in Atlanta.

Developing the game plan for a conversion weekend takes months of planning among lots of people who hold repeated conference calls, O'Connell explained.

"So by the time we get to the execution process, everyone knows what they are doing," he said. "We map out every detail. And hopefully we don't have to call any audibles."

Constant communication involving as many stakeholders as possible — not only the buyer and seller, but all their vendors, too — is a necessity, O'Connell said. Those conversations must include even existing vendors that won't be retained by the combined bank.

"We … make sure everyone is on the same page," he said.

The goal is more than simply integrating the machinery, but making sure the blended operations work even better than either predecessor did before.

"It's about how do we convert their success into our success so it's compounded," O'Connell said. "And ultimately we want to make this whole process going on internally as seamless for the customer. We always think about how everything looks from the customer's point of view."

O'Connell and his team have to juggle the nitty-gritty of systems integration with Bank of the Ozarks' pursuit of tech innovation. O'Connell said the bank is very focused on digital engagement and mobile delivery.

"We have a generation coming up that has never not known mobile technology, and their expectation is to do everything on a cellphone," he said. "So we're putting a lot of effort and thought into mobile."

As an example, Bank of the Ozarks earlier this year became a partner bank with Apple Pay. However, O'Connell said, the bank initially did it as a pilot and made no formal announcement. Still, through serendipity and word of mouth, the bank had more than 1,000 users sign up for the service at the end of the first week it was offered.

"There was a big appetite out there for this kind of service," O'Connell said. "And I think Apple Pay is only the tip of the iceberg when it comes to mobile payments."

To accommodate its ambitions, Bank of the Ozarks opened a so-called Tier IV data center in Little Rock earlier this year. The bank's previous primary data center, in Ozark, Ark., now serves as its backup data center.

O'Connell described the new data center as a state-of-the-art facility that provides increased processing and data capacity to support further growth of the bank and enables it to innovate quicker and easier. Since the previous data center offers near-instantaneous backup capabilities, the bank can conduct tests of new software while still having resources available to make sure retail systems don't go down.

"We live in a 24-by-7-by-365 world, and in order to accommodate that you can never take systems offline," O'Connell said. "We have to be there all the time for the customers."