The merger of SunTrust Banks and BB&T into the $522 billion-asset Truist Financial
The way the Charlotte, North Carolina, company is handling the tech side of its merger reflects several trends in the industry, including the movement toward cloud computing, the desire for real-time data and the need to be digital-first.
Some of the approaches the tech teams have taken, such as picking and choosing technology components from each "heritage" bank for Truist, are relatively common. Others, such as building new digital channels and a new utility for sending data from old systems to new, are rare. Here is an overview of their laborious efforts, which are expected to be mostly completed by the first half of 2022.
Choosing the best
Often in bank mergers, the larger, acquiring bank dictates the technology decisions.
“It wasn't approached as an acquisition of one bank over the other," Chief Information Officer Scott Case said. “We did not draw a hard line right down one side or the other and say we're going to convert all of our platforms and data to the legacy BB&T systems or all to SunTrust,” said Case, who had been chief technology officer and then CIO of SunTrust after spending 15 years at Bank of America.
Instead, his team created what he calls “ecosystems.” The deposits ecosystem, for instance, encompasses more than 100 software applications, including teller platforms, reporting applications and Truist's general ledger.
“We took a lens to that and said, what would be the best outcomes for our clients?” Case said. “So as an example, we selected one of our heritage companies’ deposit platform, but we selected the other company’s teller platform because we thought that was the best-of-breed combination.” Then Case and his team had to engineer, build, test and convert to those programs.
“It's not a straightforward conversion from one to the other,” he said. “It's a hybrid set of technologies behind the scenes that we had to build and test and migrate. And we're in the process of finalizing those minor migrations over the next few months.”
SunTrust’s consumer lending platform LightStream will continue to live under the Truist brand. Case’s team chose the BB&T deposit platform. It also chose a SunTrust mortgage loan origination system and BB&T servicing software. Moreover, it selected a SunTrust corporate banking loan origination platform and a BB&T servicing platform and is now building integrations between them.
“We assessed thousands of applications and we've had to make very intentional decisions along the way on which ones survived and which ones didn't, or where we wanted to build something new,” Case said. The primary criterion was which application had the better client experience, he said.
This is a common approach, according to Sam Kilmer, senior director at Cornerstone Advisors.
“In a true merger of equals where the two companies are really close in size, the best practice is that they look over all their applications and choose which one is best,” he said.
But other factors sometimes creep into the equation, Kilmer said. In some cases, if one business, such as consumer lending, runs at a higher volume in one bank than the other, its technology will be chosen.
Such choices can also get political, Kilmer observed. The chief lending officer in a high-revenue-generating line of business might demand that the system his or her group uses stay alive.
The various vendor agreements each bank has also come into the equation, Kilmer explained.
“You may have relatively generous versus relatively onerous terms on either one of your agreements” when it comes to trying to exit a contract, he said.
Building a new digital experience
For mobile and online banking, Case’s team did not choose either predecessor's original solutions but built applications from scratch.
The company has been rolling out the new Truist app and website slowly. Today, 2 million customers are using them.
It’s unusual for a bank to build all-new digital channels while going through a merger conversion.
“I can't think off the top of my head of an example of where two organizations merged and decided to build new online banking as part of that process,” Kilmer said. “But then again, in most mergers the combined entity takes one company's brand or the other, rather than create a new brand.”
Like most banks, Truist wants to present a digital-first self to the world.
“They're taking very concerted steps to compete and become a more digital institution,” said Stephen Greer, senior analyst at Celent. “They're investing the resources to get there.”
Taking to the cloud
Truist’s post-merger technology strategy includes a form of “hybrid cloud” in which some technology stays on the premises and other pieces run in a public cloud.
“We are moving more and more towards what I call a fit-for-purpose cloud architecture strategy,” Case said. He declined to share the names of any of Truist’s cloud partners or specifics of what will be moved to the cloud and when.
Merger tech integration work in general will become easier as banks put more applications in the cloud, according to Greer.
“If your end goal is to be running in the cloud and be running either cloud native applications or very highly cloud-enabled applications, then it also should be a little bit easier to start plugging them together and making them run different services in a containerized, somewhat isolated way but connected to other pieces of the bank,” Greer said. “It becomes a lot easier to do best of breed.”
In the past, when all applications were run on-site, “you might have these applications that are completely different and have a really hard time talking to each other,” he said. “The effort to get those systems to talk to each other could be prohibitive. Whereas a lot of those questions are beginning to fall away somewhat” as companies move to the cloud.
Creating a "digital straddle"
To get existing applications to send up-to-date information to Truist's new mobile app and online banking environment, Case’s team built what he calls a “digital straddle.”
It's an architecture that relies on the cloud and application programming interfaces that Truist is using to send real-time data to and from both legacy banks’ deposit systems and the new app and website. The bank has applied for a patent on it.
“It straddles the legacy deposit platforms but allows us to deliver the client experience in a digital format ahead of the back-end conversions,” Case said. “Ours is probably the first and largest merger in what I would call the digital era in banking. And that forced us to think about challenges like this. How do you get online banking, mobile solutions in the hands of our clients ahead of these big deposit conversions that happen on the back end? So we built a whole new architecture to support that.”
It’s not unusual for a bank to have some kind of data utility that moves data from older systems to newer applications. Some use technology designed for this purpose from vendors like MuleSoft and Oracle. It is rare for a bank to build this completely in-house.
“It sounds consistent with a lot of big-bank efforts to be able to move data around using enterprise service tools or integration tools,” Kilmer said. The challenge for such utilities, he said, is to not just moving data from one system to the next, but to be able to work with technologies that will come later, such as next-generation enterprise resource planning software.
“The possibilities seem almost limitless,” Kilmer said.
The overarching goal for this tech merger, according to Case, is “to align on a design-centric, client-focused journey mindset that allows us to apply agile principles and behaviors to start to move faster.”
He wants his team to deliver technology and operations in a more automated way “so that we can react quicker to client expectations, react to market needs and produce operational outcomes that keep pace with expectations."
