Sterling National Bank’s Unusual Merger

Howard Bruck shepherded his IT team through a significant acquisition and made sure it came out the other side in better shape than ever

When a large organization absorbs a much smaller entity, the small fry gets swallowed and the big fish has its way in setting strategic direction; the smaller company’s IT systems get trashed as the larger enterprise sets standards and calls the shots.

The recent merger of Sterling National Bank, with assets of $7.5 billion, and Hudson Valley Bank, with assets of $3.2 billion, was an exception—more like joining two strong and successful banks. This was reflected in the approach to evaluating IT for the post-merger organization, as many of the smaller Hudson Valley’s systems were seen as viable options for future operations.

Not only that, Hudson Valley’s CIO, Howard Bruck, was chosen to lead IT for the post-merger company, to be called Sterling National Bank. Overseeing the transition for a merger of this size is typically a once-in-a-career project for an IT executive. It’s a challenge that required Bruck to bring all his skills and abilities to bear. Though the merger was officially completed on June 30, 2015, and much has been accomplished since then, much more remains to be done.

Professor of IT

In addition to his duties as CIO for Sterling National Bank, Howard Bruck is an adjunct professor at Fordham University’s Gabelli School of Business. Most of his students are not IT specialists, but Bruck stresses the importance of IT to business success. “IT is a differentiator between winners and losers,” he tells students. “Those who are better than their competitors at leveraging technology will come out ahead.”

His Information Systems in Business course includes technology topics that most business managers should be familiar with, including:

  • Global e-business and collaboration
  • E-commerce
  • Information security
  • Business intelligence
  • Emerging technologies
  • Project management

Bruck offers students valuable insight into how they should approach IT. “You’ve got to know what your competitors are doing with IT,” Bruck says. “Don’t rely on technologists to tell you how to use technology. We expect the logistics executive to know what an RFID device can do for inventory management, for example.”

Bruck and his IT team, in consultation with other business groups, began strategizing immediately after the two companies announced their intent to merge in November 2014. “You need four to six months to prepare for Merger Day One,” Bruck says. The project kicked off with a comprehensive analysis of processes and systems—client-facing and backroom-support functions alike—and, importantly, included a look at how decisions would impact clients. “It was an enterprise-wide program that was methodically managed and carefully orchestrated.”

Since the merger took a full seven months to finalize, Bruck had to proceed with caution. “We had to run both banks as if the merger could fall through,” Bruck says. Thus, integration of processes and systems had to be carefully timed with contingencies included so that both entities could continue to operate separately until the deal was officially completed. About 40 percent of the time during this period, according to Bruck, was devoted to keeping both companies operating separately.

The rest of the time, IT conducted a thorough evaluation of both banks’ systems. Choosing which systems to use post-merger depended upon many factors. Could a particular system handle the data volume post-merger? Does the company prefer one system’s vendor over another? Is the technological platform up to date? Does one enable more desirable features for clients than the other?

“We went through every system in the bank,” Bruck says. “We had to decide which ones to phase out based on costs and benefits.”

The first major milestone—Merger Day One—after the deal was finalized included unveiling the merged company’s new branding, which took into account that Sterling was careful not to overwhelm clients with changes. “We wanted to assure clients that nothing was going to change dramatically without them knowing about it well in advance,” Bruck says.

Both companies had a considerable base of business clients, many of whom interacted with the banks primarily online. “Switching platforms may be better in the long run, but it is still a disruptive process for clients in the short term,” Bruck says.

Thus, on Merger Day One, former Hudson Valley clients continued to use the same systems with a just a few new branding elements, and the merged Sterling will hold off on making changes to those client-facing systems for the foreseeable future. Both banks had upgraded client-facing platforms in 2014, Bruck adds, and the company felt it was important to maintain continuity so clients didn’t have to adjust to new systems yet again.

The effort to consolidate back-office systems will continue through the end of the year and beyond, if necessary. “We need to examine everything closely right down to the look of customer statements,” Bruck says. For example, Hudson Valley may include a certain data set on its statement that is absent on Sterling’s. It may be that that data is useful for certain clients and should be included in the new company’s statement format.

Attending to those small details on a wide variety of systems is a necessary part of the transition to a post-merger environment that should at the least maintain the quality of service to which clients from both banks were accustomed. The painstaking examination of processes and systems has an ancillary benefit: managers become better informed about where improvements should be made in the future. Bruck and his team have the best IT practices of two once-separate banks that now share their accumulated  knowledge.