Why Financial Services Industry Consolidation is Harder Than It Looks … And What It Takes to Get It Right

A well-planned bank or credit union merger can result in scale, unparalleled efficiency, and unbeatable client offerings. It can position financial institutions to keep up with the break-neck pace of technological innovation and ever-higher consumer expectations. In the first quarter of 2025 alone, anticipated benefits like these helped drive 34 bank merger and acquisition deals worth more than a combined $1.6 billion.* The year prior, the total value of bank deals reached its highest level since the record — breaking M&A spate of 2021.**

But once deals are completed, a challenging journey begins. Consolidation entails more than just combining balance sheets and rebranding branches. It’s about integrating people, cultures, systems, and risk frameworks—all without disrupting client service.

Key Challenges in Consolidation

Aligning Around People, Culture, and Strategy

The human side of consolidation is often underestimated, but those with a clear-eyed view of its significance can make a real difference for the teams that are combining. Shared values are as important as shared KPIs when it comes to bringing groups together. Even when teams have much in common, employees can feel unnerved by job uncertainty, shifting organizational hierarchies, and tension related to overlapping roles. This can ultimately impact their ability to collaborate and hurt long-term talent retention.

The ability to work together constructively may prove difficult at higher levels of the organization as well: leaders may face difficulty in aligning future visions, including what markets to focus on and which operating models to pursue. In addition, leaders also face pressure to meet varying expectations of external stakeholders with corporate board members, investors, and communities each having their own priorities.

Banks and credit unions can position themselves for optimized alignment by being proactive in strategic planning and engagement. As teams are combined and reorganized, human factors should be considered, not only financial goals. It is also critically important to provide clarity to employees about their roles to avoid confusion and uncertainty. Clear lines of communication are vital so that institution leaders can partner effectively with each other, empowering them to align on objectives and keep external stakeholders in the loop.

Integrating Systems While Minimizing Risk

Problems with techology integration can hurt value creation following a merger. Few institutions rely on identical infrastructure, and integrating without disruption to operations and services is delicate and often expensive. This problem is exacerbated by outdated, high-cost legacy systems and fragmented back-office functions, making integration even more difficult and time-consuming. Regulatory and reputational risk also surface during this process, particularly when migrating client data from one system to another with one error having the potential to lead to delays, fines, or client exits.

That said, integrating systems doesn’t have to be a drag on achieving the cost and process efficiencies promised by mergers. Establishing a plan from the outset makes the difference. A clear roadmap for rationalizing tech stacks and centralizing functions can help teams navigate complex integration issues. Partnering with third party experts on financial services technology modernization planning can make any tech transformation easier, especially for post-merger rationalization.

Meeting Regulator Requirements and Client Expectations

Mergers can elevate skyrocket risk exposure across financial, operational, and reputational dimensions. Scenario planning and stress testing become essential to prove operational readiness — not just to satisfy internal stakeholders, but to meet regulators’ standards as well. Every merger invites deeper scrutiny, particularly when wealth and advisory services are involved.

Clients and members are likely not keeping tabs on merger operational readiness, but they’ll notice delays in communications and slowdowns in customer service. They can easily become irritated by a new, unfamiliar online user experience or have trouble accessing benefits or offerings. Such disruption isn’t uncommon during bank mergers, but if client trust is broken, it can be hard to rebuild.

For both regulators and clients, transparency and communication are key. Institutions should establish communication plans for each. For clients, communications should occur in tandem with an overly client-centric onboarding process so that clients can adjust to new systems in a guided, user-friendly manner. For regulators, communications should highlight the bank’s risk modeling initiatives, helping preserve ongoing confidence in the merger.

Drawing Inspiration from Recent Client Successes

Financial institution consolidation isn’t novel, but doing it well when there is a wealth management component still is. As new bank deals continue to come to fruition, recent acquisitions like those made by Old National Bank and Renasant Bank can serve as north stars for successful consolidation of wealth management assets. Old National Bank, based in Indiana, is consolidating roughly $3 billion in wealth assets after its acquisition of former Raymond James client Bremer Financial late last year, while Mississippi-based Renasant is integrating some $600 million after acquiring Raymond James' former client, The First Bancshares. In each case, the banks are focusing on the integration of people, cultures, systems, and risk frameworks. Smart approaches to integration will help them meet evolving client expectations, achieve programmatic alignment, and enhance efficiency.

The Role of LPL Financial

At LPL Financial, we’re proud to be helping both institutions achieve their goals. We’ve partnered with Old National Bank and Renasant Bank to deliver not just a successful transition of wealth management assets from one platform to another — but an industry-leading blueprint for long-term success. With scalable infrastructure, implementation expertise, and deep experience in wealth integrations, we’re helping financial institutions solve complexity and clear the path for wealth program expansion. LPL helps banks and credit unions get the hard part right — so they can focus on the growth ahead.