The CIO and executive vice-president of newly formed Yapi Kredi tells Dan Barnes of the challenges involved in successfully merging the IT systems of two banks with divergent platforms and cultures.

Mergers and acquisitions are challenging times for most, but as banks now run on IT, it can be particularly rough on the chief information officer. When Koç Financial Services (KFS) in Turkey decided to merge its Koçbank with Turkish bank Yapi ve Kredi Bankasi, it was Hishem Laroussi, CIO at newly formed Yapi Kredi, whose vision was required to manage the IT – and the IT team’s – integration. “Our work began in the due diligence process,” says Mr Laroussi. “At this point we began to evaluate people at the other bank to understand the skills they might bring to the completed picture following an acquisition.”

The greatest integration challenge faced by Mr Laroussi was on the people side. Wherever people from Koçbank and Yapi ve Kredi were working on a single task, they would wonder whether they would retain their position or if their opposite number would replace them. Mr Laroussi notes that in order to keep the project on track, he would sometimes select staff for roles that they would grow in to in order to retain a balanced workforce, even if this may cause delays in the short term. “The important thing for me was ensuring that the staff would work together,” he says. “What was interesting is that most of the rigidity and need for control came from staff in the upper echelons rather than other levels, because they had territory to protect.”

Culture clash

Cultural differences were also noticeable, with Koçbank having a culture of building systems wherever possible, while Yapi ve Kredi tended to buy off-the-shelf systems. Such significant differences meant change for one side or the other and this left Mr Laroussi often playing the step-father role, as he explains: “When you marry someone who already has children you must favour them in order to build their trust in you. A similar process must take place when you move into a new company.”

Due to the reach of Koçbank and its part-owner UniCredit, there was ample opportunity for staff to be retained, minimising redundancies.

The technology decisions had to be more cut and dried. “We could have run two banks separately with two separate IT systems and at the end of the month produced a single balance sheet, but it would have been inefficient, customers would be receiving different levels of service and so it didn’t appeal to me. I wanted a unified system,” Mr Laroussi explains.

The challenge was that Yapi ve Kredi had been running its operations on an IBM mainframe using the Siglo core banking platform that had been phased out in 1992, whereas Koçbank had migrated its core banking to Open Platform (an Oracle/Java application run with an Oracle database running on Sun Microsystems machines) from a mainframe in 2004. With some previous experience of converting a bank to a new system behind him, Mr Laroussi and his team had decided during the due diligence process to move everything to the Koçbank application.

Yapi ve Kredi’s credit card system would be maintained on the mainframe for a period after the merger and later taken out of use as it would be too expensive to maintain dual systems. But in neither case would the migration be easy, explains Mr Laroussi: “Our models were quite different. At Koçbank we could view the position of our customers and the bank in real time, we had 60% front office and 40% back office – Yapi ve Kredi was quite different and a lot of people said that it would be impossible to move it to our system.”

Mass migration

After showing the bank’s senior staff that it would take more than three years to move Koçbank onto the Yapi ve Kredi platform, the board agreed to move everything to the Koçbank system. The next step was putting the teams in place to begin the migration. “Whenever something was being converted across from Yapi ve Kredi to a Koçbank system, I would select people from Yapi ve Kredi. If a project involved more than 70% work within Koçbank, I would select a team from there. When there were projects that involved both equally, I selected staff based on their technical skills,” he says.

Having started work in March, 2006, the migration was completed during October’s Ramadan, with more than 11 million accounts migrated and almost one billion records. The project was a success, leaving almost 600 branches and central offices working on a single platform.

As project leader, Mr Laroussi stresses that the human element was the most challenging – but also the central reason for its success. “Without my team this would not have happened. I can only praise them for this accomplishment.”

CAREER HISTORY

2005 Vested by the board to continue in the position of CIO executive vice-president in Yapi Kredi when it was acquired by UCI and the Koç Group

1991 CIO assistant general manager with Koç-Amerikan bank

1988 CIO and deputy general manager of Egebank

1987 Senior vice-president in Anadolu bank in charge of IT

1978 Freelance IT consultant and project manager to banks such as National Bank of Abu Dhabi in Tunisia and Sudan; Citibank in Tunisia, Morocco, Turkey; American Express in Turkey

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