One of the primary growth strategies for credit unions includes Mergers and Acquisitions. Any decent CFO can aggregate the income statements and balance sheets and forecast the impact on the key ratios to establish the business case. The CTO can identify the projects to convert or combine technology platforms. The COO can consolidate the processes. But the vital challenge for a successful Merger is to fit the two credit union’s cultures together. When the merger is credit union to credit union, there are already significant similarities:

1. They are both not-for-profit entities.
2. They believe in the value of cooperation.
3. They share a “member-first” mentality.

Beyond these three apparent similarities, cultural blending is complicated, especially when acquiring a bank or a FinTech company.

Here are the cultural attributes the merging organizations must consider:

1. Mission, vision, values, and purpose
   1. How consistent are these four elements of culture?
   2. What are the differences between these four elements?
   3. Can they be synced up and blended, or do they all need to be recreated for the new organization?
   4. Are the “compromises” in these four acceptable to all parties?
2. Strategies
   1. How do the top three strategic drivers compare the two organizations – size (assets or revenue), income, expenses, process improvement, service, innovation, transformation, or differentiation driven?
3. Branching plan
   1. Is the goal to provide maximum member choice?
   2. Is the goal to provide maximum physical presence?
   3. Is the goal to provide the best-of-breed digital and mobile channels for account access?
   4. Is the goal to replace branches with digital and mobile access?
4. Sales Philosophy
   1. How do they each compare in the way they provide sales incentives?
   2. How do the organizations compare in managing the sales process – inbound and outbound sales?
   3. How do they align their brand values with their sales systems
   4. These are all questions that will need to be answered and negotiated.
5. Service Philosophy
   1. Do you believe in high-touch members’ service?
   2. Do you want to move more transactions to the self-service channels?
6. Fee Philosophy
   1. Does your credit union see fees as a primary revenue source?
   2. Does your credit union see fees as a means to manage expenses?
   3. Is your credit union fee averse?
7. Human capital style
   1. Do you see employees as your most valuable asset?
   2. Do you see employee benefits as an expense or as an investment?
   3. Do you balance internal promotions with outside hires?
   4. How do you invest in employee wellness?
   5. How do you invest in employee development?
8. Financial management
   1. What is your governance range for Capital Ratio?
   2. What is your governance range for ROAA?
   3. What are your expectations for the expense ratio?
   4. Where do you stand on liquidity; do you prefer to fund loans with deposits, or does the Fed rate almost exclusively determine if you borrow to loan or grow deposits to make loans?
   5. Does top-line growth or bottom-line growth drive the income statement decisions?
   6. Is the organization profit-driven or service-driven, and how does this philosophy drive the financial decisions?
9. Leadership style
   1. Are the leadership styles in each organization consistent and aligned?
10. Marketing philosophy
    1. Is marketing seen as an investment or an expense?
    2. Does marketing participate in the leadership team?
    3. Is marketing seen as a strategic partner to the management team or exclusively a tactical team?
    4. Does marketing participate in ALCO and the pricing committee?
11. Lending Philosophy
    1. Is the primary goal to grow loans via consumer loan products?
    2. Is the goal to become a commercial lender?
    3. Is the goal to become a mortgage lending leader?
    4. What are the risk tolerances for credit risk; how well-defined are these?
    5. What are the risk tolerances for interest-rate risk: how well-defined are these tolerances?
    6. What are the collections philosophies of the two organizations?
       1. Make every effort to be the first to be paid by the member in collections.
       2. Provide tools, resources, and counseling to help members avoid difficult financial situations.
       3. A combination of the two options above?
12. Contact/Call Center service style:
    1. How do the critical metrics and service philosophies for the call center compare?
       1. What is the average call time?
       2. The number of calls per hour/shift?
       3. NPS or service satisfaction measures?

These layers of due diligence will help define the strategies and tactics required to succeed in a merger. Once the cultural differences are clearly understood, they will ideally result in projects to close the identified cultural gaps.

If one of your growth strategies is merger and acquisition, whether it is another credit union, a bank, or a FinTech, knowing your culture altogether will remove half of the challenge of determining the cultural gaps between the two organizations. A cultural audit will bring to light your and your merger/acquisition partner’s culture and