KeyCorp and First Niagara: merger ahead

KeyCorp and First Niagara: merger ahead

As US-based KeyCorp prepares to take over its rival First Niagara to create the country’s 13th largest bank, Banking Technology muses what this might mean for the fintech market. A major system selection perhaps, as both banks are currently using dated systems?

KeyCorp and its banking subsidiary, KeyBank, hope to finish acquiring First Niagara by September this year.

It is still awaiting shareholders and regulators approvals, and still needs to address public comments, integration strategies and other issues (including a number of shareholder lawsuits).

On the technology side, KeyBank has been working closely with Oracle FSS, with the roll-out of Oracle Banking Platform (OBP) as the enterprise service layer.

OBP is an “orchestration layer” that sits between the core systems and the digital channels of the bank and delivers “all the piping and all the business logic in one place”, according to Ryan Gorney, head of digital banking technology at KeyBank.

However, at the back-end, the core processing systems are old: FIS’s Systematics and CSC Hogan.

Meanwhile, First Niagara is also a long-standing customer of FIS, but using a different system – Miser.

Similar to KeyBank, First Niagara has been revamping its front-end solutions. The key focus of the digital transformation – including the bank’s “Mobile First” strategy – is on customer experience and product harmonisation. Speaking at a conference last year, Paul Hlivko, head of IT and digital at First Niagara at the time, said the idea was “to move from a complex product set and a simple understanding of our customers to a simple product set and a complex understanding of our customers”.

The bank selected the Bancs omnichannel platform from Indian heavyweight TCS Financial Solutions. The project kicked off in 2014.

It is worth noting that originally, First Niagara was also going to implement the Bancs core system to replace Miser, but this project did not go ahead.

The digital side of the venture, however, did move forward, although it had to be suspended of late due to the pending merger with KeyCorp. Hlivko left First Niagara earlier this year and is now CTO at an Iowa-based insurance company, Wellmark Blue Cross and Blue Shield.

Also, First Niagara was getting involved with the Banking Industry Architecture Network’s (BIAN) architecture model just as the merger was announced.

Provided the merger of the two banks is successful, there will be many technology integration issues to grapple with, not to mention the legacy processing platforms and different set-ups for digital banking. Which vendors are going to gain from this merger and which are set to lose out? Banking Technology will keep a close eye on the story as it unfolds.