Thank you and goodbye – ending customer relationships and its significance

In today’s world of increased regulation, scrutiny, and cost cutting, financial institutions are under pressure to ensure their client portfolios have the appropriate level of risk and return. Financial services firms need to be clear on their client selection and exit management strategies to drive revenue growth through new and existing relationships, whilst in parallel, ensuring risky and uneconomical clients are managed accordingly. Managing risky or uneconomical clients is a challenge that many institutions face, and most are fully cognizant of just how reputationally damaging it can be when not done in the most client sensitive way. Why would or should client relationships be terminated in the first place? What benefit can these organizations gain from ending relationships with their clients? How can this be done in a sensitive way? This article looks at key considerations for financial institutions and the challenge of terminating relationships with existing clients. Moreover, it explains why ending relationships with existing clients should be an important part of an organization’s agenda and how they can position themselves to do this in a sensitive and sensible manner. The article additionally explores how terminating relationships can best be done to reduce the reputational risks presented to them.