Taking a thoughtful approach to consolidating vendor relationships.

I don’t often meet a business that is looking to grow their stable of vendor partners. 

Fee compression and rising compliance costs are squeezing profitability. From platform and emerging tech integrations to better data flow and analytics to cybersecurity, digital transformation initiatives require firms to invest in and simplify their tech stacks. Firms across financial services are facing the convergence of strategic, economic, and technological trends—creating mounting pressure to reduce operational costs and improve margins, while scaling, transforming, and adapting to evolving client expectations. 

As firms look at simplifying the complexity of multiple vendor relationships to meet these demands, thoughtful planning becomes paramount. Here are five key considerations:

1. Strategic alignment over cost savings

While cost reduction is usually the initial motivation, the true value lies in strategic alignment. Does a provider support your long-term vision? Can they meet multiple needs and scale with you? Will they build a plan tailored to your needs and timeline? Technology, operations, and investment solutions alone aren’t enough. Partners must understand and integrate with your business model, goals, and culture to help you achieve them.

2. Integration and scalability

Consolidation often involves merging disparate systems, data architectures, and workflows, and integrated systems not only reduce friction but also enable scalability. The complexity of integration can derail even the most promising partnerships. Firms should prioritize providers with proven experience in managing integration at scale—especially those who can handle the people, process, and technology dimensions of change. Investing in seamless integration can better position your business to respond to market shifts, manage compliance, and deliver better client outcomes.

3. Risk management and compliance

Vendor consolidation must be executed with a clear understanding of regulatory obligations and risk exposure. Firms operating in highly regulated industries need partners who can meet evolving compliance standards (including across global regions), protect sensitive data, and support oversight requirements. These standards are foundational to maintaining trust and operational integrity.

4. Operational efficiency and oversight

Reducing vendor complexity can unleash productivity and improve the client experience. A streamlined ecosystem helps minimize overhead, simplify vendor management, and enhance visibility across the enterprise. But you must balance flexibility with control because your confidence in a partner’s ability to deliver consistently and securely matters.

5. Cultural fit and change management

Consolidation isn’t just a technical or operational exercise, it’s a cultural one. Integrating providers means integrating teams, values, and ways of working. You should consider how vendor relationships will impact internal culture, employee engagement, and the client experience. Change management is critical, and successful transformation hinges on managing the human side of change, including clear communication, stakeholder alignment, and a shared commitment to your mission.

Vendor consolidation can be a powerful lever for transformation—but only when approached strategically. By aligning with partners who invest in understanding all aspects of your business and goals, you can turn consolidation into a competitive advantage. 

What’s more? You can turn multiple vendor providers into a single strategic partner.