Ahead of HCLTech and Confinale consolidating their suite of wealth management solutions into a new first-of-its-kind business unit, HCLTech Trends and Insights sat down with Rakesh Sarin, Senior Vice President and Head of HCLTech Confinale Wealth Solutions to discuss the evolution of wealth management.

Three shifts that have defined wealth management

According to Sarin, over the past two decades, the wealth management industry has undergone significant shifts that have shaped its landscape and transformed the way wealth is managed.

The first major shift he points to is the “geographical change in wealth distribution.” Historically, wealth management has predominantly focused on Europe and the US. However, the rise of billionaires and millionaires in Asia has led to a significant migration of wealth management activities to the region. Additionally, the American continent has experienced similar growth in this sector, while the Middle East is becoming an emerging player. As a result, the mindset and approaches to wealth preservation and creation have evolved according to the specific needs and expectations of individuals from different regions.

“When the geography shifts, the wealth management mindset has to shift when it comes to capital deployment and expected returns,” says Sarin.

The second shift, according to Sarin, is the changing generational dynamics. The Baby Boomer generation, which has long been associated with wealth accumulation, is gradually making way for the Millennial and Gen Z populations. This younger demographic has grown up in a technology-dependent era, where digital advancements play a significant role in their lives. This trend has accelerated since the 1990s and the COVID-19 pandemic further highlighted the importance of remote transactions and virtual interactions. Wealth management, traditionally reliant on face-to-face meetings, has had to adapt to this new reality and embrace technology-driven solutions. 

This has given rise “to what I call experience transformation," which is an expansion in the way wealth management services are delivered beyond the limitations of physical presence.

The third shift Sarin refers to is the emergence of digital assets in the wealth management industry. While technology has always played a supporting role in this field, advancements such as digital currencies and assets have taken center stage. These digital offerings are reshaping the wealth management landscape and presenting new challenges and opportunities for industry professionals.

 “Combining these three shifts with ongoing geopolitical developments creates an evolving landscape that creates different opportunities for everyone involved in the wealth management space,” says Sarin. 

Shaping the future of wealth management with the right M&A

In the fast-evolving landscape of wealth management, the strategic merger and acquisition between HCLTech and Confinale has played a pivotal role in reshaping the industry and driving innovation. Two years ago, HCLTech acquired Confinale, known for its expertise in implementing the Avaloq platform for wealth management in Switzerland, UK and German markets.

The wealth management industry has been experiencing steady growth globally while dealing with emerging challenges such as a lack of gender diversity, ESG considerations and changing market dynamics. HCLTech, a leading provider of infrastructure, application and business process driven transformation services in capital markets, recognized the need to approach the wealth value chain holistically rather than in isolated components.

“We realized that the speed of change in the industry required a shift towards a platform-based approach,” says Sarin.

This led to the strategic decision to partner with Confinale, whom Sarin calls “a hidden gem in wealth management” and a company with a unique blend of technical and functional expertise and a mindset focused on product engineering. 

The merger between HCLTech and Confinale was not just a simple consolidation of resources, but a synergistic collaboration that has resulted in a comprehensive set of offerings for wealth management transformation. By combining HCLTech's global reach and Confinale's deep industry knowledge, the merged entity is delivering end-to-end solutions, including consulting, implementation, maintenance and enhancement services, cloud migration and wealth tech-focused products and accelerators, for wealth management clients.

According to Sarin, the success of the merger can be attributed to a careful approach that prioritized preserving the unique culture and capabilities of Confinale while integrating with HCLTech. By focusing on joint service offerings launches and market delivery, the transition was driven by customer demand rather than forced system integrations.

“We are [now] the largest talent pool of Avaloq certified resources in the world,” says Sarin. This marks a significant leap forward, establishing HCLTech as a credible player in the implementation of wealth management solutions.

He adds that one of the most significant impacts of the acquisition has been the expansion of Avaloq implementation in Asia, a market that neither HCLTech nor Confinale would have reached on their own. This expansion has paved the way for further growth opportunities in other parts of the world.

Today, the HCLTech Confinale Wealth Solutions business unit is poised to accelerate growth and innovation by focusing on offering technology solutions and services to wealth management and financial services clients. In particular, the unit’s expertise lies in implementing the Avaloq platform with the largest talent pool of Avaloq certified professionals to deliver exceptional client outcomes. The solutions also include a portfolio of products and productized solutions designed to offer end-to-end digital transformation support for wealth management firms.

“With a strong focus on experience transformation wealth value chain transformation and a service catalogue that caters to both implementation and evergreening services, such as post implementation services, the company is set to offer a wide range of solutions that cater to the changing needs of clients, which will ultimately help them achieve their business outcomes,” adds Sarin.

Looking ahead: A tech-driven future

The merger between HCLTech and Confinale has set a new standard for collaboration and innovation in wealth management. By leveraging their strengths, HCLTech and Confinale will seek to drive change and success in the industry.

Moving forward, technology will play a pivotal role in the future of wealth management. According to Sarin, financial institutions are increasingly turning to generative AI (GenAI) to “generate more tech-assisted human relationship managers” to deliver client experience transformation and enhanced productivity.

However, predicting future trends in this dynamic environment is challenging, particularly due to the rapid emergence of digital assets and the implications of central bank digital currencies (CBDCs). Additionally, the growing focus on environmental, social and governance (ESG) factors is expected to drive a different approach to wealth management.

Finally, it is crucial to note that wealth management is not solely limited to the ultra-rich. The rising number of next-generation millionaires in Asia, referred to as the “mass affluent segment” by Sarin, presents a significant market opportunity. Catering to this emerging demographic, along with addressing gender inclusion in traditionally male-dominated leadership roles, further expands the potential for growth and innovation in the industry.

With the largest number of Avaloq certified resources, the new brand is a turning chapter in our combined wealth management capabilities. Commenting on the launch of HCLTech Confinale Wealth Solutions, Roland Staub, Co-Head HCLTech Confinale Wealth Solutions and ex-CEO Confinale AG says: “This is a milestone that represents how our expertise combined with HCLTech’s engineering heritage and software competence is the perfect fit for delivering wealth value chain transformation.”

HCLTech Confinale Wealth Solutions is a first-of-its-kind dedicated business unit that offers Wealth Tech solutions focused on digital wealth platforms like Avaloq. The unit serves all core banking operations and sets the standard in the Avaloq Community in wealth advisory, tax, compliance, regulatory reporting and credit business. Offerings include experience transformation, lifecycle management services and productized solutions. Click here to find out more.