Lloyds Banking Group has paid £11 million for a 10% stake in core banking developer Thought Machine as part of a strategic partnership designed to accelerate the UK lender's digital transformation plan.
Set up by a gaggle of former Google engineers, Thought Machine has spent the last few years trying to solve one of the biggest problems in banking: how to replace the decades old legacy core systems which hamper the delivery of new customer-facing digital services.
The firm's answer is Vault, a cloud-native modern alternative that comes with a full suite of retail banking products that are implemented via a system of smart contracts and has cryptographic ledgers for watertight security.
Lloyds has been carrying out extensive testing and proofs of concept with Thought Machine since 2017 in the belief that the technology can provide customers with more tailored products, as well as enable faster development cycles and further digital banking improvements.
The bank is now ready to go to the next level and will enter into a development and deployment phase in 2019.
As part of the partnership, Lloyds is pumping £11 million into Thought Machine's £18 million Series A investment round.
Zak Mian, group director, transformation, Lloyds, says: “A key part of our recently launched three-year strategic plan is applying technology innovation to meet our customers’ evolving needs. I’m really excited to work with the Thought Machine team to explore ways to simplify and enhance our IT architecture and helping on our journey to make banking easy and simple for customers.”
Earlier this week, Lloyds revealed that it is hiring thousands of more tech staffers in order to drive ahead with the digital transformation programme.