Lloyds Bank is looking at a £750 million annual saving in tech spend as it plots a move to a new core banking platform from tech startup Thought Machine.
Lloyds paid £11 million for a 10% stake in Thought Machine in November, following a year of testing of the startup's cloud-based Vault product.
At the time the bank announced that it would enter into a development and deployment phase in 2019.
According to an internal memo seen by the Financial Times, the bank has been in discussion with regulators about moving a first tranche of 500,000 customer across from the defunct Intelligent Finance arm to the new platform. If successful, the bank plans to shift more of its business in a phased process over the next few years.
Lloyds plans to use the new platform to catch up with digital-native challengers, acknowledging that incremental improvements to its legacy infrastructure can only take it so far.
A reduction in costs is also expected, with Thought Machine claiming that the bank will reap an estimated 35-40% in savings by moving across to Vault. For a bank that spends about £2.2 billion per year to keep the lights on across its business, that represents a £750 million per annum saving.