Banks are struggling with archaic systems. There is an alternative. Thought Machine offers a complete banking system, built with cutting-edge tech. Founder Paul Taylor explains why his concept is in high demand.
Why did you found Thought Machine in 2014?
Banks have been suffering from the effects of legacy IT systems for years. They found themselves marooned on platforms which are difficult to maintain and upgrade. The software is often ancient and fragmented. The IT staff can barely cope. Customers feel the effects when there are unplanned outages or systems need to be taken offline for maintenance. To put it bluntly, banks don’t provide the online or digital experience that customers expect. So we at Thought Machine took a different approach and built a new banking platform entirely from scratch. Our platform is free from legacy problems. It gives banks a more resilient and modern platform upon which to base their online offerings.
Talk us through your product
Our platform is called Vault. It runs in the cloud. It is highly configurable and can run all the products you normally associate with a bank, from current accounts and mortgages, to loans and credit cards. Many of the senior team in Thought Machine were previously at Google where we learnt how to solve many of the problems that all large systems face. We put this experience into Vault, which gives a number of advantages. Vault can be upgraded while it is running, for instance; no more Sunday
mornings when you can’t do online banking. It has security baked into the system, so customers don’t have to worry about data leaks. It is incredibly resilient because the system runs in multiple datacentres at the same time. This means an entire datacentre can go offline without any disruption in a customer’s online activity. It’s a massive leap forward.
How hard is it to deploy?
We can deploy a complete, new bank in a few hours. After that, banks configure Vault for the range of banking products and customer experience they want. Many of our customers are building completely new online banks, with no legacy systems to think about. These are normally very quick for customers to onboard and get started. Established banks, sometimes with millions of customers, are replatforming. This involves building a new bank on Vault and moving their existing customers on to it. The customers can continue using their banking services without disruption, but now on a new platform. From that point on, the bank can innovate far more quickly and provide new services impossible to imagine in the old world.
How did you win the Lloyds Bank contract?
We started working with Lloyds Bank a few years ago, following an introduction by Jason Bates, founder of 11:FS, the well-known digital banking consultancy. We began with a simple proof of concept and then moved on to proving more and more parts of a bank, such as regulatory reporting, time taken to create new accounts, resilience and so on. It has been a great journey for both us and Lloyds. We’ve learnt about the nitty-gritty of banking. Lloyds is learning about what banking in the cloud can really look like and what advantages can be achieved. Near the end of 2018, we took investment and agreed a long-term partnership, with the aim of putting some of Lloyds’ customers on the platform and giving them access to all the advantages we’ve just discussed. We signed a partnership with Atom bank in 2018 as well. Atom is one of the UK’s fastest growing challenger banks and our partnership gives Atom the ability to move as fast as possible in the new digital banking world. We have many more banks going live on our platform in 2019 and 2020.
In the long run, what difference will it make to banks if they are based on the Thought Machine platform?
I point to four major advantages. First, security. Everything is encrypted and data is safe from security breaches. Second, flexibility. Banks can easily launch whatever apps and banking products they want. Third, scalability. The cloud gives banks the chance to have huge customer numbers and transaction volumes. And finally, cost. We can run a bank at the fraction of the cost of a traditional system. As all costs are eventually passed on to the customer, this is a huge win for everyone.
Banks want to offer third-party services via open banking.
Do you make this easier?
Using APIs [application programming interfaces] is a must-have for any new banking system and of course we provide this. The days when banks owned and built all their technology from top to bottom are gone. Far better to have a best-of-breed policy, where the people best able to provide apps and services can do so, and link to banks in a safe and secure way.
What new products are your Labs team building?
Thought Machine Labs is the experimental arm of Thought Machine. While much of what we do is infrastructure work, we want to show banks how banking experience can be. Every year, we create a small number of new apps which help people imagine and use finance in a different way. We have games apps that help people with saving, apps which show the effects of good financial health and apps which provide highly customised products for individual users. We license these concepts in an exclusive way to a select number of banks.
What is the future for Thought Machine?
It is an exciting time at Thought Machine. We have more than tripled the size of the company in the last 12 months and are now at 170 people. Customer demand is so strong that we will double to the company again by the end of 2019. Right now, I’m in Singapore setting up Thought Machine Singapore; the level of interest here is amazing. Soon we will be setting up in North America.
Our ambition is to build a genuinely global tech company, selling to thousands of banks and solving the problem of banking technology for ever. While Thought Machine’s future is as a global company, I am proud to have founded the company in London. It is another mark of success for the London technology scene that it is now not just known for its vibrant startup scene, but is becoming known for rapid growth scale-up companies also.