Let's fix the legacy of broken banking

A British company, backed by IQ Capital, has solved the greatest challenge in fintech: how to replace the core software that retail banks have clung onto for decades. Vault OS elegantly fills this vacuum and enables a bank of any age or size to deliver innovative end-to-end financial systems that run smoothly in real-time.
The one area of finance unimproved by technology is people’s everyday experience of retail banking. Any mobile or online services that do exist are weak compared to those in other facets of modern life. They are all stunted by the underlying software written by banks decades ago which is no longer fit for purpose. It’s impossible to build great customer experiences on shaky foundations – and millions of people suffer when this software melts down. Treasury Committee chair, Andrew Tyrie MP, demanded bank regulators act to improve the resilience of these systems, saying: “we can’t carry on like this”.
The solution is Vault OS, the first ‘next-generation’ operating system for banks. This was built from the ground up by Thought Machine, a fintech firm that has worked on this project in stealth for two years. It was established by a core of ex-Google engineers and has a team of 50, all based in east London.
Vault OS was created with private blockchain-style technology and has cryptographic ledgers for watertight security. It enables a bank to scale from one customer to tens of millions without expensive in-house data-centres because it runs in the cloud as a software-as-a-service. This removes the need for the large operations teams that banks typically employ purely to keep legacy systems from failing.
As you’d expect of an operating system, Vault OS is hugely flexible and handles any standard banking functions or business models. Best of all, it employs smart contracts and machine learning to enable banks to offer a vast array of financial products – or roll out new ones in days. It is 100% future-proof.
Vault OS provides banks with relief from the challenges of compliance because its treasury and risk functions provide accurate and up-to-date reporting. Every transaction is reported in real time and so within seconds of, say, a customer swiping a credit card, the effect appears on its balance sheet. This means bank officials can determine its exact financial position at any moment. These tools are in the core of Vault OS, making implementation of capital-adequacy standards such as Basel III automatic.
On handing RBS a record £56million fine in 2014, Andrew Bailey, chief executive of the Prudential Regulation Authority, recently warned of a “very poor legacy of IT resilience and inadequate management of IT risks”. The premise of legacy systems failing is unthinkable but Vault OS fixes broken banking forever.
Benefits for banks

• Scales from one customer to tens of millions without fixed costs because it runs in the cloud
• Fundamentally secure due to private blockchain-style technology and cryptographic ledgers
• Supports full array of bank services (e.g. current accounts, mortgages, loans, credit cards)
• Flexible set-up for any type of bank, from pure digital challengers, building societies, private banks, business banks, or international universal banks with branches or call centres
• Handles millions of transactions per second, captured in real-time on a single unified ledger
• Accurate risk-reporting and full compliance with capital-adequacy standards such as Basel III

Benefits for consumers

• Reliable banking services that accurately group all spending or income into 60 categories
• Real-time transaction information as opposed to current ‘batch-processing’ overnight
• Comprehensive overview of all personal finances with insights including ‘safe-to-spend’
• Smart contracts enable genuinely bespoke financial services such as ‘payment holidays’

Notes to editors
Paul Taylor, CEO of Thought Machine, said:
“People have suffered for too long from the archaic software banks are built on and their CIOs stay awake at night worrying if these systems will cope with one more day. It’s time for new ideas, built with today’s technology. Vault OS fixes broken banking and will be the engine for the banks of tomorrow.”
About Vault OS
Vault OS is the world’s first next-generation ‘operating system’ for banking. This is a core-banking toolkit that enables a bank of any age or size to deliver end-to-end financial systems that run smoothly in real-time. Vault OS was created with private blockchain-style technology and cryptographic ledgers for watertight security. Its risk-reporting features automatically implement new compliance standards
About Thought Machine
Thought Machine was founded by Paul Taylor, one of the few entrepreneurs to successfully found and sell a UK company to Google. The firm is built around a core of ex-Google engineers, eager to bring their experience of building fault-free systems able to handle billions of transactions per day into retail banking. The team of 50 have years of experience in financial services, working at top banks such as Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS. The whole team is based in east London.
Team Biographies
Paul Taylor
CEO
Paul is a serial tech entrepreneur and one of few to found and sell a UK startup to Google. He spent three years running the text-to-speech group there, resulting in an app with a billion downloads and a service which delivers the speech for Google search and navigation. Paul has founded two other successful companies, and is the former director of Edinburgh University’s Centre for Speech Technology Research, where he took his PhD, and is a visiting lecturer at Cambridge University.
Will Montgomery
Director of Banking Engineering
Will was a senior software engineer and technical lead of Google’s AdSense platform. He was responsible for its AdSense Exchange, the real-time auction platform which serves billions of transactions a day and is relied on by the world’s largest publisher networks. His remit is design and implementation of back-end systems that are scaleable on a global level.
Tristan Fletcher
Director of Research
Tristan is a former director of UBS, where he created the bank’s algorithmic FX trading facility that still handles at least $2billion per day. Prior to this, he helped to automate trading for Aspect Capital, one of the first trend-following hedge funds, and was a derivatives trader at Lloyds TSB, running one of the largest swaps-books in the UK. He is an expert at predicting financial markets with machine learning.
Mark Warrick
Director of Creative & Design
Mark has broad experience of retail banking and specialised in integrating complex financial systems with front-end software environments for Deutsche Bank, RBS, and the London Stock Exchange. He was Young Engineer for Britain and a Royal Navy weapons engineer officer. Mark also founded and ran a digital-design agency with clients such as Selfridges & Co.
Notes to editors

• Gartner defines core-banking software as ‘a back-end system able to process daily banking transactions and post updates to accounts’. Global Retail Core Banking Report (April 2016)
• Published in official correspondence dated January 2016 from Rt Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, in relation to ongoing IT system-failures at retail banks.
• Basel III is a global, voluntary regulatory framework, developed by the Basel Committee on Banking Supervision, to strengthen the regulation and risk management of the banking sector.
• The overall fine of £56m for RBS, NatWest and Ulster Bank was two penalties issued within days of one another for the same incident. The first was from the Financial Conduct Authority (£42m) and the latter from the Prudential Regulation Authority (£14m).