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Lloyds Bank to migrate hundreds of thousands of customers to Google-inspired fintech
Following its announcement that it was exploring the use of a fintech platform, Lloyds Bank has been quick to plan customer migration
Lloyds Banking Group is planning to move 500,000 customer accounts from its legacy IT onto a cloud-based core banking platform from fintech Thought Machine.
According to the Financial Times, citing an internal presentation, the bank is in discussions with regulators about moving customers from its Intelligent Finance division to Thought Machine’s banking platform.
Lloyds, which has invested in Thought Machine, has already announced that it is exploring the use of its technology through its relationship with IBM.
In December, Zak Mian, group director of transformation at Lloyds Banking Group, said: “A key part of our recently launched three-year strategic plan is applying technology innovation to meet our customers’ evolving needs. I am really excited to work with IBM and the Thought Machine team to explore ways to simplify and enhance our IT architecture and help our journey to make banking easy and simple for customers.”
But the planned migration was not mentioned at the time of Mian’s announcement.
IBM, already a major supplier to Lloyds, is also a global implementation partner for Thought Machine.
Like many traditional banks, Lloyds has decades-old legacy mainframe systems that have been added to over the years, creating an infrastructure of thousands of systems. Maintaining these complex systems can account for up to 80% of a bank’s IT budget, and the move could save Lloyds £750m in annual IT costs, according to the FT report.
Legacy systems also make it more challenging to introduce new functionality, which is in great demand today as customers demand digital banking channels and bank operations require automation.
Thought Machine’s technology is considered to be a possible means of overcoming large banks’ reliance on legacy core infrastructure.
Read more about Thought Machine
- Former Google engineers apply their experience to solving the huge handicap that core legacy systems place on the banking industry.
- Lloyds Banking Group is exploring the use of a cloud-based core banking platform from UK fintech Thought Machine through its IT services relationship with IBM.
- Atom Bank is putting its future products and services on a cloud-based platform developed by a group of former Google executives.
The concept of “Google bank” is seen as the holy grail of banking today. This refers to a bank with the functionality and ease of use for customers similar to that offered by the internet giants. Such functionality offers huge operational cost savings and gives customers the digital services they want.
Thought Machine was set up by ex-Google executives, including Paul Taylor, the company’s former head of text to speech, in 2016.
It has built a cloud-based banking infrastructure, known as VaultOS. When it was announced in 2016, it was said to offer a real-time, high-volume architecture that could handle billions of transactions a day, with cryptographic security via a private centralised ledger and smart contracts to enable banks to launch new products quickly.
At the time, Taylor said: “People have suffered for too long from the archaic software that 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. VaultOS fixes broken banking and will be the engine for the banks of tomorrow.”
But Thought Machine’s VaultOS is not just for traditional banks with legacy issues – it has the scalability to reach banks of all sizes. For example, app-based challenger bank Atom, which gained a banking licence in 2015, recently said it is putting its future products and services on VaultOS.