Sweden’s SEB explores core banking in the cloud

Swedish Bank SEB will use its innovation department to deploy and explore a Google-inspired cloud native platform for core banking.

The bank’s SEBx unit, which was established to test out new technologies, will use Thought Machine’s cloud native Vault platform to build new banking products.

The first product to be built on the platform will aim to service self-employed customers “in completely new ways”, according to SEB.

“The SEBx team has a clear mandate to explore leading technologies in its quest for creating next-generation customer offerings, and also to explore viable technology options for the future of the group,” said SEB CIO Nicholas Moch. “Having the opportunity to build a bank from the ground up within SEBx, we are determined to work with partners that bring new perspectives to a traditional industry, and the team at Thought Machine does that.”

Thought Machine’s technology platform, known as Vault, is considered to be a possible means of overcoming large banks’ reliance on legacy core infrastructure.

The platform is Google inspired, aiming to enable banks to offer 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.

The London-based startup was the brainchild of ex-Google executives, including Paul Taylor, the internet giant’s former head of text to speech, in 2016. When it was announced 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.”

Thought Machine’s banking customers in the UK include Lloyds Banking Group, which has acquired a stake in the company, and digital challenger Atom Bank.

Lloyds Banking Group is currently moving 500,000 customer accounts from its legacy IT onto Though Machine’s Vault platform. The customers being migrated have accounts with its Intelligent Finance division.

In November last year, Atom Bank announced it was putting its future products and services on Thought Machine’s Vault platform. Atom, which delivers its products and services through an app for mobile devices and desktop computers, received its banking licence in 2015. It opened its doors to the public in 2016, following its initial invite-only launch.

If Thought Machine’s platform enables banks to move from a mainframe legacy system to the cloud, it could accelerate change in an industry held back by a technology legacy dating back four decades. Mainframes still account for most of a bank’s processing.

These systems are secure, cheap, reliable and are understood by regulators. In fact, an IBM-commissioned study by McKinsey showed that although the simplest workloads are in the process of migration to the cloud, 80% of total workloads are still on-premise.