Lloyds Banking Group has invested £11m in fintech firm Thought Machine, which is building technology to revolutionize banking.

Thought Machine

Image: Lloyds Banking Group headquarters in London, UK. Photo: Courtesy of Carcharoth/Wikipedia.org.

The investment, which provides Lloyds 10% stake in Thought Machine, was a part of the firm’s Series A funding round.

In addition, Lloyds has entered into a partnership with Thought Machine to support digital transformation of its business.

The Lloyds fintech investment aligns with the firm’s Strategic Review, announced earlier this year.

Thought Machine has been developing new banking technology with the potential to bring significant enhancements to the customers of Lloyds.

Lloyds Banking Group transformation group director Zak Mian said: “A key part of our recently launched three-year strategic plan is applying technology innovation to meet our customers’ evolving needs. I’m really excited to work with the Thought Machine team to explore ways to simplify and enhance our IT architecture and helping on our journey to make banking easy and simple for customers.”

The stake acquisition is part of £18m Series A investment round in Thought Machine. Lloyds stated that it will continue to look at additional investment opportunities to help accelerate the fintech’s transformation program.

Thought Machine’s core product is Vault, a cloud-native banking platform. In the last three years, the start-up has developed Vault to help simplify technical and operational complexity of banking, while maintaining security and reliability.

Vault is claimed to be a solution to replace old legacy platforms that plague the banking industry. It offers a full suite of retail banking products such as current accounts, loans, savings, mortgages and credit cards.

Thought Machine CEO and founder Paul Taylor said: “We are delighted to announce this partnership with Lloyds. Lloyds has shown a deep commitment to embrace the opportunities that new technologies can bring in improving customers’ banking experience and it is a pleasure to take this partnership forward.”

Lloyds has completed testing and proofs of concept since 2017, and continues to work with Thought Machine to develop the capabilities of Vault.

The new technology has the capability to offer customers with more tailored products, as well as allow faster development cycles and further digital banking improvements. Lloyds will enter into a development and deployment phase in 2019.