Lloyds plans to reap the digital transformation benefits with Thought Machine’s the “Vault.”
In November last year, Lloyds bought a 10% stake in Thought Machine a financial technology start-up that aims to revolutionize banking technology with its cloud-based banking system called the Vault.
Lloyds Banking Group plans to reap the benefits of the Vault and save millions of pounds in annual technology costs. This has triggered wide struck fear amongst unions about large scale job losses as the new banking system is cloud-based and artificially intelligent to solve the old problems efficiently and cost-effectively. The British bank has started regulatory discussions with an official with an aim to move 500,000 customers from its old Intelligent Finance systems to the new core banking solution the Vault build by Thought Machine.
An internal memo in the bank said that incremental improvements in the old Intelligent Finance systems could only go so far, which means that Lloyds has realized that the digital transformation era of today has seen start-ups come up with modern cloud-based platforms which have proven to be cost effective and scalable to meet financial technology demands of the future.
Founded by former Google engineers, Thought Machine is dedicated to developing cloud-based solutions to the age-old systems built on mainframe computers. These old systems require regular maintenance and aren’t very scalable. The “Vault” promises to produce customer insights and make it easier to test and roll out new products cost-effectively and efficiently.
Spending about 2.2 billion pounds every year on IT running and improvement, Lloyds aims to reduce this cost by 35% and save more than 750 million pounds annually and boasting the lowest costs to revenue ratio among British high street. They aim to reduce the existing 47 pounds in every 100-pound revenue down to 40 by the end of 2020. The Thought Machine project is supposed to be a step toward that and a step closer to competing with the digital banks that are operating at costs as low as 30 percent.
Changing customer habits and financial technology trends have made it necessary for banks to update themselves and adapt to the upcoming digital economy regularly. This has also caused significant changes in the number and types of job roles across the banking sector. Banks are constantly relocating jobs to other centers specializing in digital processes.