Thought Machine: a game changer in the core banking arena | NTT DATA

ju., 22 diciembre 2022

Thought Machine: a game changer in the core banking arena

There is a new player in the core banking arena that is attracting an unusual amount of attention: Thought Machine.

Set up fin London in 2014, Thought Machine claims to be building technology able to revolutionize banking.

Although practically unknown before 2019, Thought Machine has become a notorious player in the core banking arena in a very short time span. Making its first appearance in Fintech 50 (European ranking) in October 2019, Thought Machine breached the Unicorn level valuation before the end of 2021 and jumped to more than USD2.5B with its Series D funding round, in May 2022.

At the center of Thought Machine’s offering sits Vault, a core banking platform designed and written from the scratch, driven by a microservices based API architecture and native to the cloud.

In their own words, Thought Machine describes Vault as being able to run any type of banking product, from mortgages to current accounts, having a workflow engine which defines how the bank operates, running all data in real time within the system, meaning data analytics and regulatory reporting can be fully automated, as well as the customer interactions, thanks to the complete set of available Streaming APIs.

With a fast-growing customer base where many relevant players can be found on the list (Lloyds, Standard Chartered, Atom, Intesa Sanpaolo, SEB, JPMorgan Chase, BBVA) there is one interesting fact to consider, being that many of Thought Machine’s customers have decided to invest in their funding rounds (Lloyds, SEB, Intesa Sanpaolo, JPMorgan Chase).

The technology Vault is built on follows the event-driven architecture paradigm, where every component publishes and consumes events. This approach enables a loosely coupled solution that improves elasticity, it is able to scale and responds in real-time. Every action executed in the system will produce one or more events if their underneath actions have been executed successfully. This means that the event stores are the source of truth for the whole architecture of the system, enabling the reconstruction of any entity state, at any given time, by replaying the events.

One of the most complex and expensive elements of any core banking transformation is the migration from legacy to target systems. This unavoidable challenge is a key barrier to reaping the benefits of new technologies and breaking free of the constraints of legacy systems. Thought Machine has put a lot of thinking into Vault to de-risk the migratory journey required to get there. With a resourceful set of features focused on how to migrate functionality and data to the new core, three arise as specially value dense: Automated API loads with managed data dependencies, time-travel capabilities to enable simulation testing and the ability to load data into production in a dormant state.

Additional to Vaults capabilities, Thought Machine is building an extended ecosystem composed of alliances with integration partners and technology provider partners, with whose solutions banks may address the broader challenge of integrating the core with the rest of their applications and channels. Relevant is the following fact: the partner base is skyrocketing, having multiplied in the last few months.

Last but not least, one of Vault’s main competitive advantages is the flexibility and adaptability the solution offers the banks for implementing their products through the use of Smart Contracts. Not to be confused with the ones used in blockchain, any banking product can be manufactured, from new innovative products to replicating back book products for a migration, using developer-friendly code, abstracted away from the platform via a configuration layer. Any financial product can be built and improved entirely through the writing of Smart Contracts and no coding will be needed in the platform layer. This gives banks full control over product logic, that will be fully encapsulated, transparent, and described in its smart contract code.

There are many solutions that share some of these value traits with Vault, taking advantage of their native cloud architectures. The way Thought Machine has managed the different challenges that implementing a new core banking represents for most of the banks, small to global, is key in their actual success.

The special focus they are putting on helping their customers with the migration of present products with the associated data and the Smart Contract concept they have implemented, giving banks the control and autonomy to replicate their present product base while easily designing and launching new products without the need to relay on their core banking provider, are the building blocks for a real game changer. The Smart Contracts will enable the banks to continuously and rapidly implement new products and the ecosystem could be able to work as a community, enriching the product library, with or without the help of Thought Machine itself. The mentioned revolution will only happen if every customer and partner is able to add to Thought Machine’s efforts. And this is made possible by their Smart Contracts.

NTT DATA has been an active core banking integrator for a long time and is working with many of current world class solutions. We are creating a network of Centers of Excellence (CoEs) focused on the top of the class core banking solutions, building a solid ecosystem of partnerships to be able to drive more value to our clients. Thought Machine is present in our network of partnerships as a top of the class solution. NTT DATA is building capabilities to leverage the strengths of Thought Machine’s core banking solution reinforcing our capacity to respond our client’s needs.