Thought Machine raises funding to continue expansion

Funding round highlights growing interest in cloud banking services

by | May 18, 2022 | bobsguide

UK cloud banking technology provider, Thought Machine, has raised $160 million in Series D funding, boosting its valuation to $2.7 billion.

The funding round comes six months after the company successfully raised $200 million in Series C, crossing the $1bn valuation threshold.

The company intends to use proceeds from the financing to continue its global expansion plans. It has set out strategies to further expand in the Asia Pacific, including Vietnam, Thailand, Indonesia, and the Philippines.

Having recently opened an office in Syndey, it is now opening a new office in Miami to service Latin America.

The cloud banking platform provider will also use the funds to invest in its technology, expanding its core banking platform capabilities and launching new products.

“We will use this new capital to accelerate our expansion plans, serve more clients around the world, and continuously refine the capabilities of our core banking platform and other products,” said Paul Taylor, founder and CEO of Thought Machine.

Singaporean state investment manager, Temasek, led the funding round, with participation from global financial institutions Intesa Sanpaolo and Morgan Stanley as well as existing investors Eurazeo, ING, JP Morgan, Lloyds, and SEB.

Intesa Sanpaolo’s participation coincides with the bank’s selection of Thought Machine’s core banking engine, Vault Core, to power the former’s digital offering, Isybank.

“We are investing c.£40m into Thought Machine, a fintech innovator and partner we consider strategic to the industrial upgrade of Intesa Sanpaolo,” said Carlo Messina, managing director and CEO of Intesa Sanpaolo.

“Their cloud-based technology is fundamental to our transformation from incumbent to digital challenger, improving our core banking technology and providing the foundation for our new digital bank, Isybank.”

In tandem with the funding round, participant Lloyds also extended its license agreement with Thought Machine until 2029 as part of the bank’s continuing technology modernisation programme.

Thought Machine sweeps in new collaborations

Thought Machine’s latest capital raise and Lloyd’s licence extension mark a series of wins for the company, which in the past year has struck several banking and technology partnerships.

Since the beginning of the year, the cloud platform provider has announced seven new partnerships with banks in Asia, Europe and America as well as other fintech groups.

In February, Thought Machine partnered with Vietnamese lender HD Bank to modernise the latter’s core platform and internal workflows.

That same month, Hungarian bank Magyar Bankholding also selected the fintech group to launch a digital bank.

Norwegian challenger bank Lunar also recently signed an agreement to utilise Thought Machine’s core banking engine to power the bank’s services in the Nordic region.

Cloud tech attracts interest from fintech and traditional banks

Thought Machine’s rising collaboration with banks underscores the wider trend of financial firms looking to cloud platforms to host their digital services for streamlined operations and cost-optimisation.

According to a recent survey by hybrid multi-cloud computing services provider, Nutanix, cloud adoption among financial firms is expected to reach 56% from 26% in the next three years.

In line with the estimate, the industry has seen a series of cloud migration announcements in recent months.

Last month, Swiss bank Mirabaud partnered with banking software provider Temenos and UK lifecycle management services company, Wealth Dynamix, to migrate its wealth management businesses to a cloud.

That same month, ABN AMRO also signed a multi-year partnership extension with Temenos to support customer growth and business expansion on the Temenos Banking Cloud.

In contrast to a lift-and-shift-style migration, many smaller and regional financial firms, including several North American credit unions, have recently opted for the SaaS route. Credit unions such as Calgary’s connectFirst and APCI FCU have selected nCino and Lumin Digital as their respective cloud providers.

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