The London-based fintech startup Thought Machine has raised $83 million in a Series B funding round, for its cloud-based platform providing digital banking services for both challenger and legacy banks, according to TechCrunch.
Both conventional, legacy banks and newer banking startups are offering a range of digital services to customers. Banking services that once required a trip to the branch are now available on mobile devices, from depositing checks to taking out a loan.
The startup’s cloud-based platform, called the Vault, offers checking and savings accounts, credit cards, loans, and mortgages. The company doesn’t provide services directly to consumers, instead relying on a business to business model, partnering with banks.
Thought Machine was founded in 2014, by CEO Paul Taylor. Though the company isn’t disclosing its valuation, Taylor says its market cap is “increasing healthily.” During its last funding round, estimates put the company’s valuation near $143 million. The CEO says that the company is still in “growth mode” and isn’t yet profitable,
Thought Machine’s customers include established institutions like Standard Chartered, Lloyds Banking Group, and Sweden’s SEB, as well as challenger banks like the UK banking startup Atom. By buying services through a platform like Thought Machine, banks are able to focus on customer service, rather than technology.
“There are all sorts of banks, and they are all trying to find niches,” according to Taylor.
Startups like Mambu, Temenos, and Edera are also competing to provide services to banking institutions.
“Banks have not kept up and are marooned on their own tech, and as each year goes by, it comes more problematic,” Taylor says.
For rising challenger banks, Thought Machine offers an easy way to plug into a proven platform for services, allowing them to launch and scale up more easily.
The new funding round was led by Draper Esprit, with participation from existing investors including Lloyds Banking Group, IQ Capital, Backed and Playfair.
“We are delighted to be partnering with Thought Machine in this phase of their growth,” Draper Espirit Investment Director Vinoth Jayakumar said in a statement.
“Thought Machine stands out by way of the strength of its engineering capability, and is unique in being the only company in the banking technology space that has developed a platform capable of hosting and migrating international Tier 1 banks. This allows innovative banks to expand beyond digital retail propositions to being able to run every function and type of financial transaction in the cloud.”