On Tuesday, the 6th of November Lloyds Banking Group announced that it had invested in a FinTech company as a part of digital shake-up aimed at enhancing the bank’s digital presence.
A £3bn transformation and technology investment programme includes the investment of £11m for a 10 % stake in cloud-based core banking start-up Thought Machine, which focuses on building technology to revolutionise current online banking system.
Thought Machine’s core product, Vault is able to run any type of banking product. It aims to simplify outdated online systems while providing customers with maximum security and reliability.
However, that’s not all – Lloyds Bank plans to cut 6,240 jobs while creating 8,240 new digital positions as part of its huge shift towards Digital Transformation.
Lloyds Banking Group and Thought Machine
Thought Machine was set up by a group of former Google engineers with the aim of bringing modern software technology to banking. Since its foundation in 2014, the firm was trying to answer one important question: how to replace cumbersome and awkward banking systems, which are ‘deeply frustrating and practically useless for millions of end users’?
In 2015 Thought Machine came up with the idea of Vault, a cloud-native modern alternative to the legacy platforms that plague the banking industry. Vault comes with a full suite of retail banking products that are implemented via a system of smart contracts and has cryptographic ledgers for watertight security.
Lloyds said it has been working with the company since 2017 and expected to start rolling out technology developed with Thought Machine next year.
Well-established, traditional banks such as Lloyds often have quite complex and inefficient back-end IT systems that have been developed many years ago when technology was not that advanced and as a result did not offer so many solutions.
By contrast to traditional banks, new challenger banks such as Monzo or Starling attract their customers with simpler core systems and increased mobility, but as proven by TSB earlier this year, when trying to become more digital, well-established banks might struggle with the transformation process they want to implement.
Zak Mian, Lloyds Director of Transformation, 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.’
Cutting 6,240 jobs and creating 8,240 new ones
Lloyds Banking Group has confirmed it will axe 6,240 jobs as part of a digital overhaul. However, as the part of the shake-up, the high-street lender will also create 8,240 new digital roles, what will result in the net creation of 2,000 new jobs. The new roles are believed to be focusing on areas of digital expansion, which can include the group transformation unit, addressing and managing the changes taking place across the banking industry.
Essentially, Lloyds bank confirmed that 75% of the new positions will be filled by the existing employees, but some more specific roles e.g. software engineers or data scientists will require the recruitment of the external experts.
Branches are not going to be affected as the cut will fall on back office positions, and Lloyds' site in Gillingham in Kent will close.
A Lloyds Banking Group spokesperson said: ‘Lloyds Banking Group has today announced that it will create an additional c.2,000 roles, as it strengthens its capability to offer customers new leading-edge digital banking products and services.’
He added that ‘the Group is investing to further digitise the bank and will refresh some existing roles and create new roles within its structure, while also providing comprehensive retraining for colleagues to help them build their capabilities to meet the demands of these future roles.’
Lloyds, which owns well-known brands such as Halifax and Bank of Scotland, announced in February this year that it would re-evaluate its strategy alongside a £3bn investment plan running from 2018 to 2020. It is also aiming to cut operating costs to less than £8bn in 2020, from £8.2bn in 2017.
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