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Italy's Intesa Sanpaolo teams up with Thought Machine in digital push

Italy's Intesa Sanpaolo teams up with Thought Machine in digital push
Italy's Intesa Sanpaolo teams up with Thought Machine in digital push   -   Copyright  Thomson Reuters 2022
By Reuters

By Valentina Za

MILAN -Intesa Sanpaolo, Italy’s biggest lender, is investing in British banking software maker Thought Machine after picking its application to run Intesa’s new digital bank, Intesa said on Monday.

Under a four-year strategy it unveiled on Feb. 4, Intesa will launch Isybank, a digital-only service targeting 4 million customers under 40 who do not visit branches, costing Intesa more than they yield in revenues.

The digital push will allow it to close 1,050 branches in the next four years and save around 800 million euros ($905 million) a year from 2026, up from 600 million euros in 2025.

Isybank will be powered by Thought Machine’s Vault core banking engine, Intesa said, adding it was investing 40 million pounds ($54 million) in the British fintech firm.

Founded in 2014 by former Google engineer Paul Taylor, Thought Machine raised $200 million in a funding round in November that valued the company at more than $1 billion and brought onboard JPMorgan as a strategic investor.

Lloyds Banking Group, an early backer of Thought Machine, contributed to the latest financing round to maintain its shareholding.

“Vault was chosen for its flexibility to serve multi-currency and multi-country clients,” Intesa said.

Over time Intesa plans to extend the use of Vault beyond Isybank, moving to cloud infrastructure for the wider group.

“Currently in Europe only the latest generation of lenders has adopted in full the cloud technology,” Marco Folcia, a partner at consultancy PwC Italy, said.

Folcia said the cloud system was much less costly than banks’ traditional mainframe IT infrastructure and allowed them to easily scale, switching smoothly across different channels such as mobile apps and websites.

“Intesa’s digital offering is already top-notch. It’ll be very interesting to see what Isybank will provide,” he said.

($1 = 0.7407 pounds)

($1 = 0.8842 euros)