Even though banks manage most of the world’s money, banks are not really at the cutting edge of technology. It is perhaps because of this money itself that banks are too afraid to upgrade themselves, think about the unimaginable amount of loss they can suffer if something goes wrong. Most banks as we know run on archaic systems dating back to even 1970s.
All of us must have experienced the problems caused by these old systems as regular consumers. Just last week when I asked my bank to provide a tax certificate for my loan, the bank staff told me that they aren’t able to retrieve data older than this year’s data as it was connected to another system. They promised to fetch the data and send me the report within two days (which they did). This might be an extreme case, but we all know how slow the banking system is because of the slow and disconnected systems the entire infrastructure runs on.
However, banks have begun to realize that they need to change and are open to embracing new technology, both for efficiency and security.
A UK-based fintech company called Thought Machine, that has been working in stealth mode for the last two years announced the launch of their new product called VaultOS, which addresses exactly this issue and has the promise to make banking cutting-edge again.
Paul Taylor, CEO of Thought Machine, says: “People have suffered for too long from the archaic software banks are built on and their CIOs stay awake at night worrying if these systems will cope with one more day. It’s time for new ideas, built with today’s technology. Vault OS fixes broken banking and will be the engine for the banks of tomorrow.”
Details of VaultOS
VaultOS is the new cloud-based core banking software developed by Thought Machine. Here are a few highlights of the technology.
- VaultOS creates banks that run in the Cloud. It provides secure, fast, reliable end to end banking systems, capable of managing users, accounts, savings, loans, mortgages and more sophisticated financial products.
- VaultOS runs as a Software as a Service, which could potentially save banks billions when it can scale to provide services between a single customer or millions together.
- A simpler way to image VaultOS is to think of it like Amazon Web Services or Google Drive, but for “core banking”
- VaultOS employs smart contracts and machine learning. In addition, it supports a “full array” of bank services – such as current accounts, mortgages, loans and credit cards.
- VaultOS is completely flexible, smart contracts are used to create products, so any type of loan or deposit account is configurable.
- The VaultOS platform uses the latest technology such as cloud infrastructure and blockchain.
- Each instance of the OS will run its own private blockchain and cryptographic ledger, hosted as a service by ThoughtMachine.
The VaultOS will not only improve the banking experience for banks, but also for the consumers.
VaultOS can make deployment of smart contracts easy which banks are interested in. Smart contracts enable quick and safe transfers of funds from one area to another according to a predefined set of rules which opens up all kinds of opportunities in the space
For those who don’t know, the term, smart contract, refers to any contract capable of automatically enforcing itself, without a third party between individual participants. Smart contracts are written as computer programs rather than in legal language on a printed document. In my next article, I will write more about smart contracts, their application in finance and banking and how they benefit everyone.