London-headquartered Thought Machine has announced the signing of an additional $42 million in funding for its series B round. The firm targets international expansion, product development and APAC market growth.

The company, which operates a cloud-native core banking technology platform, sees potential for it to grow in Asia Pacific's retail banking market where reliance on legacy IT is still prevalent.  

«The emergence of digital and neo banks is changing the APAC banking industry rapidly. This creates an urgent need for traditional banks to adopt solutions that provide innovation, agility and scalability,» Nick Wilde, Singapore-based managing director APAC, said in an announcement on Tuesday.

Ambitious Plans

The round extension, which brings the round's total value to $125 million, was led by Eurazeo Growth, with the participation of new investors British Patient Capital and SEB. It previously secured $83 million in March, led by Draper Esprit and joined by Lloyds Banking Group, IQ Capital, Backed and Playfair Capital.

The announcement said that Thought Machine will continue to invest in growing its business internationally, while hiring for key roles in APAC, U.S. and Australia. It is also planning to develop new products and features, including an advanced payments solution.

Outdated Technology

About 95 percent of banks in Asia are using second and third generation banking technology, severely limiting their ability to innovate, while increasing their costs, according to «Digital Core — Now Is the Time,» an IDC-sponsored report by Thought Machine.

Banks that are not ready to migrate to fourth generation organic digital core technologies are unlikely to meet their digitalization objectives and will become vulnerable to acquisition by more digitally advanced banks in the next two to four years, the report said.

Strong Growth

Thought Machine was founded in 2014 by former Google engineer Paul Taylor. Its clients include SEB, Lloyds Banking Group, Atom bank and Standard Chartered Bank, with several European fintechs to be added in the near future.

In recent months, the company has scaled up international hiring, adding 100 employees in the first two quarters of 2020 across three regions. It has also expanded product compatibility to all major cloud providers and will be making major client announcements in the coming months.

The company has a team of more than 350 people spread across offices in London and Singapore.