British fintech start-up Thought Machine has raised $200 million in a fresh round of funding that lifts its valuation above the coveted $1 billion mark. The cash injection was led by Nyca Partners, a U.S.-based venture capital firm that has previously bet on companies including Affirm and Revolut, with additional backing coming from major lenders including JPMorgan Chase, Standard Chartered and ING. Existing investors Lloyds Banking Group, Eurazeo, and SEB also increased their holdings. Thought Machine says its software helps big banks move away from legacy IT infrastructure to a modern, cloud-based platform. The firm counts many of its big-name banking backers as clients. In the U.S., for example, it has a deal with JPMorgan to replace the company’s core retail banking system. In Britain, Thought Machine has a similar deal with Lloyds.
Thought Machine is also setting up shop in new Asian markets like Malaysia and Japan. Around half of Thought Machine’s business now comes from Asia. The company competes with the likes of Mambu, which was valued at over $2 billion in its most recent funding round, as well as 10x Future Technologies, the fintech venture of former Barclays CEO Antony Jenkins. 10x is also backed by JPMorgan. Thought Machine is one of several new business-focused fintechs looking to partner with, rather than disrupt, the world’s banking behemoths. Banks are facing increasing competition from a slew of new digital entrants like Chime, Revolut and N26. Banks aren’t sitting quietly. Many have attempted to roll out their own standalone digital banking products, to varying degrees of success. JPMorgan recently launched a digital-only version of its Chase brand in the U.K., while Credit Suisse rolled out a new banking app called CSX in Switzerland.