Product Strategy Recommendations

July 10, 2022

I recently completed an online course where I learned the frameworks and concepts needed to create compelling and memorable product experiences. I chose to apply this knowledge to Thought Machine, a company that has developed a core banking product. This product is revolutionizing the banking industry by empowering banks to offer innovative services to their customers.

2022 07 10

Thought Machine has experienced substantial growth, recently raising $200 million in a Series C funding round. The round included industry-leading VCs and global banks such as Nyca Partners, Molten Ventures, JPMorgan, and Standard Chartered. This brings the company's total funding to $350 million, with a valuation exceeding £1 billion. Thought Machine collaborates with several banks, ranging from Tier 1 institutions to challengers, including Atom Bank, Curve, Lord Banking Group, Monese, SEB, Standard Chartered, TransferGo, Arvest, ING, and JP Morgan Chase.

The company's flagship product is Vault, a cloud-native ledger platform that operates on various cloud services, including Amazon Web Services, Google Cloud Platform, and Microsoft Azure. Thanks to smart contracts, Vault offers unparalleled flexibility, allowing it to run various retail banking products like current accounts, savings, loans, credit cards, and mortgages.

Levels of the Product

The best products offer more than just functionality; they meet a psychological need. Here's a breakdown:

Augmented Product

  • Real-time data transmission in and out of the ledger enables rich data streaming for AI and reporting.
  • Banks can manage everything from international currencies to cryptocurrencies and reward points.
  • A payments processing platform that allows any bank to manage payments across all methods, schemes, and regions worldwide.

Actual Product

  • A modern core banking platform in the cloud utilizing state-of-the-art infrastructure.
  • Product Library features a catalog of over 200 pre-configured financial products, such as current and savings accounts, loans, and mortgages.
  • The platform is designed with an API-first architecture, enabling banks to easily connect to services and technologies from other vendors.

Core Product

  • Reduces capital expenditure for on-premise hardware, significantly lowering a bank's carbon footprint.
  • Enables banks to innovate and introduce new financial services to their customers.
  • With Vault Core as the Universal Product Engine, banks can run any product they desire.

Competitive Landscape

Understanding the competition at various levels — narrow, form, need, and substitute — helps in positioning the product.


  • Products nearly identical to yours, sharing both core and actual features.

    • Mambu
    • Temenos
    • Finastra


  • Similar actual products competing for wallet share, but not perfect substitutes.

    • Microsoft Dynamics 365
    • 10x
    • FIS MBP


  • Different actual products that meet the same core needs for the user.

    • Legacy systems, like IBM mainframes


  • Products competing for the same customer resources (i.e., money, time, attention).

    • Excel
    • Fiserv
    • Silverlake

Niche Evaluation

Evaluate the product's niche using Professor Alter's four criteria for a strong niche.


  • The global retail core banking market is estimated to be worth just over £6 billion.


  • How to identify individuals with this need:

    • Newly established banks with digital banking licenses.
    • Banks needing to migrate legacy systems to a cloud platform.


  • Channels for marketing to these individuals include:

    • Management consultants working in the banking sector.
    • Partners operating within the banking ecosystem.

Predictable Behaviors

  • Banks looking to compete and differentiate their financial products.

Friction Audit

Identify all customer touchpoints, pinpoint areas of friction, and suggest how Thought Machine could alleviate these issues.

Phase: Pre-Purchase
Customer Touchpoint: Assessing Risk
Friction: Banks are risk-averse and unwilling to change.
Solution: Introduce Agile Methodology

Phase: Pre-Purchase
Customer Touchpoint: Joining Demo Sessions
Friction: Banks with outdated technological knowledge
Solution: Introduce modern cloud architecture

Phase: Pre-Purchase
Customer Touchpoint: Decision Making
Friction: Bank decision-makers have close personal relationships with competitors.
Solution: Build relationships with decision-makers

Phase: Purchase
Customer Touchpoint: Signing Contract
Friction: Complex software licensing documents
Solution: Simplify and standardize the terms and conditions

Phase: Purchase
Customer Touchpoint: Writing Statement of Work
Friction: Banks may lack complete requirements.
Solution: Engage early and provide a technical estimate

Phase: Purchase
Customer Touchpoint: Team Formation
Friction: Lack of talent within the bank for project participation
Solution: Bring in system integration partners

Phase: Post-Purchase
Customer Touchpoint: Product Installation
Friction: Banks struggle with product installation
Solution: Offer expert support

Phase: Post-Purchase
Customer Touchpoint: Product Documentation
Friction: Bank developers struggle to understand the product
Solution: Provide enablement training and a self-service learning portal

Phase: Post-Purchase
Customer Touchpoint: Production Support
Friction: Need for platform stability
Solution: Offer 24/7 product support and triage by severity levels

Product Innovation

The sweet spot for incremental innovation lies at the intersection of articulated needs for unserved customers and unarticulated needs for served customers. Here are some targeted customer needs:

  • Out-of-the-box core banking service
  • Flexibility with an easy-to-use configuration layer
  • Hosting options on both private and public cloud platforms
  • A scalable solution capable of high demand and throughput
  • Better integration with other banking systems
  • Enhanced reporting and data analytics
  • Data protection and privacy for personally identifiable information (PII)
  • Operational resilience to minimize production incidents

Priorities and Recommendations

To fully realize the potential of cloud core banking technology, we suggest the following initiatives:

  1. Focus on narrow niches, such as Shariah-compliant banking products, and leverage platform flexibility.
  2. Build an open-source integration library with other banking systems as augmented products.
  3. Conduct a friction audit to make the product easier to install and offer a SaaS solution that requires no installation effort.

For any questions regarding this proposal, feel free to get in touch with me on LinkedIn:

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Victor Leung, who blog about business, technology and personal development. Happy to connect on LinkedIn