DXC Technology partners with Thought Machine to streamline digital banking for smaller institutions

How does DXC Technology’s partnership with Thought Machine offer midsize banks a new route to digital transformation?

DXC Technology (NYSE: DXC), a Fortune 500 global IT services provider, has announced a strategic alliance with cloud-native banking software developer Thought Machine to jointly offer a fully managed core banking modernization service for small and midsize financial institutions. The new platform combines DXC Technology’s full-stack IT and operations expertise with Thought Machine’s flagship Vault Core and Vault Payments products to accelerate the modernization of legacy infrastructure and simplify digital transformation for banks outside the global Tier 1 category.

The announcement comes at a time when mid-tier banks are facing increasing digital pressure from both top-tier incumbents and digitally native fintechs. Larger banks have begun building proprietary cloud platforms in-house, leaving smaller players to navigate fragmented vendor environments and rigid core systems on their own. The DXC–Thought Machine collaboration is positioned as an off-the-shelf, scalable alternative designed to close this gap—particularly for banks looking to launch modern digital offerings without overhauling their entire technology stack internally.

Why is core system modernization a strategic priority for small and midsize banks in 2025?

The modernization of legacy core banking platforms has emerged as one of the most pressing strategic imperatives for financial institutions globally. For regional and midsize banks, outdated systems can inhibit everything from product innovation to regulatory compliance. According to institutional observers, the inability to respond quickly to shifting customer preferences or launch personalized services is increasingly viewed as a structural disadvantage.

The DXC–Thought Machine platform addresses this challenge by offering a cloud-native, code-free configuration model that dramatically shortens product development timelines. Financial institutions can introduce new savings products, mortgage offerings, or lending services in hours instead of weeks. Thought Machine’s Vault Core technology, already deployed by a growing number of digital-first banks, provides the architectural flexibility needed to experiment and scale without the overhead of rewriting underlying code.

This agility is paired with DXC Technology’s robust managed services backbone, which includes business process automation, compliance tooling, and real-time operational monitoring. Banks migrating to the platform can delegate key IT and operational workloads while retaining the ability to innovate rapidly at the product level.

What specific technologies and service components are included in the new DXC–Thought Machine solution?

The integrated solution merges several of DXC Technology’s core banking and business process capabilities with Thought Machine’s cloud-native Vault Core and Vault Payments platforms. Vault Core offers a smart contract-based product engine that enables banks to build and launch highly customizable offerings. Vault Payments supports real-time, scalable processing across multiple payment rails including ACH, SEPA, SWIFT, and card networks.

These technologies are delivered through a single, fully managed service platform. Banks can opt for full migration of existing services or selectively implement new digital-first offerings while gradually phasing out legacy components. DXC Technology handles end-to-end integration, operational resilience, and risk management—components that are critical for institutions seeking to avoid disruption during transformation.

According to Chris Drumgoole, President of Global Infrastructure Services at DXC Technology, the managed platform offers a “comprehensive, future-ready path to modernization.” He noted that DXC’s experience managing over 250 million customer deposit accounts and processing 275 million daily card transactions across 475 global banks gives it a unique ability to operationalize transformation at scale.

What investor and institutional sentiment surrounds DXC Technology’s banking infrastructure business?

DXC Technology has been working to reorient its service portfolio toward higher-margin, cloud-enabled and industry-specialized offerings as part of its long-term turnaround plan. While the company’s overall revenue growth has been under pressure in recent quarters, investors have shown support for its pivot toward verticalized managed services—particularly in financial services, healthcare, and manufacturing.

Banking remains one of DXC Technology’s most mature verticals, accounting for a significant portion of its Business Process Services revenue. Institutional investors have noted that partnerships like the one with Thought Machine could help the American IT services firm capture more share in the digital transformation budgets of midsize banks, a segment currently underserved by hyperscale vendors and large system integrators.

Thought Machine, meanwhile, continues to attract strategic interest as a next-generation core banking provider. Having raised hundreds of millions in funding from global financial institutions, the British fintech has built an ecosystem of Tier 1 and challenger bank clients, including Standard Chartered, JPMorgan Chase, and Atom Bank. Analysts expect that partnerships with IT services players like DXC will further accelerate its global expansion by reducing deployment complexity for clients.

What competitive edge does this platform offer over building proprietary solutions in-house?

While some large banks have opted to build proprietary digital platforms, this approach is typically out of reach for midsize institutions. It involves hiring cloud architects, managing compliance across multiple jurisdictions, and building out payments infrastructure from scratch. These investments often exceed the budgets and talent availability of regional banks.

The DXC–Thought Machine solution provides an alternative route—one that blends operational maturity with cloud-native innovation. Financial institutions gain the ability to launch new digital products rapidly, scale on demand, and comply with global standards like ISO 20022 and PSD2 without investing in end-to-end technology development.

Importantly, the platform supports coexistence with legacy systems during transition, enabling banks to de-risk modernization by gradually migrating components. This phased approach appeals to boards and risk committees wary of large-scale IT disruption.

Randy McFarlane, global head of partnerships at Thought Machine, stated that the platform allows banks to “develop more innovative, customer-centric services with speed and ease.” He added that the joint solution is built to support global scalability while ensuring operational compliance.

What’s next for the DXC–Thought Machine banking modernization platform in terms of rollout and adoption?

Initial rollout of the platform will prioritize markets with a high concentration of midsize banks undergoing digital transformation mandates—particularly in North America, Europe, and Asia-Pacific. DXC Technology is expected to leverage its existing banking client relationships to drive early adoption. The partnership may also open doors for Thought Machine in regions where it has limited footprint but where DXC maintains strong enterprise relationships.

Future development phases are expected to include deeper integration with digital identity solutions, AI-based fraud prevention, and embedded finance APIs. DXC’s ability to support global regulatory compliance and scale infrastructure provisioning via its hybrid cloud platform will be critical to adoption by risk-conscious institutions.

Institutional observers believe the collaboration reflects a growing market trend: smaller banks pursuing digital parity through managed platforms rather than in-house builds. As such, the success of this rollout could serve as a bellwether for future alliances between fintech infrastructure firms and legacy IT services providers.