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MILAN — Intesa Sanpaolo, Italy’s biggest lender, is investing in British banking software maker Thought Machine after choosing its app to run Intesa’s new digital bank, Intesa said on Monday.

As part of a four-year strategy unveiled on February 4, Intesa will launch Isybank, a digital-only service targeting 4 million customers under the age of 40 who do not visit branches, costing Intesa more than it only brings in revenue.

The digital push will see it close 1,050 branches over the next four years and save around 800 million euros ($905 million) a year from 2026, up from 600 million euros in 2025.

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Isybank will be powered by Thought Machine’s Vault core banking engine, Intesa said, adding it was investing 40 million pounds ($54 million) in the British fintech company.

Founded in 2014 by ex-Google engineer Paul Taylor, Thought Machine raised $200 million in a November funding round that valued the company at over $1 billion and integrated JPMorgan as a as a strategic investor.

Lloyds Banking Group, an early backer of Thought Machine, contributed to the latest round of funding to maintain its shareholding.

“Vault was chosen for its flexibility in serving multi-currency and multi-country customers,” Intesa said.

Over time, Intesa plans to expand the use of Vault beyond Isybank, moving to cloud infrastructure for the entire group.

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“Currently in Europe only the latest generation of lenders have fully embraced cloud technology,” said Marco Folcia, partner at consultancy PwC Italy.

Folcia said the cloud system was much less expensive than banks’ traditional mainframe IT infrastructure and allowed them to scale easily, moving smoothly across different channels such as mobile apps and websites.

“Intesa’s digital offering is already top notch. It will be very interesting to see what Isybank will provide,” he said.

($1 = 0.7407 pounds) ($1 = 0.8842 euros) (Reporting by Valentina Za; editing by Agnieszka Flak, Keith Weir and Cynthia Osterman)

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