By adopting Tuum’s cloud-native platform, LHV Bank has streamlined financial product development, enhanced operational flexibility, and improved its ability to adapt to market demands, positioning itself for continued innovation.

Introduction: Powering One of Europe’s Largest BaaS Providers

LHV Bank, a UK-licensed financial institution and one of Europe’s largest Banking-as-a-Service (BaaS) providers, is at the forefront of enabling embedded finance. The bank serves over 200 Fintechs, including Wise, Coinbase, and Trustly, and facilitates 8% of all European real-time payments. With a global customer base exceeding 10 million, LHV Bank needed a modern core banking infrastructure that could scale with its rapid growth, support multi-entity operations, and ensure regulatory compliance in the highly competitive UK financial services sector.

LHV Bank’s objective was to transform its core banking operations with a scalable, cloud-native solution that would allow for seamless expansion, rapid product development, and increased operational efficiency. However, it’s existing legacy core banking system was becoming a bottleneck, limiting flexibility and making it increasingly difficult to support Fintech partners and SME customers.

The Challenge: Overcoming Legacy System Constraints

LHV Bank’s core banking system had been inherited from its parent company in Estonia. While functionally, it lacked the flexibility, speed, and modularity required to support LHV Bank’s expansion plans. To secure its UK banking license, LHV Bank needed a modern, independent core that could:

• Support high transaction volumes and scale seamlessly for an expanding Fintech and SME customer base.
• Enable rapid product launches across lending, payments, and deposits.
• Ensure compliance with UK financial regulations and evolving industry standards.
• Improve operational efficiency by reducing reliance on legacy infrastructure.

LHV Bank sought a technology partner that aligned with its long-term growth strategy, providing a foundation for future-proofing its operations while maintaining full control over its product roadmap.

The Solution: Tuum’s Scalable, API-First Core Banking Platform

LHV Bank selected Tuum’s cloud-native, modular core banking platform as the foundation for its transformation. With its API-first architecture, real-time processing capabilities, and fine-grained configurability, Tuum equipped LHV Bank with the agility to launch, scale, and innovate without the constraints of outdated technology.

Key Features and Benefits of the Tuum Platform for LHV Bank:

• Seamless Migration & Operational Continuity: LHV Bank migrated millions of customer accounts to Tuum’s platform in under two months using Tuum’s Smart Migration approach. This ensured a smooth transition, allowing the bank to continue servicing Fintechs and SMEs without disruption.
• Scalability & High-Performance Processing: Tuum processed 47.7 million transactions for LHV Bank in its first year as a licensed bank, handling 8% of European real-time payments and reinforcing LHV’s role in embedded finance. Its multi-currency, multi-entity support enabled seamless expansion in lending and savings without infrastructure limitations.
• Regulatory Compliance & Security: Fully compliant with UK regulatory requirements, a key enabler in LHV Bank securing its UK banking license. High level of configurability allowed LHV Bank to manage critical business logic independently, reducing reliance on vendor support.
• Enabling BaaS and Embedded Finance: Over 200 Fintech partners leverage LHV’s BaaS infrastructure, made possible by Tuum’s highly configurable, modular design. Enables Fintechs to deploy financial products efficiently while avoiding the challenges of legacy systems.
• Cost Efficiency & Innovation Focus: Tuum’s cloud-based architecture streamlined IT infrastructure, lowering operational costs. 75% of LHV Bank’s IT budget is now allocated to customer-focused innovation, compared to industry norms where 80% is spent on maintenance.

Implementation Process: A Structured Approach to Core Modernisation

To minimize risk and ensure operational readiness, LHV Bank and Tuum followed a phased migration strategy.

Comprehensive System Assessment:

• LHV Bank and Tuum conducted an in-depth audit of the bank’s existing core system, identifying key functional requirements for migration.

Configuration & Testing:

• Tuum’s modular platform was tailored to LHV Bank’s specific needs, with a strong focus on core banking, SME lending, and payments processing.
• Sandbox testing and parallel runs ensured a seamless transition from the legacy system.

Data Migration & Integration:

• Using Tuum’s Smart Migration framework, millions of customer accounts and transactions were migrated without downtime.
• Integration with AML, fraud detection, and KYC solutions ensured compliance was maintained throughout the process.

Post-Launch Optimization:

• Continuous monitoring and optimization enhanced system performance, ensuring long-term reliability and efficiency.

Benefits Achieved: Transforming BaaS at Scale

Since implementing Tuum’s platform, LHV Bank has cemented its position as one of the European leader in BaaS and embedded finance.

• Secured its UK banking license in 2023, reinforcing its position as a key infrastructure provider.
• Processed 47.7 million payments in its first year, supporting seamless real-time transactions.
• Expanded its SME lending business, growing its portfolio to £69 million and increasing deposits to £207 million.
• Reduced IT maintenance costs, enabling a shift toward rapid product development and customer-centric innovation.

Conclusion: A Future-Proof Banking Foundation

By leveraging Tuum’s cloud-native core banking technology, LHV Bank has achieved greater independence, scalability, and innovation. The bank is now better positioned to expand into new markets and further strengthen its BaaS leadership, rapidly launch new products across lending, deposits, and embedded finance, and enhance operational resilience while maintaining full regulatory compliance.

With Tuum, LHV Bank has transformed from a Fintech enabler into a leading provider of scalable, future-proof banking solutions, solidifying its position as one of the most reliable BaaS providers in Europe.

Key Facts

Supplier: Tumm
Headquarters: Tallinn, Estonia
Client: LHV Bank UK
Headquarters: London, United Kingdom.
Solution: Core Banking, Payments, Lending, Cards.