UK Banks Bet Big on Tokenisation to Reshape Financial Services

UK banks are turning to tokenisation as a way to modernise and improve financial services. According to Lloyds Banking Group's annual Financial Institutions Sentiment Survey, 71% of senior decision-makers at major UK banks, insurers, and asset managers expect tokenisation to reshape the industry.

The survey found that 60% of respondents identified faster payments and settlement as tokenisation's biggest opportunity, while 41% saw better collateral and liquidity management as a key benefit. Meanwhile, appetite for emerging technologies has increased significantly, with 77% now considering investment in new tech a growth priority.

Rob Hale, Lloyds' co-head of global markets, stated that the next step is to turn pilot projects into 'infrastructure that works at scale,' built on shared standards connecting digital and traditional markets. Live tests are already running between rival banks, with UK Finance reporting two successful interbank tokenised deposit tests involving Lloyds, NatWest, and Barclays.

The initiative aims to establish a formal company and rulebook, with three digital bond issues planned for the first quarter of 2027. Lloyds has also been testing settlement using a dollar stablecoin, settling $750,000 in live payment obligations with Visa using USDC in under an hour.