UK Banks Pin Hopes on Tokenization for Faster Settlement

UK banks are shifting their focus towards faster settlement and tokenization, with 71% of financial institutions expecting the technology to reshape finance. According to Lloyds' annual survey, 60% of respondents named faster payments and settlement as tokenization's biggest opportunity.

The UK's Financial Institutions Sentiment Survey questioned 100 senior decision-makers at major UK banks, insurers, financial sponsors, and asset and wealth managers. Tokenization represents assets such as cash, bonds, and funds digitally on blockchain infrastructure, which can automate transactions when agreed conditions are met, reducing operational work involved in financial processes.

The survey found that payment speed ranked ahead of collateral and liquidity management, with 41% of responses citing better collateral and liquidity management. Lloyds reported that digital infrastructure could reduce the time and resources needed to transfer money and assets, releasing capital held up while transactions complete.