UK Banks Pioneering Blockchain-Based Interbank Transactions

Britain's largest banks have made significant strides in using blockchain technology for interbank transactions. The UK Finance announced on September 24, 2026, that Lloyds, NatWest, and Barclays successfully completed the first-ever tokenized deposit transfers between institutions.

The breakthrough involved two real mortgage payments and a simulated online purchase, all of which were executed in a digital format using tokenized deposits. This technology records bank money on a blockchain instead of traditional bank records, ensuring instant settlement and guaranteeing funds transfer only when specific conditions are met.

HSBC also led a separate test involving a customer-to-customer payment resembling an online marketplace transaction. The buyer's funds were held until the delivery of goods was verified, although no actual products were exchanged. This experiment is part of the Great British Tokenised Deposit project, which includes banks like Monzo, Nationwide, and Santander, utilizing technology developed by Quant.

The Bank of England favors tokenized deposits over stablecoins, viewing them as a safer option due to their connection to the banking system. The participating banks plan to establish a new company and create a rulebook to transform this pilot into a commercially viable service, with three digital bonds scheduled for issuance in early 2027.