UK Finance Leaders Converge on Tokenization as Infrastructure

Tokenization is gaining traction in British finance, according to an annual survey by Lloyds Banking Group. The study polled 100 senior executives across major UK banks, insurers, asset managers, and financial sponsors.

Nearly three-quarters of respondents predicted tokenization would reshape how financial services operate, with faster payments and settlement topping the list of anticipated benefits. A substantial minority focused on balance-sheet effects, with 41% saying tokenization could improve collateral and liquidity management.

Lloyds noted that shifting assets and payments onto digital rails may free up capital and liquidity currently tied up in financial transactions, potentially allowing institutions to redeploy those resources elsewhere.

The survey suggests firms are thinking beyond single-dealer or pilot arrangements, with a focus on interoperability. Rob Hale, co-head of global markets at Lloyds, said the next phase is about turning individual use cases into infrastructure that works at scale, with the interoperability and common standards needed to connect digital and traditional markets.

UK policymakers are also pushing tokenization beyond pilots. The Bank of England proposed extending its core settlement infrastructure toward near-24/7 availability in May, a move that directly increases the operational relevance of digital settlement rails where continuous or almost continuous processing can be beneficial.

The government payments blueprint called for tokenized and traditional forms of money to operate within an interoperable payments system. The implication is that institutions may not need to choose between tokenized and legacy approaches, but rather integrate them in a way that maintains reliability, compliance, and liquidity across the financial system.