UK Finance Leaders See Tokenization as Key Industry Driver

Nearly three-quarters of major UK financial institutions expect tokenization to reshape financial services in the coming years, according to a survey by Lloyds Banking Group. The UK's largest financial services provider polled 100 senior decision-makers across major UK banks, insurers, asset managers and financial sponsors.

The survey found that 71% of respondents believe tokenization will have a significant impact on the industry, with faster payments and settlement emerging as the biggest potential benefit. 60% of those surveyed cited improved payment processing times, while 41% pointed to enhanced collateral and liquidity management.

Lloyds said moving assets and payments onto digital infrastructure could free up capital and liquidity tied up in financial transactions, allowing institutions to deploy those resources elsewhere. The bank has also tested the technology directly, working with Archax and Canton Network on a public blockchain transaction using tokenized deposits to purchase a tokenized UK government bond.

The UK is building its infrastructure for tokenized finance, with policymakers pushing to move beyond pilot projects and into the country's financial infrastructure. The Bank of England proposed extending its core settlement infrastructure toward near-24/7 availability in May, while a subsequent government payments blueprint called for tokenized and traditional forms of money to operate within an interoperable payments system.

The UK has also sought greater coordination with the US on tokenized finance, with the two countries' treasuries recommending creating a private-sector group to test cross-border uses of tokenized assets. The task force estimated that leadership in tokenized finance could add as much as 33 billion British pounds ($44 billion) to the UK's annual economic output by 2035.