71% of UK finance leaders expect tokenization to reshape sector

A Lloyds Banking Group survey found that 71% of senior leaders at major UK financial institutions expect tokenization to reshape financial services through blockchain-based systems for payments, settlement and liquidity management.

The annual survey covered 100 senior decision-makers at major UK banks, insurers, asset managers and financial sponsors. Faster payments and settlement ranked as the leading potential benefit, selected by 60% of respondents. Another 41% cited improved collateral and liquidity management.

Lloyds reported that tokenization could reduce the capital and liquidity held during financial transactions, allowing institutions to use those resources elsewhere. Wider adoption would require digital and traditional markets to use shared standards and compatible systems.

Rob Hale, co-head of global markets at Lloyds, described the next phase as the development of infrastructure that can operate at scale. He highlighted the need for interoperability and common standards connecting digital and traditional markets.

Earlier this year, Lloyds worked with digital securities platform Archax and the Canton Network on what the bank described as the UK’s first public blockchain transaction using tokenized deposits to buy a tokenized UK government bond.

The survey comes as UK policymakers develop rules and infrastructure for tokenized assets and digital payments. In May, the Bank of England proposed extending its core settlement infrastructure to operate nearly 24 hours a day, seven days a week.

A subsequent government payments blueprint called for tokenized and traditional forms of money to operate within an interoperable payments system. In July, a government-backed industry task force estimated that UK leadership in tokenized finance could add up to £33 billion ($44 billion) to annual economic output by 2035.

The task force also called for the UK to issue its first tokenized government bond by early 2027. The UK and U.S. treasuries separately recommended creating a private-sector group to test cross-border uses of tokenized assets. They also encouraged regulators in both countries to identify compatible regulatory approaches.