Nearly three-quarters of leading UK financial institutions, including banks and asset managers, anticipate that tokenization will significantly reshape financial services in the coming years. Interest in blockchain-based infrastructure for payments, settlement, and liquidity management continues to gain momentum across the sector.
Lloyds Banking Group survey highlights
Lloyds Banking Group, the UK’s largest financial services provider, conducted an annual survey involving 100 senior decision-makers from major UK banks, insurers, asset managers, and financial sponsors. The findings revealed that 75% of respondents see tokenization as a transformational force in the financial industry.
Among the potential benefits, 60% of participants indicated that faster payments and settlement are the most significant, while 41% emphasized the advantages for improving collateral and liquidity management. Lloyds explained that shifting assets and payments onto digital infrastructure could unlock capital and liquidity currently tied up in transaction processes, enabling institutions to allocate these resources more efficiently.
Rob Hale, co-head of global markets at Lloyds, stated that the focus is now on expanding isolated use cases into scalable infrastructure:
“The next phase is about turning those individual use cases into infrastructure that works at scale, with the interoperability and common standards needed to connect digital and traditional markets.”
UK’s move toward tokenized financial infrastructure
Lloyds has been actively experimenting with tokenization. Earlier this year, the bank partnered with Archax, a digital asset exchange, and Canton Network, a blockchain interoperability protocol, to conduct a transaction using tokenized deposits to purchase a tokenized UK government bond. This was described as the UK’s first such transaction on a public blockchain.
Mini dictionary: Canton Network, a blockchain interoperability protocol designed to connect different financial infrastructures and enable secure, synchronized transactions across platforms.
UK policymakers are encouraging these technological advancements to move tokenization from pilot initiatives into core financial infrastructure. In May, the Bank of England proposed extending its core settlement infrastructure to near-constant availability, while a government payments blueprint subsequently called for both tokenized and traditional forms of money to operate within an interoperable system.
| Initiative | Details | Timeline/Goal |
|---|---|---|
| Bank of England settlement upgrade | Near-24/7 availability for settlements | Announced May |
| Government payments blueprint | Interoperable system for tokenized & traditional money | Unspecified |
| Tokenized government bond | First issuance targeted | Early 2027 |
Economic impact and international coordination
In July, an industry task force supported by the UK government estimated that leading the development of tokenized finance could add up to 33 billion British pounds ($44 billion) to the UK’s yearly economic output by 2035. The group also recommended issuing the country’s first tokenized government bond by early 2027.
Simultaneously, the UK has sought to coordinate efforts with the United States on tokenized finance. Both the US and UK treasuries advocated establishing a private-sector group to test cross-border applications for tokenized assets and called on regulators to develop consistent approaches to overseeing this emerging market.
