Key facts
- 71% of UK finance leaders expect tokenization to reshape financial services.
- Faster payments and settlement are the most significant perceived benefits of tokenization.
- Improved collateral and liquidity management is a key benefit for 41% of respondents.
- UK policymakers are pushing to integrate tokenization into financial infrastructure.
- A UK industry task force estimates tokenized finance could add 33 billion British pounds to annual economic output by 2035.
- The UK aims for its first tokenized government bond by early 2027.
Nearly three-quarters of major UK financial institutions anticipate that tokenization will fundamentally alter financial services, as the sector increasingly explores blockchain-based infrastructure for critical functions like payments, settlement, and liquidity management. This sentiment was revealed in an annual survey by Lloyds Banking Group, which polled 100 senior decision-makers across prominent UK banks, insurers, asset managers, and financial sponsors.
Faster payments and settlement were identified as the most significant potential advantages, with 60% of respondents highlighting them. Additionally, 41% pointed to improvements in collateral and liquidity management as key benefits. Lloyds indicated that migrating assets and payments to digital infrastructure could also unlock capital and liquidity currently tied up in transactions, enabling institutions to reallocate these resources.
Rob Hale, co-head of global markets at Lloyds, stated that the next phase involves transforming individual use cases into scalable infrastructure with the necessary interoperability and common standards to bridge digital and traditional markets. Lloyds has actively participated in testing this technology, including a recent transaction involving tokenized deposits to acquire a tokenized UK government bond, in collaboration with Archax and Canton Network.
The survey's findings align with the UK's strategic push to integrate tokenization into its financial infrastructure, moving beyond pilot programs. The Bank of England has proposed enhancing its core settlement infrastructure for near-24/7 operation, and a subsequent government blueprint advocated for an interoperable payments system accommodating both tokenized and traditional forms of money. A government-backed industry task force has projected that UK leadership in tokenized finance could boost the country's annual economic output by as much as 33 billion British pounds ($44 billion) by 2035, and has called for the issuance of the UK's first tokenized government bond by early 2027.
Furthermore, the UK has been pursuing closer collaboration with the US on tokenized finance. In July, the US and UK treasuries jointly recommended the establishment of a private-sector group to explore cross-border applications of tokenized assets and encouraged their respective financial regulators to identify common regulatory approaches.