SKN | 71% of UK Finance Leaders Expect Tokenization to Reshape Financial Services

Key Points

• A Lloyds Banking Group survey found that 71% of senior UK finance leaders expect tokenization to reshape financial services.
• Faster payments and settlement were identified as the leading potential benefit, cited by 60% of respondents, followed by improved collateral and liquidity management at 41%.
• The findings come as the UK develops infrastructure and regulatory frameworks designed to move tokenized finance from experiments toward broader financial-market adoption.

Nearly three-quarters of senior decision-makers at major UK financial institutions expect tokenization to reshape financial services, highlighting growing institutional interest in blockchain-based infrastructure for payments, settlement and liquidity management.

The finding comes from an annual survey by Lloyds Banking Group involving 100 senior decision-makers across major UK banks, insurers, asset managers and financial sponsors. The results point to a shift in institutional thinking as financial firms increasingly consider tokenization as infrastructure rather than simply an experimental application of blockchain technology.

Faster payments and settlement emerged as the most significant potential benefit, cited by 60% of respondents. Another 41% identified improved collateral and liquidity management as a major advantage.

Faster Settlement Emerges as Leading Benefit

Tokenization could allow financial assets and payments to move through digital infrastructure with fewer settlement frictions. Lloyds said this could potentially release capital and liquidity currently tied up during financial transactions, giving institutions greater flexibility in how those resources are deployed.

The potential efficiency gains extend beyond transaction speed. Improved movement of collateral could allow financial institutions to manage liquidity more dynamically, while programmable and digitally represented assets could eventually support more integrated financial-market processes.

“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,” said Rob Hale, co-head of global markets at Lloyds.

The emphasis on interoperability reflects one of the central challenges facing institutional tokenization. Digital assets must be capable of interacting with existing financial systems if blockchain-based infrastructure is to operate at meaningful scale across traditional markets.

Lloyds Tests Tokenized Deposits and Bonds

Lloyds has also moved beyond theoretical applications by testing tokenization directly. Earlier this year, the bank worked with Archax and Canton Network on what it described as the UK’s first public blockchain transaction using tokenized deposits to purchase a tokenized UK government bond.

The transaction demonstrated how tokenized forms of money and securities could potentially interact within the same digital infrastructure. Such experiments are increasingly focused on practical financial-market functions rather than standalone blockchain applications.

For major financial institutions, the development of tokenized deposits, securities and settlement infrastructure could eventually connect multiple parts of the financial system through common digital rails.

UK Pushes Tokenization Toward Financial Infrastructure

The Lloyds survey comes as UK policymakers seek to move tokenization beyond isolated pilots and toward broader financial-market infrastructure.

The Bank of England has proposed extending its core settlement infrastructure toward near-24/7 availability, while a subsequent government payments blueprint called for tokenized and traditional forms of money to operate within an interoperable payments system.

The economic opportunity is also becoming part of the policy discussion. In July, a government-backed industry task force estimated that leadership in tokenized finance could contribute as much as £33 billion, or approximately $44 billion, to annual UK economic output by 2035. The task force also called for the UK’s first tokenized government bond by early 2027.

These initiatives indicate that British policymakers increasingly view tokenization as a potential component of the country’s future financial-market infrastructure rather than solely as a digital-asset industry development.

Cross-Border Coordination Gains Importance

The UK is also seeking closer coordination with the United States as tokenized financial markets develop.

In July, the US and UK treasuries recommended establishing a private-sector group to explore cross-border applications for tokenized assets. The two governments also encouraged financial regulators and the Bank of England to examine areas where regulatory approaches could become more aligned.

Cross-border interoperability could become particularly important as tokenized securities, deposits and other financial instruments expand beyond individual domestic markets. Without common standards and compatible systems, fragmented digital infrastructure could limit the efficiency gains that tokenization is intended to deliver.

Outlook

The Lloyds survey suggests that tokenization is moving deeper into the strategic planning of major UK financial institutions. With 71% of surveyed finance leaders expecting the technology to reshape financial services, attention is increasingly shifting from whether tokenization has practical applications to how those applications can operate at scale.

The strongest perceived benefits—faster settlement and improved liquidity management—also point toward areas where institutional adoption could have measurable effects. The next phase will depend on interoperability, common standards, regulatory coordination and the ability to connect tokenized markets with existing financial infrastructure.