UK Banks Name Faster Settlement as Tokenization’s Biggest Prize as Lloyds Survey Shows 71% Expect Overhaul
A decade into the institutional blockchain experiment, the message from Britain’s biggest financial institutions is finally blunt: the technology matters because it moves money faster. Lloyds Banking Group’s tenth annual Financial Institutions Sentiment Survey, published Oct. 2, found that 71% of senior decision-makers at UK banks, insurers, financial sponsors, and asset and wealth managers expect tokenization to reshape financial services, with 60% naming faster payments and settlement as the single biggest opportunity the technology offers.
The survey, which questioned 100 senior figures across the UK financial sector, puts hard numbers behind a shift that has been visible in pilot projects for the past two years. Better collateral and liquidity management ranked second at 41%, a reflection of the quiet accounting logic that drives institutional interest: capital that sits frozen while transactions clear is capital that earns nothing. Lloyds argues that digital infrastructure can compress the time and resources needed to transfer money and assets, releasing value that is currently held hostage by settlement windows.
From Experiments to Infrastructure
Rob Hale, co-head of global markets at Lloyds, framed the next phase of the transition in unusually practical terms. The industry’s task, he said, is to turn today’s scattered individual applications into “infrastructure that works at scale,” supported by “the interoperability and common standards needed to connect digital and traditional markets.” It is a candid admission that the sector’s many siloed pilots, each impressive in isolation, have yet to knit together into anything resembling shared plumbing.
The survey also recorded a broader appetite for emerging technology. Lloyds reported that 77% of respondents now consider investment in new technologies a growth priority, up sharply from 41% in 2025, while 64% plan to increase capital expenditure over the next 12 months. Whatever else the numbers say, the budget lines are moving.
Sterling Deposits Already Moving Between Banks
The optimism is anchored in work already completed. Lloyds previously executed a transaction with Archax and Canton Network in which tokenized deposits paid for a tokenized UK government bond, described by the bank as the UK’s first public blockchain transaction using tokenized deposits.
More recently, UK Finance’s interbank tokenized deposit tests, reported Sept. 24, included two remortgage transactions involving Lloyds, NatWest and Barclays. The tests examined whether digital representations of sterling deposits could move between separate banks, the foundational question for any tokenized money system. During the mortgage transactions, funds were locked while the property process continued and released automatically once it concluded. A separate simulation involving three banks, including HSBC, modeled an online marketplace purchase, holding money in the buyer’s account until confirmation that goods had arrived.
The initiative includes Barclays, HSBC, Lloyds, NatWest, Nationwide and Santander, supported by Quant, EY and Linklaters. Participating banks plan three digital bond issues in the first quarter of 2027 that can settle using tokenized deposits, backed by a new company, rulebook and governance framework.
USDC Settlement With Visa in Under an Hour
The survey’s release follows another concrete milestone. In a report published Oct. 1, Lloyds said it had settled 750,000 USD in live payment obligations using USDC during a seven-day pilot with Visa. The obligations were booked through its Corporate Markets branch in Jersey, converted into USDC via Archax, and transferred to Visa in the United States, arriving in less than an hour, including outside normal banking hours and over a weekend. Lloyds operated its own Canton node while Visa supported settlement on a separate public blockchain, testing transfers across different environments rather than requiring both sides to use one network.
Peter Left, Lloyds’ head of digital assets, said the live payments let the bank examine the capabilities in a real transaction setting, with faster settlement improving certainty over arrival times and reducing liquidity parked while payments complete.
Digital Gilts and a Transatlantic Testbed
The policy scaffolding is advancing in parallel. On May 18, the Bank of England proposed staged extensions to RTGS and CHAPS settlement hours toward near-24/7 availability. A government-backed tokenization development plan detailed in July estimates adoption could add up to 33 billion pounds, roughly 44 billion USD, to annual economic output by 2035, with a task force of 54 firms targeting an end-to-end tokenized repo transaction by spring 2027 and a first digital government bond by early 2027.
On the transatlantic front, recommendations published in August propose a private-sector group operating for one year to test cross-border transactions, while the SEC, CFTC, Financial Conduct Authority and Bank of England examine common approaches to settlement finality, regulatory treatment and market infrastructure, including whether stablecoins and tokenized money-market funds could qualify as margin collateral.
The takeaway from the Lloyds survey is that the debate inside UK finance has moved past whether tokenization works. The question now is whether the industry can standardize it quickly enough to matter.
60% picking faster settlement as the big prize is the least surprising stat of the year. Anyone who has waited 2 days for a cross-border SWIFT payment knows exactly why banks want this.
The 41% citing collateral management deserves more attention than the headline. Frozen capital during settlement windows is a real cost banks feel every single day, that is what actually gets budgets approved.
@settlwatch_ exactly, 2 day SWIFT versus atomic settlement. the 60 percent number is banks admitting the rails they sold us for decades are the bottleneck
also note its Lloyds running the survey, a bank with its own settlement pain. faster settlement is self interest dressed as innovation, still happy to see it
Ten years of these Lloyds surveys and the tone has completely flipped. 71% expecting an overhaul is basically consensus now, the holdouts are the story.
Only 100 people surveyed though. Directionally useful, but I would want to see the split between banks and insurers before calling it sector wide conviction.
tenth year they run this survey and suddenly its 71 percent. the holdouts are just waiting for someone else to eat the first integration cost
60% picked faster settlement as the prize. the other 40% clearly never waited three days for a cross border payment lol
the 41% on collateral and liquidity management is the sleeper stat. capital frozen in transit earns nothing, and banks hate dead capital more than anything
100 senior figures and a decade of surveys. forgive me for wanting actual production volume numbers instead of sentiment percentages from a bank that runs pilots