Lloyds survey says tokenisation will reshape finance

Senior leaders at the UK's largest financial institutions expect tokenisation to transform financial services, according to a Lloyds survey that found 71% of respondents share that view.

The poll covered 100 senior decision-makers across major UK banks, insurers, financial sponsors, and asset and wealth managers. It examined the technologies and industry trends they believe will shape the sector.

Tokenisation allows assets such as cash, bonds, and funds to be represented digitally on blockchain-based infrastructure. Those assets can then be transferred through digital networks while remaining linked to the protections associated with traditional financial assets.

Respondents identified faster payments and settlement as the main opportunity from tokenisation, with 60% citing that benefit. Collateral and liquidity management followed at 41%.

The findings come as institutions increase spending on newer technologies. More than three-quarters of respondents, or 77%, said investment in new and emerging technologies is now a growth priority, up from 41% in the previous survey. Meanwhile, 64% said they plan to raise capital expenditure over the next 12 months.

Lloyds said this shift reflects growing interest in the infrastructure behind financial services, rather than only the customer-facing layer. The bank said digital forms of money and assets could shorten settlement times, simplify some back-office processes, and release capital tied up during transactions.

Infrastructure focus

Respondents also identified modernising financial and market infrastructure as one of the UK's biggest economic opportunities over the coming year. That suggests firms see underlying market systems as an area where change could have wider effects on the flow of money and capital.

Settlement speed has long been a focus for banks and market participants because delays can tie up funds and collateral. Supporters of tokenisation say moving assets and payments onto shared digital infrastructure could allow transactions to complete more quickly and trigger automated processes when pre-set conditions are met.

For financial institutions and corporates, that could affect balance-sheet management. If less capital is tied up in clearing and settlement, firms may have more flexibility to direct funds elsewhere, including lending or investment activity.

Lisa Francis, Global Head of CIB Coverage at Lloyds, said the industry's attention is moving deeper into the systems that support financial activity.

"Financial institutions have spent years modernising how customers interact with financial services. Increasingly, attention is turning to the infrastructure behind those experiences. Tokenisation is a key part of that shift, with organisations exploring how it can help them transact in a safe, trusted environment, improve efficiency, make better use of capital and enable new products and services. Those that can turn that potential into real-world solutions stand to gain the greatest advantage," Francis said.

Market development

The survey also points to a broader debate over how digital market structures will connect with existing ones. Institutions considering tokenised forms of deposits, securities, or funds still need common standards and systems that work across traditional and digital platforms.

Rob Hale, Co-Head of Global Markets at Lloyds, said the next stage will depend on scaling individual applications into a functioning market structure.

"The real opportunity is to make financial markets work faster, more efficiently and with greater flexibility for clients. Faster settlement, more efficient use of collateral and better movement of liquidity are tangible benefits that boost balance sheets. 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," Hale said.

Lloyds has been involved in digital asset projects with external partners as banks test how tokenised instruments might work in practice. One example cited by the bank was a public blockchain transaction completed with Archax and the Canton Network, in which tokenised deposits were used to buy a tokenised gilt.

Lloyds described the transaction as the first public blockchain trade of its kind in the UK. It was designed to show how tokenised money and securities could be exchanged in a way that supports quicker settlement and more efficient movement of collateral and liquidity.

The survey suggests large financial institutions are increasingly willing to treat this type of digital infrastructure as a strategic issue rather than an experimental one. With 77% now describing investment in emerging technologies as a growth priority, tokenisation is moving closer to the centre of the sector's planning.