UK financial institutions have identified faster settlement as tokenization's biggest benefit, with 71% expecting the technology to reshape financial services according to Lloyds Banking Group's tenth annual Financial Institutions Sentiment Survey. The survey questioned 100 senior decision-makers at major UK banks, insurers, financial sponsors, and asset and wealth managers, revealing that 60% of respondents named faster payments and settlement as tokenization's biggest opportunity. Additionally, 41% cited better collateral and liquidity management as a key benefit, while 77% now consider investment in new technologies a growth priority, compared with 41% in 2025. The survey also found that 64% plan to increase capital expenditure over the next 12 months.
Lloyds Banking Group and Visa have successfully completed a seven-day live stablecoin pilot that settled $750,000 in cross-border payment obligations using USDC. According to reports from Lloyds Banking Group, the trial used USDC for real-world U.S. dollar settlements between its Corporate Markets branch in Jersey and Visa in the United States. The most significant achievement was that funds reached Visa in under an hour, including during the weekend, compared with traditional settlement that can take a day or longer outside banking hours. The settlement involved a series of real U.S. dollar settlement obligations rather than a laboratory simulation, demonstrating the practical viability of blockchain-based money for reducing delays created by traditional banking hours.
The pilot tested more than just settlement speed, as reported by Lloyds Banking Group. Lloyds operated its own node on Canton Network using the blockchain's configurable privacy features, while Visa supported settlement on a separate public blockchain. Lloyds purchased USDC through Archax, a UK regulated digital asset exchange, before transferring the settlement funds to Visa. The companies focused on the settlement process between financial institutions rather than changing how customers make payments, allowing transactions to continue outside normal banking hours including over the weekend. Each company utilized different blockchain networks during the pilot, demonstrating how stablecoins can work alongside existing banking infrastructure.
According to Lloyds Banking Group, the structure could provide more certainty over when funds arrive and improve visibility into their status for treasury operations. Peter Left, head of digital assets at Lloyds Banking Group, stated that moving money across different markets, currencies and financial systems can add time and complexity to cross-border transactions. He emphasized that digital money could make international payments faster, more transparent and more flexible for businesses, while giving companies more certainty over the movement of their funds. The pilot represents a significant step forward in testing whether blockchain-based money can reduce the operational friction that currently exists in cross-border payments, with tokenization potentially releasing capital tied up in settlement and automating transactions when agreed conditions are met.
UK banks have conducted extensive testing of tokenized financial services, with Lloyds earlier completing a transaction with Archax and Canton Network involving tokenized deposits for a tokenized UK government bond. More recently, UK Finance's interbank tokenized deposit tests included two remortgage transactions involving Lloyds, NatWest and Barclays, examining whether digital representations of sterling deposits could move between separate banks. During these mortgage transactions, funds were locked while the property process continued and released automatically once it finished. The UK Finance initiative includes Barclays, HSBC, Lloyds, NatWest, Nationwide and Santander, with support from Quant, EY and Linklaters, planning three digital bond issues in the first quarter of 2027 that can settle using tokenized deposits. The success of these trials could influence broader adoption, with the UK government estimating that tokenization could add up to £33 billion ($44 billion) to annual economic output by 2035.
