71% of UK Banks See Tokenization as Key to Modernizing Market Infrastructure

Major financial institutions across the UK now overwhelmingly view tokenization as the architectural foundation for next-generation banking infrastructure, according to Lloyds' tenth annual Financial Institutions Sentiment Survey. 71% of senior leaders at the nation's largest banks, insurers, asset managers, and wealth managers expect digital ledger systems to fundamentally reshape how value and assets move through capital markets.

The survey polled 100 senior decision-makers and signals a decisive industry pivot toward programmable blockchain infrastructure. By digitally representing traditional assets such as bank deposits, government bonds, and private funds on secure ledger systems, institutions aim to achieve continuous settlement and automated processing while preserving institutional-grade risk controls.

The motivation for embracing tokenized infrastructure centers on releasing capital and liquidity locked in legacy clearing cycles. Migrating assets to programmable digital rails enables smart contract automation of complex workflows, cutting operational friction and counterparty exposure.

When institutional leaders ranked the primary advantages, two capabilities stood out:

• Faster Payments and Settlement: 60% of respondents identified near-instantaneous transaction execution as the single largest opportunity
• Collateral and Liquidity Management: 41% of institutions cited real-time balance sheet optimization across fragmented markets as a critical benefit

Accelerated settlement velocity allows capital redeployment that would otherwise remain idle during clearing windows, directly supporting expanded lending, investment, and broader market liquidity.

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.

Lisa Francis, global head of CIB coverage at Lloyds, made the statement in discussing the survey findings.

The tokenization focus coincides with a broader wave of digital transformation spending. 77% of financial institutions now classify investment in emerging technologies as a strategic growth priority—up from 41% in 2025. Additionally, 64% of senior leaders plan to increase capital expenditure over the coming 12 months.

Respondents repeatedly emphasized modernizing market infrastructure as one of the UK's most significant economic opportunities, stressing the need to upgrade legacy settlement systems to maintain international competitiveness.

Live deployments already demonstrate the shift from theoretical innovation to operational reality. Earlier this year, Lloyds partnered with digital asset exchange Archax and the Canton Network to complete the UK's first public blockchain transaction using tokenized deposits to purchase a tokenized UK government bond (gilt).

These demonstrations prove that programmable bank money and digital securities can operate within regulated frameworks. As institutions expand technology budgets and align on common interoperability standards, tokenization is evolving from standalone pilots into the core operational backbone of wholesale finance.

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.

Rob Hale, co-head of global markets at Lloyds, outlined the industry's path forward in moving from proof-of-concept to scaled execution.