Nearly three-quarters of senior UK finance executives expect tokenization to reshape financial services, according to an annual survey by Lloyds Banking Group that polled 100 decision-makers across major UK banks, insurers, asset managers and financial sponsors.

The survey, released by the UK's largest financial services provider, found that 71% of respondents anticipate tokenization will restructure how financial services operate, as banks and asset managers expand their exploration of blockchain-based infrastructure for payments, settlement and liquidity management.

Faster payments and settlement ranked as the most significant perceived benefit, cited by 60% of respondents. Another 41% pointed to improved collateral and liquidity management. Lloyds said moving assets and payments onto digital infrastructure could free up capital and liquidity currently tied up in financial transactions, allowing institutions to deploy those resources elsewhere.

Rob Hale, co-head of global markets at Lloyds, framed the challenge as one of scaling individual use cases into functioning market infrastructure. "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 in the survey's release.

Lloyds has tested the technology directly. Earlier this year, the bank worked with digital asset exchange 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.

Policy Momentum Builds

The survey lands as UK policymakers push to move tokenization beyond pilot projects and into core financial infrastructure.

The Bank of England proposed in May to extend its core settlement infrastructure toward near-24/7 availability. A subsequent government payments blueprint called for tokenized and traditional forms of money to operate within an interoperable payments system.

In July, a government-backed industry task force estimated that leadership in tokenized finance could add as much as 33 billion British pounds (approximately $44 billion) to UK annual economic output by 2035. The task force, part of the UK Wholesale Markets Digital Strategy effort, also called for the country's first tokenized government bond to be issued by early 2027.

The UK has also sought closer coordination with the United States. In July, the US and UK treasuries recommended creating a private-sector group to test cross-border uses of tokenized assets and urged US financial regulators and the Bank of England to identify shared regulatory approaches.

For UK financial institutions, the operational implications are concrete. Faster settlement cycles would compress counterparty exposure windows and reduce the working capital requirements that current T+2 and batch-based settlement impose. Tokenized collateral could allow treasuries to mobilize assets intraday rather than overnight, directly affecting liquidity ratios and funding costs.

The survey results also signal where banks expect to concentrate investment. With 60% of respondents prioritizing payments and settlement, infrastructure vendors and blockchain networks targeting institutional settlement workflows — rather than retail-facing applications — stand to capture the near-term demand from UK incumbents.

The 2027 tokenized gilt target now serves as the sector's most visible deadline, and the interoperability standards Hale described will determine whether individual bank pilots consolidate into shared market infrastructure before it arrives.