UK banks have collaborated to complete the first live customer transactions using tokenised sterling deposits, marking a major milestone for payments innovation in the UK. Tokenised deposits are digital representations of traditional commercial bank money. They retain the trust and regulatory protections of conventional deposits while offering benefits such as programmability, speed and efficiency.
The transactions were delivered through the Great British Tokenised Deposit (GBTD) initiative, which was convened by UK Finance and involves Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander.
GBTD participants executed the first set of live retail transactions, which included:
Two remortgage completions:
- Deposit funds were ‘locked’ and then automatically released at completion, reducing manual checks and settlement delays. For mortgage transactions, the technology can also ensure customers continue to earn interest on funds held in their accounts until completion.
- The pilots also explored how connecting with HM Land Registry digitally could help to improve the efficiency of future transactions.
A consumer ‘marketplace’ transaction:
- A consumer purchasing an item from a private seller. The programmable tokenised deposits enabled money to be ‘locked’ in the buyer’s account, with release only happening when the goods were successfully exchanged, helping reduce transaction risk and building greater trust in online commerce.
Why tokenised deposits?
These transactions demonstrated how tokenised commercial bank money can make payments more transparent, programmable, and efficient. Once scaled, the pilots demonstrated the potential benefits to customers including reduced fraud, giving customers greater control over funds, and increased confidence for buyers and sellers.
The transactions were executed on the GBTD platform, which was developed by Quant as a shared UK industry infrastructure for tokenised commercial bank money. Complementing the work of the Bank of England, HM Treasury, the Financial Conduct Authority and the Payment Systems Regulator on the future of retail payments, the pilots demonstrate how UK banks are starting to innovate with tokenised deposits, enabling innovation while maintaining the safety, resilience and trust associated with commercial bank money.
As more transactions and services become digital, there is a growing need for money that can operate seamlessly in digital environments. Tokenised deposits provide a way to bring trusted commercial bank money onto digital networks, enabling payments to move faster, settle more efficiently and be programmed to execute automatically when specific conditions are met. This capability could support a range of future uses, from faster home purchases and safer online payments to the buying and selling of digital assets and more efficient settlement of financial transactions.
Further pilots are expected over the next few months to demonstrate digital-asset settlement by linking tokenised customer money with digital assets for seamless exchange. Banks involved in the project will issue digital debt instruments that can be traded and settled, with coupons paid in tokenised deposits, unlocking the benefits of delivery-versus-payment-versus-reserves.
Jana Mackintosh, Managing Director of Payments and Innovation at UK Finance said: “These live transactions show how tokenised deposits can deliver practical, real-world benefits and contingent payments that give customers greater control over their money. By bringing the industry together, GBTD is demonstrating how tokenised deposits can strengthen the UK’s payments infrastructure, support innovation across the economy and drive the UK’s competitiveness internationally.”
Economic Secretary to the Treasury, Rt Hon Lucy Rigby KC MP, said: “These first live transactions mark a critical milestone for payments innovation in the UK. We are a world leader in digital finance, and this Government is determined to keep us at the forefront. We will continue working with industry and regulators to build a safer, more innovative payments ecosystem that works better for customers and supports growth.”
Chris Woolard, UK Digital Markets Champion said: “As noted in my first report to the Chancellor in July, GBTD is an exceptionally important initiative to the UK, so it is great to see the level of progress being made, as part of moving the UK to a multi-money, multi-asset system.”
See also:
UK Finance publishes nine-point plan to support UK economic growth | Disruption Banking
