71% of UK lenders see tokenisation reshaping finance

A Lloyds survey found 71% of UK financial firms expect tokenisation will reshape financial services. The survey, published by Lloyds, polled banks, asset managers, insurers and other financial firms in the UK.

Respondents described tokenisation as the process of converting rights to an asset into a digital token recorded on a distributed ledger or similar digital registry. The survey noted tokenised assets can allow fractional ownership, automated settlement through smart contracts and faster transfers compared with traditional securities and payment rails.

Firms in the survey said tokenisation could change how assets are represented and how value moves between parties. Respondents pointed to specific applications including bonds and equities, real estate, private funds and trade finance.

The report said firms expect tokenised representations to interact with existing market infrastructure and to create demand for services such as digital custody, platforms to issue tokens and interoperability layers to connect different ledgers.

Survey participants identified legal and regulatory issues as barriers to wider adoption. They listed the need for clear legal frameworks that recognise tokenised assets and define rights and responsibilities, along with regulatory standards for anti-money laundering checks, investor protection and market conduct.

Operational challenges cited in the survey included custody solutions, reconciliation between tokenised and legacy systems and the development of settlement infrastructure. Firms flagged these areas as constraints to large-scale rollouts.

Many respondents reported they are maintaining pilot projects and proof-of-concept trials while monitoring technological and market developments. The survey also noted that banks, asset managers and infrastructure providers are testing tokenisation use cases and engaging with regulators to determine how tokenised assets fit within existing rules and what changes may be required.

The Lloyds report concluded that a majority of surveyed UK financial institutions expect tokenisation to be a factor in strategic planning and product development going forward.