The British trade body for financial services, UK Finance, has concluded that a ‘Regulated Liability Network’ (RLN) can provide economic benefits to the UK across a range of areas.
UK Finance has completed the experimentation phase into the RLN, a five-month process which began in April 2024. This experimentation included contributions from some of the largest active financial institutions in the UK.
The chief conclusions of the experiments are that the RLN could drive new payments and settlement capabilities forward, including tokenisation and programmability. Additional benefits identified included reducing fraud, improving the efficiency of buying homes and reducing the cost of failed payments.
An RLN would function in a similar manner to a digital sandbox, allowing UK financial services stakeholders, both big and small, to test digital payments options, such as tokenised commercial bank deposits.
UK Finance believes that the RLN could deliver economic value and support further innovation in the UK finance sector, with functionalities like programmable payments and the locking and unlocking of funds, which was demonstrated throughout experimentation.
“Every year, over £11trn worth of payments are processed in the UK, powering the economy,” said Jana Mackintosh, Managing Director of Payments, Innovation and Resilience at UK Finance.
“The success of the RLN experiment shows the potential of technology to transform the customer experience and deliver economic value and benefits for society. The Experimentation Phase demonstrated the power of industry collaboration to deliver a platform for innovation in the UK.
“The private sector wants to invest in the future of commercial bank money and a partnership with regulators is the best way of successfully making this happen.”
Britain’s finance industry is home to a huge range of startups and SMEs, which make up the vast majority of firms active in this sector. Many of these are new and emerging fintech companies, experimenting with their own products in areas like Open Banking, Artificial Intelligence (AI), embedded finance, blockchain, and other areas.
Based on its experiments, UK Finance believes that the RLN could grant firms a common point of access to interact with established institutions, as well as with enhanced payment and settlement systems.
Participating institutions in the project are Barclays, Citi UK, HSBC UK, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander UK, Standard Chartered, Virgin Money and Visa.
Some of these firms have vocally supported the notion of an RLN for some time. Lee McNabb, NatWest’s Head of Group Payments Strategy and Research, highlighted the RLN in a discussion regarding payments innovations at the Pay360 conference in March.
Many of these banks and payments firms are also playing an active role in overseeing the experiments as well as contributing to them. For example, Peter Left, Head of Digital and Markets Innovation at Lloyds Banking Group, is the co-Chair of the RLN Project.
“The RLN project has been a unique opportunity for industry collaboration to deliver a platform for innovation across the sector,” Left remarked.
“Working in partnership, we have demonstrated how this platform supports developments in money and payments aligned to common public and private sector objectives, while also providing clear and long-term customer and industry benefits.
“We look forward to continuing to collaborate in public-private partnership to ensure the UK remains at the technological frontier of payments innovation globally.”
UK Finance is also confident that the UK’s legal and regulatory frameworks could support the launch and maintenance of an RLN. The trade body states that it and its members are keen to engage with regulators and other public bodies to do so.
