Tokenised deposits could help speed up settlement, cut manual checks and give customers more control over when their money is released.
UK banks Lloyds, Barclays, HSBC UK, Lloyds Banking Group and NatWest have completed live customer transactions using tokenised deposits.
These payments were carried out through the Great British Tokenised Deposit (GBTD) initiative, a group organised by UK Finance that includes Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander.
Tokenised deposits work as digital versions of standard bank money, carring the same protections as a normal deposit account but allow for new capabilities like programmable logic and automated conditional settlement.
The recent trials tested how these features work during everyday transactions, using two home remortgages and a consumer marketplace sale as the first real world retail tests.
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.”
UK banks take tokenised deposits into live use
During the two remortgage trials, tokenised deposits kept funds in the customer’s account until the conditions for completion were met.
The software locked the funds and transferred them automatically once the deal closed, removing the need for manual payout authorisation. This cuts out back-and-forth checks and processing delays, while allowing the homebuyer to keep earning interest on the funds until completion.
The trials also looked at how these automated payments could connect with HM Land Registry, opening up possibilities to digitise and simplify other stages of the property transaction.
The other live use case involved a private sale between two individuals, where the buyer’s money stayed in their account until the goods were successfully exchanged, triggering the automatic transfer.
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, contingent payments that give customers greater control over their money.”
What comes next for tokenised deposits?
Gilbert Verdian, Founder and CEO of Quant, described the milestone as a defining moment for the sector.
“For the first time, the UK’s leading banks have shown that tokenised deposits can move seamlessly between institutions on a common, interoperable infrastructure, bringing the benefits of programmable money to customers while preserving the safety, trust and regulatory protections of commercial bank money,” said Verdian.
The GBTD platform, developed by Quant, provided the shared infrastructure for the transactions, allowing banks to move tokenised commercial bank money between institutions while keeping the same protections as traditional bank deposits.
The latest transactions add to other efforts by UK banks to explore how tokenisation could improve payments and settlement.
Lloyds Banking Group, for example, completed live-value testing earlier this year through Project Agorá, a global initiative exploring how tokenised central bank reserves and commercial bank deposits could operate on shared programmable infrastructure.
Looking ahead, the GBTD project is set to move into digital-asset settlement, with further pilots expected over the coming months.
Participating banks will issue digital debt instruments that can be traded and settled using tokenised deposits, with coupon payments also made through tokenised money. The work will look at delivery-versus-payment-versus-reserves (DvPvR), linking tokenised customer money with digital assets and reserves within the settlement process.
Paul Horlock, Chief Payments Officer, Santander said: “Tokenised deposits have the potential to play a key role in the evolution of digital money and payments in the UK and beyond.
“We believe this can enable and accelerate innovation within UK payments. This is a great example of industry collaboration with the opportunity for multiple future applications and use cases for our customers and benefit to the UK economy.”
