Large UK financial firms expect tokenisation to reshape finance

Lloyds Banking Group said on 2 October 2026 that 71% of senior decision-makers it surveyed at large UK financial institutions expect tokenisation — creating a digital representation of an asset, such as a share, bond or unit of currency, on a digital ledger — to reshape the future of financial services. The figure comes from the tenth edition of Lloyds' Financial Institutions Sentiment Survey, fielded among banks, insurers, financial sponsors, and asset and wealth managers.

That expectation is real among the roughly 100 senior decision-makers Lloyds surveyed across large UK banks, insurers, financial sponsors, and asset and wealth managers. What it is not, on the evidence available, is a description of tokenisation already operating at scale in the UK. The Bank of England and the Financial Conduct Authority (FCA) are still running a supervised sandbox for tokenised securities, the first firm to clear a key approval gate did so only in July 2026, and the infrastructure for settling tokenised trades in central-bank money is not due until 2028. For a UK reader working out what this means for them, the honest summary is: sentiment is well ahead of adoption, and several specific, named barriers stand between today's pilots and everyday use.

What Lloyds actually measured

The underlying survey questioned 101 decision-makers at a cross-section of UK financial institutions between 13 April and 19 May 2026, according to the survey's own methodology page. Lloyds' October press release describes the sample more loosely as "100 senior decision-makers" — an unexplained minor discrepancy from the methodology page's figure of 101 that may reflect rounding, though Lloyds does not state this explicitly.

A more significant inconsistency sits in Lloyds' own published material. The survey's key-findings page, released in June 2026, states that 75% of respondents believed tokenisation would "have an impact on" the future of financial services. The October release instead gives 71% expecting tokenisation to "reshape" financial services. The wording differs, and Lloyds has not explained whether the gap reflects different question wording, a data revision, or something else. Readers should treat the two figures as a reported discrepancy, not as one correcting the other.

Lloyds has not published the respondent organisations, the number of respondents in each subsector, the sampling method, the response rate or any margin of error. That matters because a sample of around 100 named only by broad sector cannot be treated as a statistically representative picture of the entire UK financial sector, even though it plausibly captures the views of a meaningful group of large institutions.

Where firms expect the practical payoff

Asked about specific benefits, 60% of Lloyds' respondents selected faster payments and settlement as a key tokenisation opportunity, and 41% selected collateral and liquidity management. Lloyds' release does not disclose the exact question wording or whether respondents could select more than one option, so the figures should be read as relative rankings of attention rather than precise, mutually exclusive shares.

Those two answers point squarely at wholesale, back-office activity — moving money and collateral between institutions faster and with less friction — rather than at retail products reaching UK consumers directly. That reading is reinforced by separate regulatory evidence: when the FCA and the Bank of England asked the market directly, most of the 123 respondents to their call for input identified post-trade processes, and particularly the movement of collateral between parties, as the main opportunity for tokenised securities, according to the FCA's feedback statement FS26/1, published on 14 September 2026.

Lloyds' survey also found that 77% of respondents named investment in new or emerging technologies as a growth priority, up from 41% in 2025, and 64% planned to increase capital expenditure over the following 12 months, up from 37% in 2025. Both figures describe broader technology spending intentions, not tokenisation-specific commitments, and should not be read as evidence that three-quarters of large UK institutions are now funding tokenisation projects specifically.

Tokenised deposits and securities, defined carefully

The FCA and the Bank of England define tokenisation as creating a digital representation of an asset on a digital ledger. In practice this covers several distinct things that carry different legal consequences:

• A tokenised bank deposit represents a claim on a bank, recorded on a ledger. The Bank of England's 2025–26 financial market infrastructure report confirms that tokenised deposits can already be used as a payment asset inside the UK's Digital Securities Sandbox and are subject to the same standards as conventional commercial-bank deposits within that sandbox.
• A tokenised security, such as a bond or fund unit, is a digital representation of that security on a digital ledger.
• These are distinct from unbacked cryptoassets and from stablecoins, which are not addressed in this survey.

A tokenised asset does not automatically carry the same legal rights, regulatory treatment or protections as its conventional equivalent. Whether a holder has the same claim, the same prudential backing, Financial Services Compensation Scheme cover or Financial Ombudsman Service access depends on the specific instrument, the issuer, the legal structure and the regulated activity involved. Lloyds' own release describes tokenisation as retaining the protections associated with traditional financial assets; that statement is broader than the underlying regulatory position allows, and readers should not assume blanket protection without checking the specific product and provider.

What has actually been built, trialled or approved

Several concrete steps have taken place, and each is worth stating precisely rather than rounding up to "adoption":

The Bank's annual report describes the sandbox firms as preparing for the live stage rather than operating at production scale, and HSBC's July approval is the first instance of a firm clearing that bar. The FCA's fund-tokenisation framework permits authorised fund managers to use distributed ledger technology for the unitholder register; take-up remains optional, and current take-up levels have not been published. HM Treasury's planned DIGIT transaction remains a pilot, separate from the government's conventional debt issuance programme, and had not taken place as of 3 October 2026.

The barriers that will decide whether this goes beyond trials

The Bank of England's DLT Innovation Challenge, reported on 12 May 2026, found no single distributed-ledger design that removes the trade-offs between settlement finality, scalability, governance and control, operational resilience, and interoperability with existing infrastructure. Several of those conditions bear directly on whether tokenised deposits and securities can move from sandbox to scale:

• Interoperability. Separate, incompatible ledgers risk fragmenting liquidity and adding new operational dependencies rather than removing old ones, according to the Bank's findings. HM Treasury's planned link between HSBC Orion and the London Stock Exchange Group is intended to address this for the DIGIT pilot specifically.
• Settlement money. The Bank has indicated low appetite for a significant shift away from central-bank money in securities settlement, and its synchronisation service to let tokenised transactions settle in sterling central-bank money is not due until 2028. Until then, questions remain about what asset actually settles a tokenised trade.
• Operational resilience, finality and governance. Systemically important settlement activity requires a DLT system to perform reliably at high volume, offer clear finality, and have accountable governance — requirements the Bank says are not yet demonstrated at the scale that wholesale markets would need.
• Legal and prudential clarity. As set out above, rights and protections attached to a tokenised instrument depend on its specific structure, not on tokenisation itself.
• Commercial demand and liquidity. No source in this review establishes an aggregate value or volume for live UK tokenised-securities or tokenised-deposit transactions, so the degree of real investor and issuer demand beyond pilot activity is not yet evidenced.

What to watch next

The clearest near-term test of Lloyds' 71% figure is whether firms move from naming faster settlement and collateral management as priorities to running commercial volumes through live systems. Readers should watch for the FCA and Bank of England's promised joint tokenisation roadmap, which had not been published as of 3 October 2026; for any data on transaction volumes inside the Digital Securities Sandbox beyond participant counts; for the first DIGIT gilt transaction, targeted by the end of the first quarter of 2027; and for progress toward the Bank's 2028 target for central-bank-money synchronisation. Readers should also watch whether Lloyds clarifies the gap between its 75% and 71% headline figures, since neither the survey's methodology page nor its October release currently explains it.

Anyone considering a tokenised product, whether a tokenised fund unit or a tokenised deposit, should check the specific regulatory status, issuer and legal structure involved with the relevant official source — the FCA, the Bank of England or HM Treasury — rather than assume that tokenisation itself carries any particular protection.