Barclays, HSBC, Lloyds and other UK banks test tokenized deposits in first live customer transactions

UK banks have carried out their first live customer transactions using tokenized sterling deposits, testing how programmable commercial bank money can improve payments and settlement, according to a Sept. 24 statement.

The transactions were conducted through the Great British Tokenised Deposit initiative, convened by UK Finance and involving seven banks including Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander.

The pilots covered two remortgage completions and a consumer-to-consumer marketplace transaction. For the remortgages, funds were automatically locked and released at completion, potentially reducing manual processing and settlement delays, while customers could continue earning interest before completion.

For the marketplace purchase, funds remained locked until the buyer received the goods, demonstrating how programmable payments could reduce transaction risk.

The transactions were executed on the GBTD platform developed by Quant as shared infrastructure for tokenized commercial bank money.

The participants said tokenized deposits could bring commercial bank money onto digital networks while retaining the trust and protections associated with conventional deposits.

Future pilots are expected to connect tokenized deposits with digital assets and test delivery-versus-payment-versus-reserves settlement.