Change your business address
If you're a full access user, you can update your business, registered, mailing and personal addresses within Online for Business and the Business banking app.
Tokenisation: everything, everywhere all at once
Read time: 7 mins Added: 22/07/26
Harnessing the security of blockchain, financial services companies are working with their customers to develop innovative digital capabilities that promise to transform ways of doing business.
Prepare for a step-change in the pace of digitalisation of financial systems. So far, most financial services businesses have taken baby steps towards exploiting the potential of digitalisation; but the increasingly supportive approach of policymakers and regulators, allied to growing recognition of the commercial opportunities, is set to underpin a major acceleration.
That applies both to the application of new technologies to traditional forms of money and assets, and to natively digital assets such as stablecoins, cryptocurrencies and programmable securities. In both cases, digital assets are representations of value that exist in digital form, including money, investments and physical assets, but also financial instruments and contracts. The ownership rights to these assets are tokenised – converted into digital tokens held on an electronic ledger, a blockchain, which is distributed among its users.
Transformation for all
“The tokenisation of both money and real-world assets has moved rapidly from proof of concept to pilots, across a range of use cases such as payments, liquidity management and settlement,” says Peter Left, Head of Digital and Markets Innovation at Lloyds.
“For businesses, this transformation has the potential to change the game entirely: CFOs and treasurers will be able to tokenise every item on their balance sheets, from deposits through to loans, invoices, warehouse inventory and even assets such as machinery. These assets can then be stored, transferred, mobilised as security or settled instantly.”
Already, financial services businesses recognise the efficiency gains that tokenisation can deliver, such as shortening transaction settlement times and reducing costs. Early use cases are bearing fruit. Lloyds, for example, partnered with Aberdeen Investments and Archax to use tokenised versions of money market funds and gilts as collateral for foreign exchange trades. The initiative delivered benefits including greater collateral efficiency, lower trading desk funding costs, improved capital efficiency and faster settlement times.
Peter Left, Head of Digital Assets and Innovation LloydsFor businesses, this transformation has the potential to change the game entirely: CFOs and treasurers will be able to tokenise every item on their balance sheets, from deposits through to loans, invoices, warehouse inventory and even assets such as machinery.
Lloyds and Archax deployed tokenised deposits on the Canton blockchain and used them to test trading tokenised gilts – highlighting the potential to make UK capital markets more efficient. Another use case attracting interest is conditional transactions, where funds are released only when certain conditions are met, such as goods having been received, which can help to prevent fraud in peer-to-peer retail transactions.
Meanwhile, at an industry level, the Great British Tokenised Deposits project is an industry-wide initiative. Coordinated by trade body UK Finance, six leading UK banks will pilot the use of digital representations of commercial sterling bank money on a shared ledger.
Bryan Zhang, Executive Director of the Cambridge Centre for Alternative Finance at the Cambridge Judge Business School, believes recent regulatory initiatives might help the sector to build on these early successes, increasing the pace of transformation. “Regulators are making progress in providing regulatory clarity,” he says. “For example, the UK’s Financial Conduct Authority’s recent consultation on fund tokenisation sets a clear direction of travel.”
The UK isn't the only jurisdiction pressing ahead with reforms. The EU has sought to clarify regulation in the digital assets space through its recent MiCA regulation; in the US, the Trump administration hopes the GENIUS Act, passed into law in July 2025, will help the country become a global leader in digital assets.
Bryan Zhang, Executive Director Cambridge Centre for Alternative Finance, Cambridge Judge Business SchoolTokenisation could become a fundamental opportunity to digitise our financial market infrastructure.
“Tokenisation could become a fundamental opportunity to digitise our financial market infrastructure,” adds Zhang. He points to research estimating that tokenisation could deliver annual global financial infrastructure cost savings of up to $20bn a year through the adoption of features such as smart contracts, which automate the terms and settlement of many transactions.
“But in addition to the cost savings, there’s the potential for new business opportunities, new growth engines and new, productive services for both businesses and consumers, especially if they are enabled and empowered by agentic AI. However, we do need to be cautious about potential security and quantum risks related to tokenisation.”
From banks to their clients
The next step is to extend similar opportunities to more of the financial services industry’s customers. In time, blockchain and tokenisation will enable businesses to completely rethink the way they manage their assets and liabilities.
Already many organisations – as well as individuals – have set up digital wallets through which they can hold a growing range of digital assets. Now businesses are investigating a wider range of use cases.
One opportunity is to shorten lengthy trade processes to a single step – removing reconciliation and settlement risk since the trade, its confirmation and its settlement are all part of the same instrument in the transparent digital ledger. This opens the door to smarter management of working capital and new forms of collateral. Meanwhile, real-time visibility provides faster and more accurate reporting, streamlined reconciliation and reduced operational risks.
In other words, tokenisation has the potential to underpin a more efficient and safer financial ecosystem. It won’t only be financial services businesses that benefit. As digital finance makes it easier to create a claim over security, or to transfer collateral at speed, a broad range of businesses will unlock access to new sources of capital and liquidity at lower prices.
Let's help you get to the right person
Get in touch with a specialist who can help with your business needs.
You may also be interested in
Keep up to date on LinkedIn
For the latest insights follow our dedicated LinkedIn channel for corporates and institutions.