Nearly three quarters of the UK's largest financial institutions believe tokenisation will transform the way money and assets move through the financial system, according to new research from Lloyds.

A survey conducted by the bank found that 71 per cent of senior decision makers expect tokenisation to reshape financial services, while investment in emerging technologies continues to gather pace across the sector.

Lloyds questioned 100 senior executives from financial institutions about the technologies they expect to have the greatest impact on the industry.

Tokenisation allows financial assets, including cash, bonds and investment funds, to be represented digitally on blockchain infrastructure, enabling institutions to transfer and settle them more efficiently.

According to the survey, 60 per cent of respondents believe faster payments and settlement represent the biggest benefit of tokenisation. A further 41 per cent highlighted improvements to collateral and liquidity management.

Lloyds said tokenisation could reduce the time and resources needed to move money and assets, helping financial institutions make more efficient use of capital and liquidity while supporting lending, investment and new financial products.

The research also points to growing technology investment across the sector. More than three quarters of respondents identified investment in new and emerging technologies as a priority for growth, compared with 41 per cent in last year's survey. Almost two thirds also plan to increase capital expenditure over the next 12 months.

Respondents also identified modernising financial and market infrastructure as one of the UK's biggest economic opportunities over the coming year.

“Financial institutions have spent years modernising how customers interact with financial services. Increasingly, attention is turning to the infrastructure behind those experiences,” said Lisa Francis, global head of CIB coverage at Lloyds. “Tokenisation is a key part of that shift, with organisations exploring how it can help them transact in a safe, trusted environment, improve efficiency, make better use of capital and enable new products and services.”

Lloyds has already carried out several tokenisation projects. Earlier this year, the bank worked with Archax and the Canton Network to complete what it described as the UK's first public blockchain transaction using tokenised deposits to purchase a tokenised gilt, demonstrating how digital assets could support faster settlement and more efficient movement of capital.

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