UK banks move tokenised deposits across shared platform

Seven UK banks completed the first live customer transactions using tokenised sterling deposits, testing whether bank money can move between institutions on shared infrastructure. The UK Finance announcement describes two remortgage completions and a consumer marketplace payment. Tokenised deposits are digital representations of commercial bank money held in customer accounts.

The transactions ran through the Great British Tokenised Deposit (GBTD) initiative, convened by UK Finance. Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander took part. UK Finance says Quant developed the shared platform. This connects participating banks on common infrastructure, allowing tokenised deposits to move between institutions.

How did the remortgage payments work?

Funds were locked and then released automatically when each property transaction completed. That conditional release can reduce manual checks and settlement delays, according to UK Finance. The pilots also explored how digital links to HM Land Registry could improve future transactions. The announcement does not say that those links were used to complete these remortgages.

The mechanism ties a payment to a defined event: funds remain in the buyer’s account until completion, then release. For a remortgage, that means the money can stay in the account and continue earning interest until completion, UK Finance said. Lloyds, NatWest and Barclays carried out the two mortgage transactions, Reuters reported.

What did the marketplace test demonstrate?

The test simulated a consumer buying an item from a private seller. The buyer’s funds were locked and released only after the goods were exchanged. The payment moved between accounts, but no real goods changed hands, according to Reuters’ report on the trials.

That setup makes payment conditional on delivery. It can reduce the risk that a buyer pays without receiving an item, or a seller releases it without receiving payment. The GBTD trials show how that rule can be applied to bank deposits across a shared platform, though the marketplace transaction was a simulation.

What happens to the deposits after tokenisation?

The deposits remain commercial bank money. UK Finance says tokenised deposits are designed to retain the protections associated with conventional deposits while adding programmability and conditional settlement. They are not a separate asset class created by the trials: they are digital representations of money held with the issuing bank.

UK Finance says further pilots are expected to test settlement of digital assets by linking tokenised customer money with digital assets. The interbank transactions therefore demonstrate a working payment mechanism, while future tests will explore its use in asset settlement. For banks and customers, the practical change is that deposits can be programmed to move between institutions when specified conditions are met.