UK Banks Pilot Programmable Tokenized Deposits to Combat Fraud

UK Finance has launched a live pilot for tokenized sterling deposits, marking a significant step toward integrating blockchain technology into everyday banking. The initiative, running until mid-2026, involves major lenders including HSBC, Barclays, and Santander, with London-based Quant providing the programmable money infrastructure.

The pilot will test three key use cases: person-to-person marketplace payments with escrow-like logic to reduce scams, remortgaging workflows with synchronized fund releases, and wholesale asset settlement using instant delivery-versus-payment. These applications aim to streamline processes, cut fraud, and minimize failed transactions.

Bank of England Governor Andrew Bailey has previously expressed skepticism about third-party stablecoins, favoring tokenized deposits instead. This aligns with the UK's regulatory approach, which prioritizes innovation within the existing banking framework rather than through external stablecoins.