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Lloyds Banking Group is pushing for an overhaul of the UK financial system to put customer deposits on the blockchain, a shift that its chief executive said could help redesign how Britons buy and sell homes.
Charlie Nunn said combining tokenised deposits with artificial intelligence could spark a change in the financial services sector that was as significant as the invention of the smartphone.
Nunn told the Financial Times’ Global Banking Summit: “If you blend these two technologies together, if you think about digital assets and tokenised deposits with AI, you can suddenly redesign significant parts of financial services.”
He added that the UK’s biggest mortgage provider was planning to pair the technology with AI models to dramatically reduce the time spent buying houses and cut out the various intermediaries involved in the process.
“Take mortgages, the whole conveyancing, document sharing, value exchange and payments process can be built into a smart contract, and the whole thing can be guided with or without a broker, with an agent giving advice to customers,” he said.
“You can redesign buying and selling homes completely with those two technologies.”
Tokenised deposits are representations of a real customer deposit on the blockchain backed by institutional or retail deposits. Advocates say the technology pairs the efficiency and speed of blockchain technology with a greater degree of regulation and reliability than other forms of digital money such as stablecoins.
Nunn said that, when paired with AI, the technology could be akin to the advent of the smartphone. “In this next five years, using these technologies could be that ‘wow moment’ where suddenly you realise it’s more personalised, more intuitive and simpler to get what you need out of your financial services provider.”
Nunn said that US President Donald Trump’s Genius Act, which regulates another form of digital token called stablecoins, had been a “wake-up call” which would lead to the proliferation of the technology in other jurisdictions.
A stablecoin is similar to a cryptocurrency but is pegged one-to-one with a traditional currency, and is meant to be backed by safe assets such as government debt.
Nunn said that tokenisation was preferable to a stablecoin version of the pound and said the bank hoped to roll out a generalised token system by 2027.
“It’s going to give, therefore, much, much better outcomes than a stablecoin, a sterling-based stablecoin emerging domestically, because it will still be instantaneous but it’ll have all the protections,” he said.
Nunn added: “We’ve already piloted the technology system-wide across the whole of the UK. No other system in the world, China, Singapore, India . . . for the last 10, 15 years have got close to this,” said Nunn.
Nunn added that advancements in digital finance would help boost growth in the UK, where he said that there was still a lack of business confidence.
Lloyds is the UK’s largest retail bank and is often seen as a bellwether for the UK economy. Nunn said there remained several factors “gumming up” the UK economy to investment, such as high energy costs, regulatory burden and high labour costs.
“I think collectively between government, financial sector and businesses, we really need to focus on getting businesses investing again because that’s where we’re going to see productivity and that’s where we’re going to see growth.”