UK Finance Body Experiment Shows Blockchain Can Help Small Firms Break Big Banking Stranglehold

Key Takeaways

• The U.K.’s finance trade body is positive about the future of its blockchain ledger, the Regulated Liability Network.
• The trade body says its blockchain-powered ledger could help small firms compete with the country’s leading banks.
• Traditional finance is increasingly adopting blockchain technology.

The U.K.’s finance trade body has reported a successful experiment with a new blockchain ledger for payments and settlements, claiming it could help small firms close the gap with the industry’s giants. 

UK Finance said its new U.K. Regulated Liability Network (RLN) is a common “platform for innovation” across multiple forms of money, including existing bank accounts and a shared ledger for tokenized commercial bank deposits. 

Blockchain Could Help Small Firms 

British trade association UK Finance announced in a Sept. 17 blog post that it has been working with eleven of its members, including Barclays, HSBC U.K., and Mastercard, on the RNL experiment since April 2024 . 

The trade body believes its RLN “could provide new and innovative firms with a common point of access to enable them to interface with established institutions.”

Large banks have the capital to invest heavily in digital transformation and AI, while smaller firms often cannot afford such large-scale investments and may fall behind in terms of technology adoption.

The trade body added that the RLN will enhance payment and settlement systems for smaller firms.  

Mike Zehetmayr, U.K. Financial Services Partner at EY, said the phase had “brought to light what is possible in the payments and settlements space, and there is so much more functionality that can be built in to benefit customers, businesses and the wider economy.”

“The next generation of payments innovation is on the cusp of being a reality,” Zehetmayr added. 

Further Work With Regulators Is Needed

UK Finance said the experiment demonstrated that the blockchain could reduce fraud, improve efficiency in the process of home buying, and reduce the cost of failed payments in the U.K.

The trade body said the legal and regulatory framework of the U.K. is “sufficiently flexible to support the implementation” of a ‘platform for innovation’. However, further implementation and regulatory engagement will be needed. 

Peter Left, Head of Digital and Markets Innovation at Lloyds Banking Group, and co-Chair of the RLN Project, said the experiment had supported developments in “ in money and payments aligned to common public and private sector objectives, while also providing clear and long-term customer and industry benefits.”

“We look forward to continuing to collaborate in public-private partnership to ensure the U.K. remains at the technological frontier of payments innovation globally,” he added. 

Banks Turning to Blockchain 

Traditional banks are increasingly embracing cryptocurrency due to a combination of evolving market demand, competitive pressures, and technological advancements. 

While initially skeptical, many global banks have recognized the potential opportunities of cryptocurrencies and blockchain technologies.

According to a report from Juniper Research , blockchain technology will be able to reduce cross-border payments costs by $10 billion by 2030.

About the Author

Kurt Robson

Kurt Robson is a London-based reporter at CCN with a diverse background across several prominent news outlets. Having transitioned into the world of technology journalism several years ago, Kurt has developed a keen fascination with all things AI. Kurt’s reporting blends a passion for innovation with a commitment to delivering insightful, accurate and engaging stories on the cutting edge of technology.

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