UK Finance announces successful outcome of Regulated Liability Network Experimentation Phase

UK Finance announces the successful outcome of the Regulated Liability Network Experimentation Phase. This is a new type of financial market infrastructure that can deliver new capabilities for payments and settlement, including tokenisation and programmability.

Since April 2024 UK Finance has been working with eleven of its members (Barclays, Citi UK, HSBC UK, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander UK, Standard Chartered, Virgin Money and Visa) and a number of other partners (EY and Linklaters and a technology team of R3, Quant, DXC and Coadjute) on a new UK Regulated Liability Network (RLN) Experimentation Phase.

This is a new type of financial market infrastructure that can deliver new capabilities for payments and settlement, including tokenisation and programmability.

Across the use cases explored, a number of potential benefits were discovered, including reducing fraud, improving efficiency in the process of home buying and reducing the cost of failed payments in the UK.

The work looked at various technical, legal and business case questions surrounding the development of a ‘platform for innovation’ and the main conclusions are:

Such a platform, in collaboration with other important initiatives such as Open Banking, could deliver economic value and support innovation in the market.
New functionality, such as programmable payments and locking/unlocking of funds, was demonstrated across a range of use cases.
It could provide new and innovative firms with a common point of access to enable them to interface with established institutions, and enhanced payment and settlement systems.
The legal and regulatory framework of the UK is sufficiently flexible to support the implementation of a ‘platform for innovation’, subject to further implementation and regulatory engagement.

As a result of this Experimentation Phase, UK Finance and its members welcome further engagement with regulators and other public bodies as the industry continues to drive innovation in payment markets. Creating a sustainable governance and funding model for future change and renewal is key to delivering benefits to UK consumers and businesses.

The Bank of England recently published a Discussion Paper which laid out several objectives for the UK’s payments sector, including the aims of maintaining the singleness of money and promoting sustained innovation – the RLN could help the industry meet these objectives.

With the Experimentation Phase completing, this offers an opportunity for other financial institutions and public sector organisations to engage with the learnings from the experiment and become involved in the future phases of work.

Jana Mackintosh, Managing Director of Payments, Innovation and Resilience at UK Finance, said:

Every year, over £11 trillion worth of payments are processed in the UK, powering the economy. The success of the RLN experiment shows the potential of technology to transform the customer experience and deliver economic value and benefits for society.
The Experimentation Phase demonstrated the power of industry collaboration to deliver a platform for innovation in the UK. The private sector wants to invest in the future of commercial bank money and a partnership with regulators is the best way of successfully making this happen.

Peter Left, Head of Digital and Markets Innovation at Lloyds Banking Group, and co-Chair of the RLN Project, said:

The RLN project has been a unique opportunity for industry collaboration to deliver a platform for innovation across the sector. Working in partnership, we have demonstrated how this platform supports developments 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 UK remains at the technological frontier of payments innovation globally.

Area of expertise:

Payments, innovation & resilience

Notes to editor

UK Finance is hosting an event to launch the RLN on 17 September. If you are interested in attending, please contact the UK Finance press office by emailing press@ukfinance.org.uk

More information about the RLN concept can be found here: www.regulatedliabilitynetwork.org

More information about the UK Finance Project: https://www.ukfinance.org.uk/regulated-liability-network

For more information please call the UK Finance press office on 020 7416 6750 or email press@ukfinance.org.uk

Lee Braine, Managing Director – Advanced Technologies, Chief Technology Office, Barclays said:

The UK’s financial services industry has collaborated intensively this year to explore payments innovation. The prototypes and experiments in this project have provided us with some great insights into a potential ‘platform for innovation’, which could improve customer experiences and mitigate fragmentation risks. We now look forward to the next steps in this journey.

Tim Moncrieff, Global Head of Strategic Growth, Money Movement Network and Operations, Visa, said:

This project was a truly collaborative industry effort that rigorously assessed the business, legal and technical considerations of a ‘Platform for Innovation’, which could accelerate adoption of tokenised liabilities, enhance settlement efficiency and deliver consumer benefits. We’re excited about the potential of RLN and look forward to continuing to collaborate with the industry to make RLN a reality.

Paul Horlock, Chief Payments Officer at Santander UK:

RLN has been a valuable industry collaboration to drive innovation compared to be driven solely by regulatory demand. This latest use of blockchain technology has shown great results, creating better and safer outcomes for consumers, within a more resilient infrastructure. This can support commercial and competitive development which is both crucial and healthy for the payment’s ecosystem. We are taking the time to experiment and test – we’re not making assumptions, and we’ll drive ongoing development through an iterative build approach.

Tom Wood, Head of Global Payments Solutions, HSBC UK said:

We are delighted to have been part of the UK RLN Experiment Phase, working with UK Finance and community members. This has provided useful insight into the possible next steps for developing an infrastructure for digital money, in a scalable and sustainable way.

Raj Dhamodharan, Executive vice president, Blockchain and Digital Assets at Mastercard:

Whether it’s buying a house, trading a tokenized bond, or making a purchase from an online marketplace, our work on the UK RLN Experimentation Phase has demonstrated the power and potential of programmable payments. As we look ahead to what’s next, this cross-functional work has given us plenty to consider – offering a glimpse into a future of smoother, innovative payments powered by tokenised bank deposits.

Lee McNabb, Head of Group Payments Strategy, NatWest said:

Today's launch of the RLN report is a testament to the power of forward-thinking collaboration. The RLN concept, while still theoretical, demonstrates that we could build a more resilient financial ecosystem with innovation and customer outcomes at its core. Whilst there remains work to be done to better understand the commercial viability, I look forward to working with the industry and regulators to explore the future of money and payment infrastructure as we tread through what is a key time for the future of payments in the UK.

Tiina Lee, CEO, Citi, UK, said:

This industry research project has highlighted the opportunities and challenges of tokenization, laying the foundation for further public/private collaboration to upgrade the UK’s payment systems with the latest technology.

Kate Karimson, R3 Chief Commercial Officer, said:

We’re proud to be a part of this pioneering effort where the UK finance industry has operated across retail, wholesale, technology and legal workstreams in a collaborative manner. R3 is committed to progressing financial markets and to enabling an open, trusted and advanced digital economy. The success of the RLN Experimentation Phase and the publication of a roadmap for the UK economy to harness the potential for the benefits of tokenisation demonstrates our advanced technology implementation capability.

Gilbert Verdian, Founder and CEO at Quant, said:

As the RLN project has proven, programmable money brings new functionality across payments and settlement. Implementing programmability will be key to cementing the UK’s leadership position in digital finance and future-proofing our capital markets. As pioneers of digital finance, Quant is empowering financial institutions to deliver valuable innovative new products across payments and settlement.

Mike Zehetmayr, UK Financial Services Partner at EY, comments:

Collaboration across the UK financial services industry has been a pivotal part of the RLN journey, and we are proud to have supported this latest Experimentation Phase. This phase has 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.