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, Linklaters and a technology team of R3, Quant, DXC Technology 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.”
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: “The RLN isn’t just about enhancing the efficiency of our current payment infrastructure; it’s about creating different forms of money that will transform the way value and assets are moved and managed. Programmability is at the heart of the transition to digital finance. As the project has proven, programmability brings new functionality across payments and settlement that are inconceivable under the current system. Implementing programmability will be key to cementing the UK’s leadership position in digital finance and futureproofing our capital markets for the decades to come. As the digital economy evolves, we’re excited to continue working with other project participants in delivering further innovation across payments.”
