Following the experimentation phase of a new ‘UK Regulated Liability Network’ (RLN), UK Finance, the British trade association for the UK banking and financial services sector, has revealed that such a platform could deliver economic value and support innovation in the market.

Since April 2024, UK Finance has worked alongside eleven of its members and six external partners to explore a range of use cases for RLN, a new type of financial market infrastructure that can deliver new capabilities for payments and settlement, including tokenisation and programmability.

During this phase of testing, the parties found that, across the use cases explored, several potential benefits were possible, including reducing fraud, improving efficiency in the process of home buying and reducing the cost of failed payments in the UK.

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.

The Bank of England recently published its Discussion Paper, highlighting a number of objectives for the UK’s payments sector, including the aims of maintaining the singleness of money and promoting sustained innovation. UK Finance says that the RLN could help the industry meet these objectives.

“Every year, over £11trillion worth of payments are processed in the UK, powering the economy,” explained Jana Mackintosh, managing director of payments, innovation and resilience at UK Finance. “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.”

‘The technological frontier of payments innovation’

The work looked at various technical, legal and business case questions surrounding the development of a ‘platform for innovation’. UK Finance revealed that the work found that:

• 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.

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 partnerships to ensure the UK remains at the technological frontier of payments innovation globally.”

Entities involved in the experimentation phase included UK Finance members Barclays, Citi UK, HSBC UK, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander UK, Standard Chartered, Virgin Money and Visa.

EY, Linklaters and a technology team of R3, Quant, DXC Technology and Coadjute also made up the remaining partners that took part in testing various RLN use cases.