The UK is embarking on a significant journey to transform its payment landscape with a live pilot of programmable bank deposits. Led by industry body UK Finance and powered by London-based Quant, this initiative brings together major banks like HSBC, Lloyds, and Barclays to test tokenized sterling deposits. The core objective is to harness the power of "programmable money" to significantly curb financial fraud, enhance transaction efficiency, and modernize financial workflows across the nation.
Programmable Money: A New Era for Transactions
The pilot, set to run until mid-2026, focuses on integrating tokenized deposits into everyday payments by embedding conditional and escrow-like logic directly into transactions. This innovative approach is being tested across three critical areas. Firstly, in person-to-person marketplace payments, it aims to mitigate scams by allowing conditional release of funds, ensuring both parties fulfill their obligations before money changes hands. Secondly, it targets remortgaging workflows by synchronizing funds release with identity checks, streamlining a historically complex and time-consuming process. Finally, for wholesale asset settlement, programmable deposits enable instant delivery-versus-payment (DvP), ensuring that cash and securities are exchanged simultaneously, drastically reducing settlement risk and time. Quant's Overledger platform and PayScript are central to providing the interoperable infrastructure, facilitating these advanced payment functionalities across various bank ledgers and existing UK payment rails.
Tackling Fraud and Boosting Efficiency
The forward-looking impact of programmable deposits is particularly evident in the fight against fraud and the drive for operational efficiency. With UK retail payments still heavily plagued by authorized push-payment (APP) scams and marketplace fraud, programmability offers a robust defense by embedding verification and conditional fund release mechanisms. Projections suggest a potential 5–15% reduction in APP scam losses in flows adopting conditional release. Beyond fraud prevention, the initiative promises substantial cost savings and faster operations. For corporate payments, embedded rules could lead to 5–10% lower internal processing costs, while remortgaging completions could shrink from days to hours by automating and synchronizing fund and title updates. This pilot aligns with the broader UK policy preference to keep financial innovation within the regulated banking perimeter, reinforcing the nation's vision for a trusted, next-generation payments ecosystem that is not only resilient but also significantly more secure and efficient.
