Blockchain's smartphone moment: Is it ready for everyday banking?

At the end of last year, Lloyds Banking Group CEO Charlie Nunn stood up at the Financial Times Global Banking Summit and compared the potential of tokenised deposits combined with artificial intelligence to the invention of the smartphone.

He was not speaking in abstractions. Lloyds had just completed the UK's first tokenised deposit transaction on a public blockchain — the Canton Network — and was pointing to a 2027 rollout that could, in his words, fundamentally redesign how Britons buy and sell homes.

For those of us who study financial technology, this moment has been a long time coming — and it raises questions that deserve a serious answer. What does blockchain actually offer everyday banking. And what are the obstacles that stand in its way?

It is important to separate the technology from the speculation. Blockchain — at its core a distributed, tamper-resistant ledger — has properties that genuinely address long-standing frictions in banking.

Immutability, transparency, near-instantaneous settlement, and the ability to embed rules directly into transactions via smart contracts are not incremental improvements. They are architectural changes to how value and information move.

Why blockchain is more than crypto hype

Lloyds' recent activity illustrates this well. The bank partnered with the deep technology company Enigio in 2023. The following year it partnered with WaveBL — a blockchain platform operating across 136 countries — to digitise trade documents such as bills of lading (loading) and letters of credit.

A process that traditionally required weeks of document couriering and manual checking was completed in four days in a recent India-to-UK transaction. That is not a marginal gain. For small and medium-sized exporters who need access to finance quickly, the difference can be existential.

The tokenised deposit pilot goes further still. Tokenised deposits are digital representations of conventional bank deposits recorded on a blockchain, retaining consumer protections, such as coverage by the Financial Services Compensation Scheme (FSCS) and interest accrual, while enabling programmable, real-time settlement.

When Lloyds used tokenised deposits to purchase a tokenised gilt issued by the digital currency exchange Archax on the Hedera Hashgraph public blockchain in July 2025, it was demonstrating that regulated financial instruments can operate in a digital environment under existing legal frameworks. This is a significant proof of concept.

The conveyancing use case deserves particular attention. Buying a home in the UK is notoriously slow, expensive, and prone to collapse: roughly a third of agreed sales fall through before completion.

Mr Nunn's vision — embedding conveyancing, document exchange, and payment into smart contracts — is not fanciful. If tokenised deposits can represent value on-chain, and property titles can be similarly tokenised, then the mortgage-to-completion process could be dramatically compressed. For the millions of customers served by high street banks, this is personal finance, not institutional plumbing.

Broader systemic benefits are also worth acknowledging. At the Gillmore Centre at Warwick Business School, our research into blockchain across financial services has consistently found that distributed ledger approaches reduce the concentration of single points of failure, enhance auditability for regulators, and — when designed well — can lower systemic risk.

During periods of market stress, the ability to transfer tokenised collateral digitally rather than forcing asset sales could reduce volatility. These are features that the financial system as a whole, not just individual banks, would benefit from.

The barriers to adopting blockchain in banking

None of this means the path to blockchain in everyday banking is straightforward. The challenges are genuine and will not be resolved by enthusiasm alone.

Regulatory uncertainty remains the most significant constraint. The UK's Financial Conduct Authority and the Bank of England are actively developing frameworks for digital assets, and the Law Commission has made important strides on the legal recognition of electronic trade documents. But comprehensive rules governing tokenised deposits, programmable money, and on-chain collateral are still evolving.

Major banks are operating largely through carefully structured pilots — testing what is possible within existing frameworks rather than deploying at scale. Until regulators provide clearer guidance, board-level risk appetite will understandably remain cautious.

Legacy systems are the second major constraint. The major UK high street banks are running technology infrastructures built over decades, with layers of core banking systems that were never designed to interface with distributed ledgers.

Integration is costly, time-consuming, and carries operational risk. When Lloyds talks about a 2027 rollout of tokenised deposits, the limiting factor is less likely to be the blockchain layer than the plumbing required to connect it to everything else. This is a problem that cannot be solved by clever technology alone; it requires sustained investment and careful programme management.

Scalability is a third concern that is often underestimated. Public blockchain networks that can handle the transaction volumes of retail banking while maintaining speed, low cost, and regulatory-grade privacy have not yet been proven at the required scale.

Will the public trust blockchain?

The Canton Network and Hedera Hashgraph are serious, permissioned platforms designed for institutional use, but they are very different beasts from the congested, fee-volatile public chains associated with cryptocurrencies.

The industry is building the right infrastructure, but its readiness for mass retail deployment is not yet demonstrated.

Public trust should not be dismissed either. The FTX collapse in 2022, the string of crypto exchange failures, and the persistent association in many people's minds between blockchain and speculation have created a trust deficit that mainstream banks will need to actively manage.

Explaining to customers that their deposit is still a deposit — still covered by the FSCS, still earning interest — but is now recorded on a blockchain will require careful, sustained communication.

Banks have earned the right to be trusted custodians of money over centuries. Rebuilding that association in a new technological context takes time.

There are also important questions about data privacy and the design of permissioned versus public chains. Blockchain's transparency, which is a virtue in reducing fraud and improving auditability, requires careful design to protect individual financial data.

Getting that balance right — open enough to provide the efficiency gains, controlled enough to protect sensitive information — is a non-trivial engineering and governance challenge.

What next for blockchain in banking?

The honest answer is that blockchain in everyday banking is no longer a question of whether, but of when and how well.

The Lloyds programme, alongside parallel pilots by Barclays, HSBC, NatWest, and Santander through the banking trade association, UK Finance, and its collaborative tokenised deposit project, represents an industry that has moved beyond experiment into structured implementation.

The infrastructure — Quant Network's Overledger, the Canton Network, the Hedera ecosystem — is increasingly capable. The regulatory direction of travel in the UK is broadly supportive.

What determines success from here is execution: the quality of the integration work with legacy systems, the clarity of regulatory guidance, and the ability of banks to communicate the benefits to customers in plain terms.

The technology is not the bottleneck. The bottleneck is the hard, unsexy work of change management in large organisations and the patient construction of regulatory and public trust.

At the Gillmore Centre, we have long argued that financial technology's transformative potential is only realised when it is grounded in rigorous research, practical implementation, and active engagement with regulators and policymakers.

Blockchain in banking is a textbook case of that challenge. The prize — faster, cheaper, safer, more transparent financial services for millions of people — is worth the effort. But the effort must be honest about what remains to be done.

The smartphone analogy Mr Nunn reached for is instructive. The smartphone did not arrive fully formed. It required years of infrastructure investment, regulatory adaptation, consumer education, and iterative design before it genuinely changed how people lived.

Blockchain in banking is on that same arc. The destination looks clearer than it ever has. The journey still requires serious work.

This article is adopted from a piece originally published by Finextra, which regularly shares long reads on fintech written by faculty at the Gillmore Centre for Financial Technology at Warwick Business School.

Further reading:

Why the UK needs to create a fintech ecosystem

Do digital currency projects have public buy in?

What does a digital pound mean for commercial banks?

How do we keep stablecoins stable?

Ram Gopal is Professor of Information Systems Management and Head of the Gillmore Centre for Financial Technology. He teaches Generative AI and AI on the MSc Financial Technology and the MSc Business Analytics.

Learn more about AI in banking and finance on the MSc Financial Technology course.

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