The UK’s Finest Banks Are Leading the Payments Revolution with Blockchain Technology

The Sterling Payment System, developed by blockchain company Fnality and supported by Lloyds, Banco Santander, and UBS, was a turning point in the integration of blockchain technology into conventional banking.

Lloyds Banking Group, Banco Santander, and UBS are among the big names in finance that have jumped on the blockchain trend with the introduction of a liquidity management network. In order to support live payments inside the Bank of England’s real-time gross settlement service, blockchain payments company Fnality built the Sterling Fnality Payment System.

After being acknowledged as a regulated payment system by HM Treasury in August 2022, the Bank of England and the UK’s Payment Systems Regulator are now responsible for overseeing the Sterling Fnality Payment System. Using the Fnality-held omnibus account to perform live transactions is a big step towards using digital models for wholesale financial markets and new tokenized asset market operations.

Last month, banking powerhouses Goldman Sachs and BNP Paribas invested $95 million combined, highlighting a strategic partnership that has contributed to Fnality’s growth. For major currencies, including the US dollar, Euro, British pound, Canadian dollar, and Japanese yen, Fnality is the go-to platform for tokenization. The safety and dependability of these tokens are enhanced by the fact that they are collateralized by currency stored in central banks.

This move is in line with the general trend of blockchain technology becoming more prominent in conventional banking. Using decentralized software to handle a collateral transaction between BlackRock and Barclays is one example of how JPMorgan has been investigating tokenization and blockchain projects. Furthermore, JPM Coin System blockchain-based accounts now have a programmable payment option, according to the bank.

Tokenization is still in its “experimental stage” in the business, says Carlos Gonzalez Campo of The focus will likely move from experimental to production in 2024, with an emphasis on resolving issues, especially those pertaining to cross-chain communication.

In keeping with its aim to connect with more payment systems, especially those that use distributed ledger technology, the Bank of England has launched the Sterling Fnality Payment System. The Bank of England will evaluate the system’s conformity with regulatory requirements as activities expand, guaranteeing a problem-free shift to commercial operations.

The Treasury Committee in the House of Commons has asked the Bank of England and HM Treasury to give serious thought to introducing a CBDC in the UK. The digital pound in particular has prompted worries about the stability of the financial system. The New York Federal Reserve proposed centralized blockchain payments as a solution to settlement process pain points after a three-month trial with large banks.

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