UK Finance has today announced work on a new UK Regulated Liability Network (RLN) experimentation phase with eleven of its members.

The UK RLN is envisaged as a common ‘platform for innovation’ across multiple forms of money, including existing commercial bank deposits and a shared ledger for tokenised commercial bank deposits.

Through a collaboration of several stakeholders within the financial services industry, the UK RLN explores the options for users to make payments, transact and settle liabilities in the increasingly digital marketplaces of the future. The firms currently involved in this work are: Barclays, Citi, HSBC, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander, Standard Chartered, Virgin Money and Visa. They are being supported by EY and Linklaters and a technology team of R3, Quant, DXC and Coadjute.

Some of the potential benefits to customers, businesses and the wider UK economy include giving users more options to manage their payments, enhanced fraud mitigations, and improved settlement capabilities.

The experimentation phase

The UK RLN experimentation phase will focus on the following use cases:

• Payment-upon-delivery for a physical product, aimed at reducing fraud in online marketplaces.
• The process of buying a home, improving customer transparency, and mitigating conveyancing fraud.
• A digital bond settlement, to connect digital customer money to digital assets

These use cases will examine how the UK RLN can facilitate different forms of money, including existing and tokenised deposits.

The experimentation phase will run until summer 2024 and will cover the following areas:

• Customer and business benefits: Exploration of foundational capabilities (aligning with the BIS and Bank of England’s Project Rosalind experiments for an application programming interface for a possible digital pound).
• Technical feasibility: Proof of concept via a technology sandbox to gauge the functional and non-functional requirements of the UK RLN design, including simulated connections and transactions.
• Legal framework: Analysis of how existing (and potential future) laws and regulations apply to the operation of a shared ledger settlement system, including tokenised deposits.

The results of the experimentation phase will be published after the summer. UK Finance will host a number of engagements and events to provide all stakeholders, including innovators, technology companies and FinTechs with an opportunity to explore how they can engage with the project.

Jana Mackintosh, Managing Director, UK Finance said: “We are delighted to bring together several of our members to explore an inclusive design for all digital money. It is important that the UK financial community works in close collaboration with public sector stakeholders to explore our common objective – to equip the UK with world leading financial infrastructure. Our work is designed to inform the best way forward for all forms of regulated digital money.”

Lee Braine, Managing Director – Advanced Technologies, Chief Technology Office, Barclays said: “It is great to see the financial services industry collaborating to push the envelope of payments innovation. We hope these experiments will provide insights into how a common platform for innovation could enhance customer experiences with new payments functionality and also mitigate the risk of fragmentation in retail payment markets.”

Tiina Lee, Chief Executive Officer, Citi UK said: “The RLN project is an opportunity for the UK to become a world leader in the design of next generation value transfer systems. Shared ledger technology has the potential to bring about 24/7, multi-asset, programmable settlement venues that can support the emerging needs of the rapidly developing digital economy.”

Tom Wood, Head of Global Payments Solutions, HSBC UK said: “HSBC is committed to exploring more efficient and secure payment alternatives to benefit our customers, and to ensure customer privacy and safety. During this experimentation phase, we are actively working with UK partners to build the Regulated Liability Network for both retail and wholesale use cases, and believe the RLN can accelerate payment innovation in the UK market. We look forward to working with the RLN community to continue this journey.”

Peter Left, Head of Digital and Markets Innovation, Lloyds Banking Group said: “As a commercially led approach, RLN can unlock new features for customers’ money across a range of retail and wholesale use cases. The enhanced interoperability between digital customer journeys, digital money, digital financial assets and real-world assets can help future proof the UK’s role as a global leader in financial services.”

Raj Dhamodharan, Executive Vice President, Blockchain & Digital Assets, Mastercard said: “As the tokenised economy evolves, collaboration is key to unlocking the potential of new, regulated forms of programmable money. We believe in the potential of commercial bank deposits to not only facilitate smoother transactions but also foster innovative applications. We look forward to the collective work to explore how the UK RLN project can enable greater interoperability and security.”

Lee McNabb, Head of Group Payments Strategy & Research, NatWest said: “We are at a pivotal point in shaping the future of money and asset movement in the UK and beyond. The RLN concept provides an opportunity to collaborate openly with peers, regulators and innovators to help understand what that future could look like. Innovation and experimentation are critical to understand what could work for our customers – improving existing journeys to create tangible benefit and change while ensuring safety and simplicity.”

Paul Horlock, Chief Payments Office, Santander said: “RLN provides an excellent vehicle to experiment with the programmability of smart contracts; bringing together the customer journey and customer money in the form of regulated, tokenised money and assets through a shared ledger. We’re hugely excited about resulting opportunities to reduce friction, improve efficiency and enhance competition. We believe that the initial use case of online purchase, supported by DvP (delivery-versus-payment) can be particularly useful in the context of authorised push payment fraud, which at this point is such a challenge for customers and financial institutions alike.”

Tim Moncrieff, Global Head of Strategic Growth Initiatives, Visa Money Movement said: “Over the last two decades, there has been enormous innovation and change on the front-end of payments with fast, flexible and frictionless solutions now widely available, however, in many instances, settlement remains less immediate and is typically constrained by siloed ledgers and batch processes. RLN presents a great opportunity for the industry to collaborate on the potential to drive innovation and modernisation in settlement through a network of value that could help to underpin continued innovation across payments.”