UK Finance has published the main conclusions from its work on a new type of financial market infrastructure, a UK Regulated Liability Network (RLN), which has the potential to deliver new capabilities for payments and settlements.
Since April this year, UK Finance has been working with 11 of its members, including Barclays, Citi UK, HSBC UK, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander UK, Standard Chartered, Virgin Money and Visa, as well as several other partners, on an RLN Experimentation Phase.
UK Finance reported that an exploration of use cases during the phase revealed potential benefits, including a reduction in fraud, improved efficiency in the homebuying process and a reduction in the cost of failed payments in the UK.
The work involved looking at technical, legal and business case questions surrounding the development of a ‘platform for innovation’.
Among the main conclusions drawn by UK Finance, its members and partners, are that in collaboration with other initiatives, such as Open Banking, a platform of this type could deliver economic value and support innovation in the market.
New functionality, such as programmable payments and locking/unlocking of funds, was demonstrated across a range of use cases, UK Finance revealed.
It also concluded that the platform 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.
Finally, subject to further implementation and regulatory engagement, the legal and regulatory framework of the UK is “sufficiently flexible” to support the implementation of a ‘platform for innovation’.
Jana Mackintosh of UK Finance
Jana Mackintosh, managing director of payments, innovation and resilience at UK Finance, said: “Every year, over £11 trillion worth of payments are processed in the UK, powering the economy. The success of the RLN experiment shows the potential of technology to transform the customer experience and deliver economic value and benefits for society.”
She added: “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 partners that took part in the work are EY, Linklaters and a technology team of R3, Quant, DXC Technology and Coadjute.
With the experimentation phase completed, UK Finance has called on financial institutions and public sector organisations to engage with the learnings from the experiment and become involved in the future phases of work.
“The RLN project has been a unique opportunity for industry collaboration to deliver a platform for innovation across the sector,” said Peter Left, head of digital and markets innovation at Lloyds Banking Group, and co-chair of the RLN Project.
“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.”
Jana Mackintosh is delivering a presentation on the Main Stage at Open Banking Expo UK & Europe 2024 on 15-16 October in London. Find out more about the speaker line-up and get your ticket here.
