The UK once led the way in payments but has now lost its competitive edge, according to Ron van Kemenade, group chief operating officer at Lloyds Banking Group.

Speaking at the UK Finance Digital Innovation Summit, van Kemenade said other countries, such as the Nordics, the Netherlands, and India, have overtaken the UK by investing in technology and modernising their payments infrastructure.

“We still focus on retaining the past rather than embracing modern technology,” he said. “India, the most populous country in the world, will soon have the most advanced payments infrastructure.

“India is driving the financial inclusion of hundreds of millions of people who previously relied on bartering or even begging for money.”

Van Kemenade noted that around 94 per cent of people in the UK own a smartphone, yet banks often underutilise this technology.

To improve the UK’s payments landscape, he said financial services firms must invest in digital ID, digital money, and the tokenisation of deposits.

Citing research from ratings agency Moody’s, he highlighted that the UK economy grows by 0.1 per cent for every 1 per cent invested in digital payments.

Van Kemenade estimates that the UK economy could achieve “much-needed growth” by prioritising investment in the payments ecosystem.

“There is an opportunity out there that we have an obligation to seize,” he said. “Innovation in payments digitisation directly creates jobs and fosters a thriving ecosystem—particularly in London.”

He added that financial services firms must make digital payments technology a priority over the next year and modernise outdated legacy systems.

The new infrastructure should be interoperable, enabling seamless transactions between banks in different countries and across various digital payment systems.

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