Paths to success for a digital pound: A research note on consumer attitudes to adoption
The report was put together in association with the Digital Pound Foundation and co-authored by Andrew Buckley, Vasileios Karountzos and Professor Markos Zachariadis from the Centre for Financial Technology Studies (CFTS).
Potential
Dr Andrew Buckley says central banks around the world are exploring the potential of new digital monetary technologies, with many considering the introduction of their own central bank digital currencies (CBDCs).
A Digital Pound would coexist with cash and be exchanged at par value with commercial money. It would be intended to ensure that central bank money remains available in an increasingly digital economy, particularly as cash usage declines. Furthermore, it would seek to safeguard UK monetary sovereignty against potential threats from foreign or 'big tech' digital currencies.
Additionally, a Digital Pound would be expected to foster innovation and enhance the resilience of UK payments. As Dr Buckley explained: "The Bank of England, like its counterparts, is dedicating significant resources into CBDCs and it's highly likely a Digital Pound will be launched in the next several years."
Research
Dr Buckley, who has spent his career in banking and payments with companies such as Vocalink, Mastercard and American Express, said: "Whilst a Digital Pound is likely to be launched, the challenge is to achieve consumer adoption as what does not scale does not matter."
In particular, he added that existing payment services are well entrenched and the history of payment innovation success is very mixed.
Preliminary findings from the CFTS research suggests that whilst consumers may quickly grasp the concept of a digital pound, perceived usefulness alone is unlikely to drive scale adoption.
Instead, successful adoption will hinge on the perceived ease of use of the Digital Pound, driven through effective consumer experience design and seamless integration into existing financial ecosystems, and nuanced government incentivisation policies.
Professor Zachariadis, Director of the CFTS, said: "Despite numerous papers discussing CBDC strategies and potential use cases, a crucial research gap remains in terms of understanding consumer attitudes towards adopting a Digital Pound. Our research aims to address this research gap and, in doing so, pinpoint key areas for further investigation."
You can read the full report (PDF).