The Bank of England has set a deadline of 2030 for the development of a central bank digital currency (CBDC) in the UK.

This would be a new type of money issued by the BoE for everyone to use in day-to-day spending. It isn’t designed to replace cash. Its value will be directly bound to sterling. It’s a ‘digital’ pound.  Or better yet, a Britcoin, as many have now dubbed it.

All of this points to innovation in financial services and payments systems. Cryptocurrencies like Bitcoin became world-renowned flag bearers for the ongoing digitisation of cash. Technology is changing what is possible across industries - shifting consumer behaviours, preferences and expectations in the process.

But designing and creating a new type of currency isn’t easy.

Building in digital society

The UK isn’t the first country to develop its own digital currency.

Hundreds of countries have explored the idea of digital currencies issued by central banks. - including some with massive populations, such as China, India and Nigeria - all rolling out centralised digital monies. China’s E-CNY currency already reaches 260 million people and is set to continue expanding this year.

There is a lot we can learn from these rollouts. A major challenge facing any digital currency is bridging generational gaps. There is still a ‘digital divide’ in most societies, where significant portions of a population will have limited access to (or understanding of) digital technologies.

In many cases these divides grew stronger in the pandemic era. Many businesses, practices and services moved online - and then stayed there. We’re now seeing another wave of socio-economic exclusion in the cost-of-living crisis. Lloyds’ Consumer Digital Index found that by May 2022 an estimated 35% of the population reported that the rising cost of living was impacting their ability to go online.

There is a lot of education that needs to be done to make Britcoin work for everyone.

For most people, cryptocurrency exists in a different universe to that of sterling. It belongs with NFTs in the Metaverse, as opposed to with the Queen in our wallets. But a digital pound will have the same tangible value as its real-world counterpart.

These people face societal and financial exclusion if they are not supported by government policies and intelligently designed services from banks and financial services brands.

So how can the treasury and BoE strike the right notes?

Banking on tech

Banking and financial services brands are getting better at learning from other markets and sectors. Banks have caught up with helping meet customer expectations with the transition and move from bricks and mortar to digital banks over the past decade.

Look at UX. Digital banking apps have taken notes from AirBnb, Uber and Tinder as much as they have from their rivals. And it works because it reflects what users want.

Understanding the needs and expectations of users is central to creating behaviours which stick. We know that younger generations think digital-first, with research finding that 98% of Millennials and 99% of Gen Zers use digital banking apps – whereas engagement for Gen X and Boomers stands at 86.5% and 69.8%, respectively.

Young generations view money as a way to express themselves, represent their beliefs and serve their needs. Financial services need to focus on becoming relationship-driven so that their products and services align with people’s purpose and empower them to achieve their goals.

Gen Z and Millennials have a different relationship with convenience. With tech companies like Apple and Google creating services such as digital wallets that are easy to use and  instantaneous, younger people’s expectations have heightened. We helped Brazil’s largest bank, Bradesco, to launch a full-service digital bank “Next”  targeting, challenging and influencing younger people through their specific needs. It grew from zero to ten million customers in four years.

We also recently worked with the National Bank of Kuwait (NBK) to create and launch Weyay, Kuwait’s first fully-digital bank, which is designed to serve the evolving financial and lifestyle needs of young Kuwaitis. From fully digital account management, to saving pots and even brand partnerships, the service humanises technology and eliminating friction creates stronger relationships through the brand experience.

Britcoin can learn from global innovations like these to meet the needs of younger, digitally native audiences. But to make a digital pound useful to older demographics, brands and government agencies will need to ensure they bring them on the journey too.

Fintechs are already seeing that older generations are willing to jump on board. Revolut notes that it is seeing a year-on-year increase of 128% 55 to 64 year olds and136% of 65 to 74 year olds within its customer base.

This has been done by building a user friendly product that creates confidence for all users.

So Britcoin may be coming our way and money is entering a new chapter which all in all is exciting to see. There is a lot to balance; privacy will be a major factor and then ensuring consumer uptake, but this creates a brilliant opportunity.