For many financial services firms, Swift cloud migration, payment data standardization, and the development of asset tokenization capabilities remain pressing and competing transformation initiatives. Migrations to align with Swift’s zero-footprint strategy and go ISO 20022-native have been on the cards for some time. But now, the demand for tokenization capabilities has added to the challenging conditions leaders are navigating.
According to a recent report from infrastructure provider Broadridge, a little over half of financial firms are making moderate to large investments in distributed ledger technology (DLT), with a similar number agreeing that it will have a dramatic effect on how assets are settled. In the words of one respondent, “tokenization has become mandatory in the last year.”
Institutions Are Moving On Chain
In his annual letter to shareholders this year, JP Morgan’s Jamie Dimon stated that he views the financial institution’s ongoing success as being based on its ability to invest wisely and incorporate its own blockchain technology into products.
Moves made by other firms, and the recent wave of regulation coming into force around the globe (MiCA in Europe, GENIUS & the incoming CLARITY act in the US) — back this assessment. And with the rules set and market appetite well established, industry-wide tokenization now looks inevitable.
No blockchain ecosystem demonstrates the momentum among financial institutions better than the Canton Network: the first public, permissionless blockchain purpose-built for institutional finance. We are proud to play our own part in this network, where nine out of the ten largest global investment banks are actively participating.
Canton Network implementations include a pilot from Nasdaq; Broadridge’s Distributed Ledger Repo (DLR), running in production to the tune of $362 billion in daily transactions; the Depository Trust & Clearing Corporation’s plans for on-chain treasuries; and Societe Generale’s first US digital bond, issued on the Canton Network with support from IntellectEU’s CatalyX suite.
The November Deadline is Coming
Blockchain is reshaping financial infrastructure. But at the same time, institutions must keep pace with another critical challenge. With Swift tightening requirements around unstructured address data in November this year, the need to move to structured, ISO 20022-compliant formats is becoming urgent.
For institutions processing payments across Latin America, the Middle East, Africa, and parts of Asia, where address formats vary dramatically and postal infrastructure is often fragmented, meeting this mandate presents a unique challenge.
Along with innovation in infrastructure, institutions are faced with the need to integrate traditional payment rails with the emerging blockchain networks and new payment channels. Legacy systems and changing standards, like ISO 20022, add significant operational complexity to this picture. The Bank of England’s Andrew Bailey recently noted that about three quarters of faster payment systems, and around half of real-time gross settlement systems are now using ISO 20022 messages, but the impact remains unnoticed by end users.
While progress in ISO 20022 adoption for CBPR+ is a step in the right direction, the industry is encouraged to be ever more ambitious. To bridge the gap, some institutions have embraced a two-speed modernization strategy. Rather than high-risk, wholesale replacement of core systems, a sophisticated orchestration layer can offer a convenient on-ramp. This approach allows institutions to continue operating their back-office systems in traditional formats, while seamlessly translating, enriching, and routing messages into ISO 20022-native environments.
A new era of finance has arrived. For institutions, it is no longer about merely staying up to date with compliance requirements, but doing so while keeping pace with the rapid advance of emerging technologies.
IntellectEU
As a banking integration and technology specialist, IntellectEU offers Catalyst Integration Manager for modernized Swift connectivity, and Catalyst Data Intelligence for AI-powered ISO 20022-compliant CBPR+ address structuring. As a DeFi innovator, IntellectEU enables the deployment and management of blockchain infrastructure, along with production-ready smart contract management and distribution, through the CatalyX product suite.
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