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Institutional adoption of ledger technology signals the time for cautious experimentation has ended.
For decades Swift has been the backbone of the global financial system. The banking network’s announcement of plans to create a blockchain-based ledger is a watershed moment for the industry: a move that signals truly mainstream adoption of ledger technologies.
More than 30 financial institutions globally will help to design and build the ledger, focusing on a first use case of real-time 24/7 cross-border payments with prototyping from Consensys. Swift’s focus will be on the infrastructure itself, while the types of tokens exchanged on the ledger will fall to commercial and central banks to determine.
As the rise of compliant ledger technologies like the Canton Network demonstrates, disintermediation is coming. But there still remains an opportunity for institutions who innovate to continue to act as enablers of future financial infrastructure, leveraging their incumbent strengths of trust and stability. Canton Network participants notably include heavyweights Bank of America, Goldman Sachs, Wells Fargo, Credit Agricole, and Deutsche Bank.
Their motivations are clear. Traditional institutions face intensifying pressures from innovators of new technologies, from stablecoins and other distributed ledger technologies, to peer-to-peer and instant payments, and even embedded finance — all of which have begun eroding their position.
Swift’s announcement is one more signal of a greater sense of urgency within the banking industry. And while not every institution has the confidence or the expertise to embrace shared ledger technologies without support, some of the world’s most significant financial entities have gone all in.
The Depository Trust & Clearing Corporation (DTCC) has committed to tokenizing trillions of dollars in assets moving across its infrastructure. The 2023 acquisition of Securrency, since rebranded DTCC Digital Assets, is a testament to strategic commitment from one of the largest market utilities on the planet.
DTCC has plans to deepen its role in digital assets by promoting industry adoption, exploring tokenization of collateral and funds, and using its clearing and settlement infrastructure to support the listing and secondary trading of digital funds on exchanges.
However, DTCC’s Nadine Chakar explained in an interview with FinTech Futures, the goal is currently to “marry the old and the new.” A period of coexistence between emerging technologies and legacy infrastructure will balance innovation with practicality, ensuring investments made over decades are not cast off too quickly.
But banks should be under no illusions. As these developments make clear, whatever form the financial infrastructure of the future takes, digital assets are set to play an instrumental role. And those unable to work with them risk being replaced.
While market utilities like DTCC are investing directly in blockchain-native capabilities, other institutions are taking a more gradual approach. Though not yet in production, Swift is exploring how to enable financial institutions to connect to blockchains using Swift messaging standards. The aim is for banks to be able to initiate and complete blockchain transactions using their existing workflows.
This kind of interoperability across systems will certainly lower the cost and complexity of adopting tokenized assets at scale. But many banks may go a step further, assessing that they can manage and transact with digital assets without ever having to truly innovate with blockchain themselves.
In our view, this path lacks vision and would be a mistake.
In the current climate, the failure of banks to innovate with ledger technologies themselves serves as little more than a holding pattern. Without efforts to truly participate – to innovate at speed and scale – institutions will be left behind and limited to offering only common services to their customers.
As IntellectEU co-founder and CEO Hanna Zubko highlighted in a recent panel at Sibos, “The banks that embrace change and the pace of innovation will have a future in the payments process and play an important role. But the way consumers change right now is going to dictate how we as an industry have to evolve.”
Accepting this reality frees institutions and market participants to make their own strategic bets. With greater regulatory clarity – via frameworks such as MiCA in Europe and the GENIUS Act in the United States – combined with improved technological maturity and strong market interest, the conditions have never been more favorable for institutional tokenization.
For many banks, embracing tokenization could be the most effective way to maintain relevance, offering programmable, transparent, and instantly transferable assets from institutions that enjoy deeply rooted trust from their customers.
Certainly, stablecoins only make up a small fraction of value in the global economy – some $280 billion according to Forbes – but their speed and the new approaches they offer for liquidity management open up opportunities for banks.
Following this tokenization trend, nine European banks recently announced plans to develop a consortium-based, euro-backed stablecoin, designed specifically for use in regulated payment and settlement environments. The initiative represents Europe’s first coordinated institutional response to the U.S.-dominated stablecoin market.
The institutional adoption of distributed ledger technology by organizations like Swift and DTCC signals that the time for cautious experimentation has ended. The next phase of financial evolution will be about operational integration: bringing tokenized assets, on-chain settlement, and programmable finance into the core of banking infrastructure.
However, time is a critical factor. The institutions already investing in production-grade blockchain infrastructure are building the foundations for future market success. Those who delay risk finding themselves on the outside of a new financial paradigm, forced to integrate on terms set by others.
Swift’s blockchain initiative underscores how the infrastructure of finance is being rewritten, and the language it will use is digital, standardized, and interoperable. And as commentators have noted, Swift’s efforts to define those standards may ultimately have an even greater impact than its new ledger.
But for banks, the message could not be clearer: waiting is no longer a strategy. The tools, regulatory frameworks, and trusted partners now exist to bring DLT and stablecoins into the heart of banking operations. Those who act will shape the standards and reap the rewards. Those who hesitate, may soon find the financial rails of the future have been built without them.
To explore what tokenization and shared ledgers could mean for your organization, connect with our team.
For decades Swift has been the backbone of the global financial system. The banking network’s announcement of plans to create a blockchain-based ledger is a watershed moment for the industry: a move that signals truly mainstream adoption of ledger technologies.
More than 30 financial institutions globally will help to design and build the ledger, focusing on a first use case of real-time 24/7 cross-border payments with prototyping from Consensys. Swift’s focus will be on the infrastructure itself, while the types of tokens exchanged on the ledger will fall to commercial and central banks to determine.
As the rise of compliant ledger technologies like the Canton Network demonstrates, disintermediation is coming. But there still remains an opportunity for institutions who innovate to continue to act as enablers of future financial infrastructure, leveraging their incumbent strengths of trust and stability. Canton Network participants notably include heavyweights Bank of America, Goldman Sachs, Wells Fargo, Credit Agricole, and Deutsche Bank.
Their motivations are clear. Traditional institutions face intensifying pressures from innovators of new technologies, from stablecoins and other distributed ledger technologies, to peer-to-peer and instant payments, and even embedded finance — all of which have begun eroding their position.
Swift’s announcement is one more signal of a greater sense of urgency within the banking industry. And while not every institution has the confidence or the expertise to embrace shared ledger technologies without support, some of the world’s most significant financial entities have gone all in.
The Depository Trust & Clearing Corporation (DTCC) has committed to tokenizing trillions of dollars in assets moving across its infrastructure. The 2023 acquisition of Securrency, since rebranded DTCC Digital Assets, is a testament to strategic commitment from one of the largest market utilities on the planet.
DTCC has plans to deepen its role in digital assets by promoting industry adoption, exploring tokenization of collateral and funds, and using its clearing and settlement infrastructure to support the listing and secondary trading of digital funds on exchanges.
However, DTCC’s Nadine Chakar explained in an interview with FinTech Futures, the goal is currently to “marry the old and the new.” A period of coexistence between emerging technologies and legacy infrastructure will balance innovation with practicality, ensuring investments made over decades are not cast off too quickly.
But banks should be under no illusions. As these developments make clear, whatever form the financial infrastructure of the future takes, digital assets are set to play an instrumental role. And those unable to work with them risk being replaced.
While market utilities like DTCC are investing directly in blockchain-native capabilities, other institutions are taking a more gradual approach. Though not yet in production, Swift is exploring how to enable financial institutions to connect to blockchains using Swift messaging standards. The aim is for banks to be able to initiate and complete blockchain transactions using their existing workflows.
This kind of interoperability across systems will certainly lower the cost and complexity of adopting tokenized assets at scale. But many banks may go a step further, assessing that they can manage and transact with digital assets without ever having to truly innovate with blockchain themselves.
In our view, this path lacks vision and would be a mistake.
In the current climate, the failure of banks to innovate with ledger technologies themselves serves as little more than a holding pattern. Without efforts to truly participate – to innovate at speed and scale – institutions will be left behind and limited to offering only common services to their customers.
As IntellectEU co-founder and CEO Hanna Zubko highlighted in a recent panel at Sibos, “The banks that embrace change and the pace of innovation will have a future in the payments process and play an important role. But the way consumers change right now is going to dictate how we as an industry have to evolve.”
Accepting this reality frees institutions and market participants to make their own strategic bets. With greater regulatory clarity – via frameworks such as MiCA in Europe and the GENIUS Act in the United States – combined with improved technological maturity and strong market interest, the conditions have never been more favorable for institutional tokenization.
For many banks, embracing tokenization could be the most effective way to maintain relevance, offering programmable, transparent, and instantly transferable assets from institutions that enjoy deeply rooted trust from their customers.
Certainly, stablecoins only make up a small fraction of value in the global economy – some $280 billion according to Forbes – but their speed and the new approaches they offer for liquidity management open up opportunities for banks.
Following this tokenization trend, nine European banks recently announced plans to develop a consortium-based, euro-backed stablecoin, designed specifically for use in regulated payment and settlement environments. The initiative represents Europe’s first coordinated institutional response to the U.S.-dominated stablecoin market.
The institutional adoption of distributed ledger technology by organizations like Swift and DTCC signals that the time for cautious experimentation has ended. The next phase of financial evolution will be about operational integration: bringing tokenized assets, on-chain settlement, and programmable finance into the core of banking infrastructure.
However, time is a critical factor. The institutions already investing in production-grade blockchain infrastructure are building the foundations for future market success. Those who delay risk finding themselves on the outside of a new financial paradigm, forced to integrate on terms set by others.
Swift’s blockchain initiative underscores how the infrastructure of finance is being rewritten, and the language it will use is digital, standardized, and interoperable. And as commentators have noted, Swift’s efforts to define those standards may ultimately have an even greater impact than its new ledger.
But for banks, the message could not be clearer: waiting is no longer a strategy. The tools, regulatory frameworks, and trusted partners now exist to bring DLT and stablecoins into the heart of banking operations. Those who act will shape the standards and reap the rewards. Those who hesitate, may soon find the financial rails of the future have been built without them.
To explore what tokenization and shared ledgers could mean for your organization, connect with our team.
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