To date the vast majority of tokenized deposit offerings have targeted corporate clients, with a view to serving those clients better. And the most popular use case has been cross border payments to optimize treasury management.
By enabling programmable and 24/7 international payments, banks are enabling their corporate clients to pool liquidity. A new report on tokenized money from the Euro Banking Association explores the impact on banks, among other topics. For example, it acknowledges the potential loss of correspondent banking and FX revenues, but expects banks to make up for this with new business models around programmable payments, custody and other offerings. As interoperability expands across tokenized money offerings, the authors argue, this “can strengthen client relationships, open new value-based revenue streams, and reinforce financial institutions’ role as providers of programmable cash management tools.”
We’d agree that programmable 24/7 payments can enhance client relationships, but there’s an argument that it depends on the application. One use case includes the Industry 4.0 solutions being explored by Germany’s Commercial Bank Money Token (CBMT) consortium. Trigger based supplier payments are more likely to enhance client relationships.
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