Blockchain Revolution: FIs Modernize Finance & Build Trust

Blockchain technology, once perceived as a niche concept confined to cryptocurrencies, is rapidly transitioning into a fundamental component of core banking infrastructure. What was previously the exclusive domain of agile startups is now a strategic focus for global financial giants such as Citi, J.P. Morgan, and Visa. These institutions are actively exploring blockchain's transformative potential across payments, liquidity management, tokenized deposits, programmable money, and the settlement of digital assets. This shift signifies a profound evolution, positioning blockchain as an integral operating system for modern finance, enhancing efficiency while safeguarding the trust upon which the global financial system relies.

As the industry moves beyond theoretical proofs of concept into large-scale production, blockchain is becoming the connective tissue linking disparate financial elements: payments, deposits, and markets. It forms a crucial part of a shared digital architecture that promises unprecedented efficiency without compromising the integrity and security paramount to global finance. This article delves into the real-world applications of programmable finance, highlighting current initiatives by leading institutions and examining the implications for treasury, operations, and risk management leaders. For those less familiar with the technical intricacies, we begin with a brief overview.

A One-Minute Primer for Financial Executives

At its core, a blockchain functions as a shared, tamper-resistant database designed for updates by multiple parties. It can be conceptualized as a common, distributed ledger, meticulously synchronized across various institutions, where each transaction is time-stamped, auditable, and exceptionally difficult to alter retrospectively. Permissioned blockchains restrict access to verified participants, typically institutions like banks or payment networks, ensuring a controlled environment. Conversely, public blockchains are open to any participant. Both types support tokens and coins, which are digital representations of money, claims, or assets capable of near real-time movement and settlement.

The significance of blockchain in banking is profound. It offers the potential to drastically reduce manual reconciliations, shorten settlement windows, and enable programmable money. For treasury and operations leaders, this translates into more efficient liquidity management and expanded commercial interaction possibilities, even with underbanked regions. Risk and compliance teams stand to benefit from enhanced traceability and automated regulatory adherence, provided systems are designed with these objectives in mind.

This analysis organizes current institutional blockchain activities into five key use cases, reflecting the priorities of financial teams: tokenized deposits; cross-border payments; shared ledgers for supply chains; liquidity solutions for diverse assets, including real estate; and robust security and identity frameworks. Additionally, we will explore the inherent challenges and strategic considerations involved in selecting between public and private blockchain networks.

1) Tokenized Deposits: Unleashing 24/7 Liquidity with Programmable Bank Money

Tokenized deposits represent bank-issued digital versions of traditional deposits, recorded on a blockchain. These are fully backed one-to-one by existing deposits, operate within established regulatory frameworks, and are inherently automatable—allowing for functions such as automated cash sweeps, escrow releases, or conditional payouts. For corporate clients, tokenized deposits transform static balances into always-available working capital, facilitating continuous liquidity management.

Major players are actively innovating in this space. J.P. Morgan has expanded its JPM Coin, a permissioned platform enabling clients to transfer dollar deposits on a private blockchain. The bank also announced plans for a USD deposit token to facilitate transaction settlements on Coinbase’s Base network, providing institutions with compliant, round-the-clock access to liquidity. Citi is pursuing a similar vision through Citi Token Services, which enables real-time movement of tokenized deposits within its extensive network. Other institutions, including HSBC, have likewise committed to developing tokenized deposits. Concurrently, industry consortia and groups are exploring models like the Regulated Liability Network (RLN) and participating in BIS-sponsored initiatives such as Project Agora. These collaborative efforts aim to link commercial-bank deposits, central-bank money, and other regulated liabilities on shared ledgers to enable instant settlement among trusted counterparties.

Indeed, Citi’s insights on "Real Time: 24/7 Finance in an Always-On World" underscore a new paradigm: continuous liquidity. This shift reorients treasury operations from a reactive posture to a predictive, data-driven approach. For Chief Financial Officers, this promises intraday cash positioning without traditional cutoffs; for controllers, automated reconciliation; and for risk teams, programmable controls governing the movement of funds.

2) Cross-Border Payments: Facilitating Instant Value Exchange Across Global Markets

For decades, cross-border transfers have relied on complex correspondent banking networks, often leading to delays and uncertainties. Today, blockchain technology offers banks and FinTechs an alternative rail for near-instantaneous, verified value exchange, significantly reducing both time and operational friction.

J.P. Morgan’s journey in this domain began with the Interbank Information Network, which evolved into Liink on the Onyx platform, designed to pre-validate transaction data. In 2024, the bank's blockchain arm was rebranded as Kinexys, consolidating its payments, tokenization, and programmable-money capabilities. Citi has similarly integrated Citi Token Services with its 24/7 USD Clearing service, facilitating real-time payments between its clients and those of participating third-party institutions on a permissioned platform. Payment networks are also adapting; Visa B2B Connect now routes transactions directly between banks via blockchain, while Mastercard is piloting programmable payments for conditional settlement and instant clearing. Ripple has expanded RippleNet to offer near-instant cross-border transfers, leveraging tokenized fiat and the XRP Ledger for efficient liquidity bridging.

3) Shared Ledgers for Supply Chains: From Disparate Paperwork to Unified Trust

Historically, trade finance has been characterized by extensive paperwork, siloed information, and post-fact reconciliation processes. Distributed ledger technology holds the potential to replace these inefficiencies with a single, immutable source of truth accessible to all participants. This innovation can substantially reduce fraud risk and accelerate funding in jurisdictions where digital contracts receive legal recognition.

Notable initiatives leading this transformation include Contour, originally founded by banks such as Citi, HSBC, and ING. Acquired by FinTech firm Xalts in early 2025, Xalts continues Contour’s mission to digitize letters of credit (LCs) and related processes across its established network. Similarly, Komgo digitizes various trade documents, including LCs and guarantees, offering real-time verification capabilities that assist banks and corporates in mitigating fraud and expediting capital flow. Even platforms that have since retired left lasting legacies: TradeLens (a collaboration between IBM and Maersk) pioneered open-data models that are now adopted elsewhere, while the former Marco Polo Network by TradeIX and R3 automated receivables and payments through smart contracts, validating transactions in real time and automatically releasing funds upon condition fulfillment. The collective outcome of these innovations is fewer disputes, faster access to cash, and improved auditability.

4) Liquidity Meets Transparency in Asset Tokenization

Tokenization is fundamentally reshaping how institutions issue, trade, and hold diverse assets. By representing ownership of securities, funds, and even illiquid assets like real estate on shared ledgers, banks can combine enhanced market liquidity with blockchain’s inherent transparency. This facilitates faster settlement, provides real-time ownership records, and enables more granular control over asset transfers.

Several significant milestones illustrate this trajectory. BlackRock’s BUIDL Fund, launched in March 2024, became the first tokenized U.S. Treasury fund for qualified investors on a public blockchain, enabling instant settlement and verifiable ownership. Goldman Sachs has expanded its Digital Asset Platform to issue tokenized bonds and structured products, featuring same-day clearing and real-time portfolio visibility. Citi, in collaboration with the SIX Digital Exchange (SDX), is bridging traditional custody services with blockchain-based infrastructures for tokenized private-market assets. Across Europe, prominent institutions like BNP Paribas and Société Générale are issuing tokenized funds under MiCA, the comprehensive European Union framework for digital assets, while the European Central Bank continues its integration efforts in 2025. The strategic direction is clear: tokenized markets are poised to compress post-trade timelines and unlock new distribution channels and investor bases.

5) Security and Identity: Compliance Embedded Within Code

As digital assets integrate into mainstream banking, innovation and regulation are increasingly converging within software solutions. Policymakers are actively testing privacy and anti-money laundering (AML) controls directly embedded within payment instruments, while banks are adopting advanced analytics and shared utilities to verify identity and transaction provenance.

A prime example is the International Monetary Fund’s (IMF) FinTech Note (August 2025), which outlined mechanisms for central banks to embed safeguards within central bank digital currencies (CBDCs)—digital forms of a nation’s fiat currency, issued and regulated by its central bank. The Monetary Authority of Singapore’s Project Orchid is piloting programmable payments featuring built-in identity verification. Similarly, the United Kingdom’s Project Rosalind—a collaboration between the Bank of England and the Bank for International Settlements (BIS)—prototyped an API framework connecting banks, FinTechs, and merchants for secure CBDC payments. On the private sector front, partners like Chainalysis and Elliptic provide banks with sophisticated tools to detect illicit activity across both public and permissioned ledgers. Many banks are also developing shared Know Your Customer (KYC) utilities to store verified credentials on permissioned networks, thereby harmonizing compliance efforts with privacy considerations.

Initial Challenges: Navigating Public vs. Private Blockchains

As blockchain transitions from experimental phase to potential widespread implementation in global finance, the central question is no longer if blockchain networks will reshape money movement, but rather how they will do so in a controlled, compliant, and scalable manner across borders, currencies, and diverse institutions. As transaction volumes escalate and scalable, real-world use cases materialize, a critical foundational design choice emerges: whether to transact on public, permissionless networks or private, permissioned chains that closely mirror existing institutional controls.

This decision carries significant practical implications. Public chains offer unparalleled global reach, a distinct advantage for facilitating tokenized deposits, cross-border transfers, and real-time settlement. However, they simultaneously introduce complexities concerning risk exposure, liability frameworks, regulatory treatment, sanctions compliance, and identity assurance. Banks must meticulously evaluate how to safeguard funds and verify counterparties within such an open ecosystem.

Conversely, private chains provide robust data privacy, operational control, and clear governance structures, with predefined participants and rule sets. Yet, these networks can face challenges in achieving critical mass; scale, liquidity, and network effects may develop more slowly when access is inherently limited. As banks accelerate their pilots towards production, a growing number are exploring hybrid approaches, strategically selecting networks on a case-by-case basis. This allows them to align the network choice with specific functional requirements and inherent risk management imperatives.

These architectural considerations are not insurmountable obstacles, but rather essential design milestones. As institutions progress further into rollout, the evolution of policy frameworks will significantly influence the pace of the next wave of adoption. The foundational elements are now firmly in place; the subsequent crucial step involves achieving alignment on shared standards and effective oversight, a topic for future exploration.

Conclusion: The Next Chapter of Regulated Digital Finance

The widespread institutional adoption of blockchain technology is no longer a distant prospect but an imminent reality. The world's largest banks and payment networks have moved beyond mere experimentation; they are actively building and deploying solutions. The immediate frontier involves achieving alignment—specifically, developing interoperability standards and policy frameworks that effectively bridge private-sector innovation with robust public-sector oversight. The future of finance will not merely adapt to blockchain; increasingly, it will be built upon its foundational principles.