Financial institutions are seeking new revenue streams, faster operations, and cost reductions. Tokenization, a blockchain-based technology, offers immediate value in these areas. It allows digital representation of asset ownership—whether stocks, bonds, cash, cryptocurrency, data sets, or loyalty points—on a blockchain.

Once an asset is tokenized, it can be transferred or traded quickly and cost-effectively, and used as collateral. Tokenization addresses common issues such as the costs and delays associated with delivery versus payment (DVP) settlement, according to PwC Report.

By leveraging tokenization and blockchain advancements, institutions can enhance operational agility, flexibility, and speed.

Current implementations provide valuable lessons for future transformations. Investments in tokenization infrastructure and capabilities can lead to improved capital efficiency, cost savings, access to new market segments, transparency, and risk management (see Why Do Insurers & Financial Institutions Need Tokenization?).

The key ways of financial services tokenization value

The key ways of financial services tokenization value

Successful companies often find a balance between near-term return on investment (ROI) and long-term capability building through tokenization in three key ways:

  • Saving Money and Time in Internal Transfers and Transactions
  • Unlocking Revenue Opportunities by Increasing Liquidity of Traditionally Illiquid Assets
  • Accelerating Complex Transactions and Enabling New Collateral Types

Saving Money and Time in Internal Transfers and Transactions

Major institutions can significantly reduce the time and cost associated with transferring funds and securities among locations. For instance, an overseas subsidiary transferring cash to the US for purchasing securities can take days (see about Digitalization in Insurance: New Risks & Solutions in 2024).

Tokenization allows for almost instantaneous ownership transfers on a blockchain, streamlining operations.

Similarly, asset managers can use tokenization for trade allocations, eliminating manual processes and enhancing efficiency.

Unlocking Revenue Opportunities by Increasing Liquidity of Traditionally Illiquid Assets

Unlocking Revenue Opportunities by Increasing Liquidity of Traditionally Illiquid Assets

Tokenization benefits both liquid assets (cash, bonds, cryptocurrency) and historically illiquid assets (private credit, private equity).

In the $1.5 trillion private credit market, matching buyers and sellers is time-consuming.

Tokenization enables “fractionalization” of loans, increasing the pool of potential borrowers. Buyers or borrowers can use tokenized assets similarly to bonds.

Accelerating Complex Transactions and Enabling New Collateral Types

Tokenization connects on-chain and off-chain assets, facilitating value transfer between blockchain-based finance and the traditional financial system.

High-net-worth clients can quickly and securely use assets in one ecosystem to make investments or payments in the other, creating new market opportunities.

The key benefits of blockchain tokenization

  • Tokenization lets you digitally represent asset ownership for tangible or intangible assets on a blockchain. 
  • Regulators around the world are showing a deeper understanding and comfort with the process and security safeguards. 
  • There are several complexities to consider when building out a project, including ecosystem and scale, operations, and product design and portfolio management.

How tokenization is works?

How tokenization is works?

Imagine a multinational financial services company needing to transfer funds between its international entities, one in USD and one in Yen. Currently, this process, using the SWIFT network, can take up to a week.

Tokenization offers a more efficient alternative. Initially, the company holds currency in a custody account in the respective fiat currencies. Tokens representing a specific amount of fiat money are then created on both sides.

These tokens can be exchanged instantaneously while the fiat currency remains in the account until the token is “unwrapped” and the standard money transfer process (SWIFT) is initiated (see Global Landscape of Insurance Digital Transformation).

However, if the token is not immediately unwrapped, it can represent the fiat currency internally. This token can be transferred for other tokenized cash, used to settle debts, or purchase assets, tokenized or otherwise.

Tokenizing interfirm cash transfers can unlock new value opportunities. For instance, the same multinational company can utilize “programmable” money for on-chain cash transfers.

Programmable money allows a treasurer to use internal funds to pay vendors, employees, or settle internal debts between departments.

The treasurer can collaborate with the internal blockchain team to create smart contracts that execute automatically when specific conditions are met.

Additionally, the company can tokenize various assets such as bonds, money market funds, and private credit. This process starts with a custodian holding the asset. Once held, a token is created to digitally represent the asset, enabling transfers similar to those for tokenized cash.

How tokenization is works?
  • You can then transfer in the same fashion in the cash discussion moving both the payment and asset simultaneously.
  • The benefits are immediate. A deal, even internal, that may take days or a week to resolve can be done instantaneously. Tokens can be unwrapped as needed and converted back to the asset’s original form or transferred along the chain as needed.
  • As long as the tokens are well designed with the proper regulatory and cybersecurity considerations, there may not be a need to convert the token back to its native form.
  • You can even use your new tokenized asset as collateral for a new loan or potentially your next shipment of goods by locking it into a codified smart contract that releases the collateral upon settlement or any other predetermined condition that has been met.

Now imagine a bigger future, where vendors, customers, or any other entity benefits from this speed.

  • Imagine being able to trade a bond to another entity for the tokenized cash you were previously working with.
  • Having smart contracts execute a transaction based on pre-agreed, codified terms that distribute funds to multiple accounts upon settlement.
  • All automatically without having to babysit all of the transfers. Cutting days of work down to a few simple programming options.

Tokenization is already starting to transform how financial services operate

Tokenization is already starting to transform how financial services operate

Tokenization is beginning to revolutionize financial services. Banks, asset managers, lenders, payment providers, and corporate finance departments are tokenizing a wide range of real-world assets, including bank deposits, securities, commodities, and documentation (see about Blockchain GameFi Market — Digital Virtual Assets).

Some banks are developing in-house blockchain technology to support further tokenization initiatives such as collateral settlement, multiparty trade finance, and interbank cash settlements.

High-value projects often arise from collaborations between innovative tech companies and established financial institutions, combining new solutions with capital, scalability, user experience, and robust risk management.

The growing interest in tokenization is driven by technological advancements, increasing real-world applications, and regulators’ enhanced understanding and comfort with the process and its security measures.

Regulators are starting to develop global frameworks to integrate digital asset technology into finance.

However, regulatory efforts are ongoing, and standards are still needed. Key progress includes focusing on the distinction between the technology and the asset and recognizing the differences among various types of digital assets.

What tokenization could do next?

What tokenization could do next?

For those seeking ROI from tokenization, it’s often most effective to begin with internal operations, where organizational decisions can be easily managed.

Tokenization can also streamline inter-institutional operations, such as finance and treasury, by reducing settlement times to near zero, bypassing costly volume-focused networks, and enhancing transparency for regulators through blockchain nodes.

With well-designed development, governance, and infrastructure, tokenization can establish a single, fraud-resistant, and cyber-secure source of truth.

Tokenization enables programmability, allowing smart contracts to execute complex operations and manage risks systematically. For instance, corporate treasurers currently spend significant time tracking cash movements.

Tokenization can automate these movements. When a token is transferred via blockchain, it settles almost instantly.

A properly programmed smart contract can then automatically distribute smaller transfers from the received balance for specified investments and payments. This process transforms a costly, labor-intensive, multiday task into an automatic, near-instant operation, independent of traditional fee-based networks.

Smart contracts can also incorporate advanced risk management measures, reducing the need for manual oversight and touchpoints. These measures provide a level of oversight and control that aligns with broader control structures.

The tunable transparency of blockchain transactions allows risk managers and auditors to quickly and easily track and verify activities.

While tokenization offers many benefits, it also presents challenges, such as asset control compared to traditional finance and increased regulatory scrutiny as the technology evolves.

By lowering costs, increasing speed and automation, and enhancing risk management, tokenization can facilitate new products, services, and business lines, particularly those involving complex, cross-border transactions.

Skilled professionals can shift from traditional treasury activities to higher-value work. Additionally, by diversifying assets for collateralized borrowing, tokenization can create new revenue streams and access new market segments.

While we have simplified tokenization here, there are several complexities to think about when building out your own project, including ecosystem considerations and scale, operational considerations, product design and portfolio management considerations. 


AUTHORS: John Oliver – Partner, Governance Insights Center & National FinTech Trust Services Co-Leader, Washington, PwC US, Matthew Blumenfeld – Digital Assets Strategy Leader, PwC US web3 & Digital Assets Lead | MBA, Crypto Strategy and Operations, Emerging Payments, Emerging Technologies, Financial Risk Management


  • Jodi Xu Klein, “The $1.5 Trillion Private-Credit Market Faces Challenges,” The Wall Street Journal, October 16, 2023, accessed via Factiva, February 6, 2024.
  • Aruni Soni, Treasury-yield surge boosts tokenization of real-world assets on blockchains, leading ‘huge paradigm shift’ in finance, Business Insider, November 12, 2023, accessed via Factiva, January 25, 2024.
  • Luisa Crawford, “Global Supply Chain Financing: A New Era of Resilience and Diversification,” Blockchain News, January 24, 2024, accessed via Factiva, January 25, 2024.
  • Miriam Cross, “Large regional banks invest in startup deposit network,” American Banker, January 23, 2024, accessed via Factiva, January 25, 2024.
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