RWA in Banking: Tokenized Securities & Financial Assets

Banking Industry Challenges

Traditional banking faces structural inefficiencies when issuing securities:

• Settlement delays: T+2 settlement creates counterparty risk
• High costs: Intermediaries (underwriters, custodians, clearing houses) add 2-5% overhead
• Limited access: Minimum investments of $100k+ exclude retail investors
• Liquidity constraints: Bonds trade only during market hours with wide bid-ask spreads
• Automation gaps: Dividend distributions and coupon payments require manual processing

How Banks Use RWA Tokenization

Corporate Bonds

A major corporation issues a $100M bond tokenized into 100,000 tokens at $1,000 each. Investors receive automated coupon payments monthly via smart contracts. Bonds trade 24/7 with instant settlement.

Treasury Securities

Government bonds are tokenized, allowing individual investors to purchase $100 worth (previously required $1,000+). Settlement via CBDC eliminates intermediary banks.

Mortgage-Backed Securities

Banks tokenize mortgage pools, automatically distributing principal and interest payments to token holders. Transparency increases as investors see underlying mortgages on-chain.

Investment Funds

Mutual funds and ETFs issue tokens representing fund shares. Investors see real-time NAV, trade during off-hours, and receive dividend distributions automatically.

Advantages for Banks

• Cost reduction: 10-25% savings by eliminating intermediaries
• Faster issuance: Days instead of weeks to launch products
• Expanded market: Access global retail investors via fractional tokens
• Operational efficiency: Smart contracts automate settlement and distributions
• New revenue: Tokenization-as-a-service for other financial institutions

Key Tokenized Securities Examples

JP Morgan Coin: Digital version of US Dollar for wholesale payments and settlement.

Deutsche Bank Bonds: €100M tokenized Schuldschein (private corporate bond) issued on blockchain.

Singapore Government Securities: SGX experiments with tokenized government bonds to enable retail investment.

Regulatory Framework

MiCA (EU) defines tokenized securities requirements. US SEC applies existing securities laws. Singapore's MAS and Hong Kong's SFC have issued clear tokenization frameworks.

Takeaways

• Banks tokenize bonds, securities, and investment products to cut costs and expand markets
• Institutional adoption is accelerating with major banks entering the space
• Settlement improves from T+2 to minutes with blockchain infrastructure
• Retail investors gain access to institutional-quality securities at fractional prices