Wells Fargo said that in cross-border payments made with bank deposits represented on a blockchain, funds reach the recipient’s account in two minutes or less.
During third-quarter earnings calls covered by CoinDesk, Goldman Sachs, Wells Fargo and Morgan Stanley described tokenization as a growth opportunity in their respective businesses. Wells Fargo shared one of the most concrete examples: The bank’s payment service using tokenized deposits has moved beyond the testing phase and is now being used in real transactions.
Chief Financial Officer Michael Santomassimo said the service is live, although transaction volumes remain small for now. The two-minute timeframe refers to how long it takes funds to reach the recipient’s account in cross-border payments made through the service.
An opportunity to grow overseas without opening branches
Tokenized deposits are based on the digital representation of bank deposits on a blockchain. For Wells Fargo, the value of this model lies not only in transfer speed but also in access to new markets.
The bank does not have as extensive an international branch network as some of its global competitors. According to Santomassimo, tokenized deposits could help it capture a larger share of the cross-border payments business without having to build such a network.
Wells Fargo also sees tokenized securities, real-world assets and crypto trading for wealthy clients as potential use cases. No timeline has yet been announced for these services.
Goldman Sachs sees opportunity instead of a threat
Goldman Sachs CEO David Solomon offered a different response to the question of whether tokenization, decentralized finance and prediction markets could reduce the bank’s trading revenue. According to Solomon, these developments could create more products, increased trading activity and new customers.
The CEO recalled that similar concerns arose about 50 years ago during the shift to electronic stock trading. Solomon said Goldman adapted to the change and grew its equities business, and sees similar opportunities in tokenization.
The bank established its tokenized asset platform, GS DAP, in 2022 and has worked in areas such as bonds, money market funds and real estate. In July, it also took part in a half-day trial of DTCC’s tokenization service. DTCC plays a significant role in the clearing and custody infrastructure of U.S. securities markets.
Goldman is now evaluating ways to use the service on a broader scale. Solomon said tokenization could reduce costs and automate transactions, while emphasizing that current activity remains small in scale.
Morgan Stanley focuses on investment advice
Morgan Stanley Chief Financial Officer Sharon Yeshaya said that making investments faster and easier to move would not eliminate clients’ need for advice. The bank therefore sees tokenization as an opportunity for both its wealth management and institutional securities businesses.
Yeshaya did not announce a new product. Executives at all three banks also declined to provide numerical estimates of the revenue tokenization could generate; alongside the banks’ expectations, Wells Fargo’s live payment service stood out as a concrete example already in use.
Not investment advice.