BNY Mellon Tests Tokenized Deposits to Facilitate $2.5T Daily Payments

Core Insights - The Bank of New York Mellon Corp. (BK) is exploring tokenized deposits to modernize its payment network and enhance blockchain usage in global finance [1][8] - The initiative aims to facilitate real-time, instant, and global transactions across BK's international network [2] Rationale Behind BNY Mellon's Move - Tokenized deposits serve as a digital representation of customer deposits, enabling quick transfers and real-time settlement without intermediary delays [3] - This approach aims to help banks overcome legacy technology constraints, improving deposit and payment efficiency [3] Payment Volume and Benefits - BNY Mellon's treasury services division processes nearly $2.5 trillion in payments daily, with tokenized deposits expected to make these transactions cheaper, faster, and available 24/7 [4] Broader Blockchain Strategy - The move aligns with BK's broader blockchain strategy, including a collaboration with Goldman Sachs to use blockchain for money market fund ownership records [5] - BK is also part of over 30 financial institutions working with SWIFT on a blockchain-based shared ledger for real-time cross-border payments [5] Price Performance - Over the past six months, BK shares have increased by 34.8%, outperforming the industry growth of 26.2% [6] Industry Comparisons - Other major banks are also pursuing similar initiatives, such as HSBC expanding its tokenized deposit service for corporate clients to enable real-time currency transfers [10] - JPMorgan has partnered with Coinbase to facilitate direct crypto purchases and enhance compliance and security in fiat-to-crypto transactions [12][13]