Building the Foundation for Digital Money

For years, digital assets were viewed as a parallel financial system, one whose earliest architecture, decentralized finance, was explicitly designed to route value around banks rather than through them. That distinction is rapidly disappearing. Stablecoins, tokenized deposits and other forms of digital money are becoming part of mainstream financial infrastructure, creating new opportunities and new responsibilities for regulated financial institutions (FIs).

The pace of that shift is narrowing the window for banks to act. Network operators are becoming less dependent on traditional FIs, while regulation in markets around the world is becoming more accommodating. The choice is no longer whether to participate but whether banks lead that participation or are relegated to a customer-channel role within someone else’s network. And the constraint most likely to decide which path a bank takes is rarely regulation. It is operational readiness: whether the institution has the infrastructure to participate credibly and at scale. This Tracker examines why the next era of digital money will be built not simply on new assets but on modern banking infrastructure.

• Digital Money Is Becoming the Next Layer of Banking Infrastructure
• The Challenge Is No Longer Digital Assets but Operational Readiness
• Purpose-Built Infrastructure Keeps Banks at the Center of Digital Money
• Building the Next Layer of Banking

Digital Money Is Becoming the Next Layer of Banking Infrastructure

Digital assets have moved beyond experimentation as customer demand, institutional investment and production deployments accelerate. Banks must now rethink how they approach money movement and financial services as new competitive alternatives emerge.

Customer demand is moving digital assets into the banking mainstream.

FIs are already investing accordingly. According to Fireblocks, 88% have committed or expect to commit budget to digital asset infrastructure in 2026, while just 11% are waiting until 2027. Among institutions that have quantified their spending, more than half are investing at least $1 million, a level Fireblocks calls evidence of production-scale commitment rather than pilot budgets. Half also identify financial infrastructure transformation as a significant strategic driver, outranking all others.

The opportunity extends beyond infrastructure itself. A joint Morgan Stanley and Oliver Wyman analysis estimates that banks could tap into a $3 trillion crypto asset class as regulation evolves, potentially adding as much as $7 billion in revenue by 2030. Beyond crypto assets, banks are also preparing for new forms of digital money, including stablecoins and tokenized deposits, that could reshape financial infrastructure. The defensive stakes may be larger. As clients seek faster settlement, transaction volume could migrate from traditional financial infrastructure to digital rails instead.

Banks risk losing relevance if they are not prepared for digital money.

The risk is not simply that banks miss a new product category. Their position in the emerging ecosystem will depend in part on which forms of digital money they support and how they participate in the networks around them. As FIS Senior Vice President of Product Jon Eisenstein noted, “Not all forms of digital money are designed to solve the same problem.” Stablecoins prioritize broad ecosystem reach, circulating a single digital asset across many participants and networks. Single-bank tokenized deposits extend a bank’s own deposits into digital environments while keeping balances on that institution’s books. Network tokenized deposits go a step further, allowing multiple banks to issue and exchange tokenized deposits through a shared operating framework while preserving each institution’s deposit relationships and balance sheet. As adoption grows, banks are unlikely to standardize on a single model. They will need infrastructure capable of supporting all three at once.

The risk goes beyond losing individual transactions or revenue. Stablecoin issuers understand that their value lies in the number of accepting endpoints, not in owning the relationship. Banks that assume their own token will become the primary currency others trade in are underestimating the difficulty of building and driving adoption of a proprietary currency. The networks forming now will determine which institutions keep the customer relationships, asset ownership and trust that come with managing digital money, and which cede that role to someone else.

Competitive pressure is coming from more directions than banks may expect. According to Fireblocks, 43% of FIs identify non-bank competitors as a critical driver of digital asset investment, compared with 24% that point to competition from other banks. Yet banks themselves are also creating demand. Seventy-six percent of institutions identify other financial institutions as a strong or primary source of demand, making digital asset capabilities increasingly important to serving banking counterparties.

The financial risk adds urgency. Morgan Stanley estimates that 3% to 11% of bank revenue, or roughly $21 billion to $82 billion, could migrate from traditional infrastructure to digital rails if institutions cannot meet client demand. Capgemini puts the stakes even higher. New research estimates that banks risk losing $230 billion in payments revenue as stablecoins, tokenized deposits and central bank digital currencies move toward mainstream adoption. That shift squeezes revenue pools such as foreign exchange spreads, correspondent banking and float income. Much of that exposure comes down to where reserves sit: Tokenized deposits keep funds, and the float they generate, on the issuing bank’s own balance sheet, while stablecoin reserves are typically held and invested by the issuer instead. Smaller institutions face an additional challenge. PYMNTS Intelligence found that regional and community banks often lack the engineering and compliance resources available to their largest counterparts, making integration particularly difficult.

Whether banks remain at the center of these transactions or become simply an access point to someone else’s rails will depend in part on the trusted networks they join. Getting there starts with operational readiness.

The Challenge Is No Longer Digital Assets but Operational Readiness

Technology is no longer the primary barrier to adoption. Banks now face the harder task of integrating digital money into existing operating models while maintaining governance, interoperability and customer trust.

Operational readiness, not regulation, is becoming the biggest obstacle.

Internal resources are part of the problem. Fireblocks found that 42% of FIs identify skills gaps as a barrier to adoption, ahead of operating-model readiness and governance structures. At the same time, 55% cite institutional-grade infrastructure and operational support as key to unlocking adoption, while 46% point to regulation that can be implemented in practice.

Collaboration and interoperability will define the next banking networks.

FIS’ Eisenstein said banks have navigated similar transitions before. Electronic payments, online banking and real-time payments became valuable as networks formed around common standards. He expects digital money to follow the same pattern, with success depending less on which asset wins than on whether institutions can connect securely across multiple forms of money. That makes collaboration essential: Banks will need to work with other institutions, networks and technology partners rather than build every capability alone.

He also expects artificial intelligence (AI) agents to increase the importance of those networks. Eisenstein said transaction volumes generated by autonomous agents could reach 10 times human transaction volume within 18 months, making scalable, programmable and low-friction networks increasingly valuable to banks seeking to retain control over assets and permissions.

Industry research reinforces the need for collaboration. Ripple found that 89% of banks rank custody as a top priority when choosing a tokenization partner, while 85% prioritize support with pre-issuance structuring. The preference for outside expertise extends to payments: Just over half favor a single provider over coordinating multiple vendors, with regulatory clarity and security among their leading concerns.

Institutions also appear to be combining traditional and crypto-native capabilities rather than choosing between them. EY found that 53% prefer a traditional finance platform supplemented with crypto capabilities, while 68% plan to partner with a crypto-native firm as they expand their capabilities in trading, custody and tokenization.

The largest institutions are placing particular emphasis on interoperability. KPMG found that 71% of leaders at institutions with more than $100 billion in assets prioritize investment in interoperable systems for tokenized deposits and stablecoins. Just 24% of respondents overall say the same.

The direction is clear: No bank builds this future alone.

Purpose-Built Infrastructure Keeps Banks at the Center of Digital Money

Modern banking platforms are enabling institutions to issue, manage and settle digital money at scale. They can also preserve the compliance, governance and operational control expected of regulated financial institutions.

Production-ready platforms are replacing point solutions.

Digital asset integration is rarely as simple as connecting a new provider. “Plug and play is never actually that easy,” PYMNTS Intelligence’s Karen Webster has said. One founder estimated that selecting a custodian represents just “10% to 15% of the work.” The remaining 80% to 85% involves connecting that provider to a bank’s internal systems and meeting regulatory requirements.

FIS’ Lyriq platform recognizes that complexity. Designed to integrate with a bank’s existing core system regardless of the core provider, Lyriq enables settlement around the clock. Transactions are completed in full or not at all, helping banks avoid the reconciliation problems that partial failures can create in legacy systems. Banks can issue and control their own digital money while keeping deposit balances on their books and preserving lending capacity. The platform also supports compliance and connections to broader liquidity networks. “Lyriq is production-ready infrastructure that … puts banks in control of money in motion,” said Jim Johnson, Co-President of Banking Solutions at FIS.

Banks should modernize for multiple forms of digital money, not bet on a single winner.

Large institutions are already taking different paths. Wells Fargo is preparing tokenized deposits for corporate clients, beginning with 24/7 dollar-pound movement and expanding across currencies and markets. BNY, meanwhile, is extending its custody infrastructure through a partnership with Galaxy Digital to support staking. The contrast illustrates why banks need infrastructure that can accommodate different assets, services and network models rather than assume one architecture will prevail.

That flexibility is also central to Circle’s guidance for banks. Rather than trying to address every opportunity at once, it recommends beginning with a well-understood use case and expanding after proving its value. Banks can support stablecoins and tokenized instruments alongside traditional accounts rather than choosing one model exclusively. Circle also recommends partnering before rebuilding infrastructure from scratch, particularly before launching a proprietary stablecoin. Above all, banks should preserve flexibility as standards and blockchain networks continue to evolve.

Building the Next Layer of Banking

Digital money is no longer a question of experimentation. It is becoming part of mainstream banking infrastructure, and that infrastructure is changing. The next wave of adoption may not be driven solely by people. Autonomous software agents are designed to act on behalf of businesses and consumers. They can negotiate purchases, transfer funds and settle obligations. These use cases require programmable money movement that can operate at machine speed while remaining subject to policy controls. Banks that participate in trusted digital money networks will be better placed to govern and facilitate this emerging volume.

PYMNTS Intelligence recommends the following actionable roadmap for banks preparing for this future:

• Define the bank’s role. Identify where stablecoins, tokenized deposits and other forms of digital money fit the institution’s strategy. Start with use cases that address a clear customer or operational need.
• Assess operational readiness. Identify gaps in integration, compliance, governance and internal expertise. Build the infrastructure needed to move from pilots to production.
• Build for interoperability. Support multiple forms of digital money rather than betting on a single model. Preserve flexibility as standards and networks evolve.
• Choose partners strategically. Decide which capabilities the bank should own and where outside expertise can reduce complexity. Preserve control over customer relationships and assets.
• Prepare for machine-speed commerce. Support programmable transactions with clear rules for permissions and authorization. Build capacity for transaction volumes that may extend well beyond human activity.

Institutions that prepare today will be best positioned to remain at the center of how money moves tomorrow. That preparation requires interoperable, bank-grade platforms designed for governance, operational resilience and future flexibility. Digital assets aren’t replacing banking. They’re becoming its next layer.