Banks Bet Big on Tokenized Deposits to Power Real-Time Treasury

The “C” in “CFO” might as well have stood for “Constraints” for much of the finance function’s history. Nowhere has that been more true than in corporate treasury, where timing windows and workflow limitations have long dictated how finance leaders allocate capital, manage risk and forecast cash needs.

Payment cut-off times, fragmented banking relationships and delayed settlement cycles have historically forced finance and treasury leaders to operate with incomplete information about their own cash positions. Even in an era of digital banking and global business operations, liquidity has remained, in practice, episodic and locked up rather than continuous and free.

Fortunately, the broader enterprise ecosystem and its attending financial institutions are well aware of this perennial challenge, and they are starting to do something about it. The latest signal of momentum came on Monday (April 13) as HSBC expanded its Tokenized Deposit Service (TDS) into the United States, extending a platform that had already been piloted in other markets.

That expansion matters. Tokenized deposits can help enable what treasury teams have long pursued but rarely achieved: true real-time cash management.

Read more: Treasury Teams Shift to Mobile Platforms to Manage Real-Time Cash

Real-Time Treasury as a Strategic Lever

The move underscores a broader institutional push: major banks are no longer experimenting at the edges of distributed ledger technology; they are embedding it into core treasury services.

In a tokenized environment, funds can be transferred instantly between accounts on a shared ledger, eliminating the delays associated with batch processing, clearing houses,and correspondent banking networks. This creates a model of “always-on” liquidity, where transfers can occur at any hour, across jurisdictions, with immediate finality.

PYMNTS reported in October that in addition to HSBC, other big banks such as BNY, Citi and JPMorgan are experimenting with tokenized deposits. The rise of tokenized deposits comes at a time when corporate treasuries are demanding real-time liquidity, the report said.

Tokenized deposits are created when a bank converts a client’s traditional deposit into a digital token on a blockchain or distributed ledger. Each token represents a claim on the underlying deposit, preserving its status as bank money.

Crucially, these systems are typically permissioned, meaning that only authorized participants, such as banks and their clients, can access the network. This distinguishes tokenized deposits from public cryptocurrencies and better aligns them within existing regulatory frameworks.

For CFOs, the implications are both operational and strategic. Real-time treasury capabilities allow finance leaders to optimize working capital with a level of precision previously unattainable. Intraday liquidity—once a blind spot—becomes visible and actionable. Idle balances can be redeployed dynamically, and funding decisions can be made based on current, rather than historical, data.

PYMNTS and Visa research has shown that cash-flow certainty is closely linked to confidence in growth. When finance leaders can trust their liquidity position, they are more willing to invest, extend supplier terms and accelerate payroll or vendor payments without fear of shortfalls.

See also: CFOs Ditch AI Features to Fix Broken Payment Flows

Integration as the Real Bottleneck

Despite the promise, the path to adoption is not frictionless. The most significant challenge is not technological feasibility, but integration.

Corporate treasury systems are deeply embedded within enterprise resource planning (ERP) platforms, payment hubs and banking interfaces that have evolved over decades. Introducing tokenized deposits into this ecosystem requires seamless connectivity with existing workflows, reporting tools and compliance processes.

Without integration, the benefits of tokenization remain theoretical. CFOs are unlikely to embrace solutions that create parallel systems or require manual reconciliation between traditional and digital ledgers.

This is where banks are focusing their efforts. HSBC’s expansion of its Tokenized Deposit Service, for instance, emphasizes interoperability with clients’ existing treasury infrastructures. The goal is not to replace current systems, but to augment them by allowing tokenized transactions to coexist with conventional payment rails.

Banks are positioning these offerings as differentiators in corporate banking relationships, particularly for multinational clients with complex liquidity needs. The ability to provide real-time treasury capabilities is becoming a key factor in winning and retaining corporate accounts.

Ultimately, tokenized deposits are likely to form part of a broader evolution in treasury management. Real-time payment systems, improved data analytics and automation are converging to create a more continuous model of financial operations.

For CFOs, the task may be to determine how and when to incorporate the mechanisms supporting this new model into their existing frameworks.