Key insight: As funding mechanisms for sovereign debt and large assets increasingly migrate toward real-time financial infrastructure, banks are at risk of being displaced as key intermediaries in global finance.
What’s at stake: Much of the infrastructure supporting capital markets was built for a paper-based environment and later digitized in layers rather than rebuilt. The result is a system that remains costly, slow and operationally intensive.
Forward look: The greatest strategic risk for banks is the quiet movement of real-world capital onto infrastructure that no longer requires manual intermediation.
For several years, much of the banking industry’s attention around digital assets has focused on volatility, regulation and reputational risk. The instability of crypto markets made caution understandable.
But the structural shift now underway has little to do with speculative tokens.
Governments, sovereign funds and large asset owners are beginning to move real-world capital, including infrastructure, energy projects and national assets, onto real-time financial infrastructure that automates issuance, settlement and reporting. As these systems remove reconciliation, intermediaries and settlement delays, parts of the traditional banking value chain risk being designed out of the process.
This is not a new asset class. It is a new operating model for capital markets.
Banks have long played a central role in sovereign and large-scale project finance. They originate transactions, provide custody, manage settlement, reconcile positions and distribute products to investors.
Instant payments don’t fail. The systems around them do.
Real-time rails are only as reliable as the batch processes, fraud checks and integrations behind them.
PARTNER INSIGHTS FROM BMC
The economics of this model depend on operational complexity.
Cross-border transactions still pass through multiple intermediaries and settlement cycles that can take days. Much of the infrastructure supporting capital markets was built for a paper-based environment and later digitized in layers rather than rebuilt. The result is a system that remains costly, slow and operationally intensive.
At the same time, the funding environment has become more challenging. McKinsey estimates that global infrastructure will require more than $100 trillion in cumulative investment by 2040, highlighting the scale of capital sovereign issuers must attract in the coming decades. Higher interest rates, tighter liquidity and rising sovereign financing needs are forcing governments and large asset owners to look for more efficient ways to access international capital.
Increasingly, the question is no longer how to digitize existing processes. The question is how to eliminate them.
A new generation of institutional financial infrastructure is beginning to support this shift. These systems automate the full lifecycle of financial assets, from issuance and ownership verification to settlement and reporting, on shared permissioned networks.
Settlement can occur in near real time rather than days later. Reconciliation across multiple institutions is replaced by a single shared record. Compliance requirements and asset conditions can be embedded directly into the instrument.
The impact is not limited to speed. It changes the operating model by reducing intermediaries, lowering operational risk and significantly decreasing administrative costs.
This transition is already underway. The market for tokenized real-world assets has expanded rapidly, reaching tens of billions of dollars in recent years. Several industry forecasts project the market could exceed $100 billion by 2026 as institutional adoption accelerates, with longer-term estimates suggesting the sector could scale to $11 trillion by the end of the decade if deployment moves beyond pilot programs and into core financial infrastructure.
From: Banks risk displacement as global finance adopts real-time settlement | PaymentsSource | American Banker.
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