Why the ‘digital money’ revolution might be just a marketing trick

beehiveweb.co.uk editorial team 2026-08-06 11:30 3 min read

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The banking sector is currently buzzing with talk of ‘tokenized deposits’—a concept often framed as the next great leap in financial technology. Proponents suggest that by representing traditional bank account balances as digital tokens, we could unlock a future of instant, automated, and round-the-clock payments. However, a new policy note from Loughborough Business School suggests that much of this excitement is built on a misunderstanding of what is already possible within existing banking infrastructure.

The reality of banking infrastructure

Professor Alistair Milne, writing for SUERF, argues that the core benefits promised by tokenized deposits—such as faster payments and improved automation—are largely achievable using the conventional database systems that banks already operate. In many cases, the hype surrounding this technology appears to be a case of ‘old wine in new bottles.’

Why the 'digital money' revolution might be just a marketing trick

While blockchain technology is frequently cited as the engine behind these innovations, the research indicates it is not a prerequisite for modernizing payment systems. Banks already possess the internal capability to program their existing databases to automate tasks and streamline money movement without the need for complex, decentralized ledger systems. The research suggests that tokenized deposits should be viewed as a new way of packaging existing capabilities rather than a fundamentally new form of money.

The essentials

Existing Capability: Most promised improvements, including 24/7 availability and automated payments, can be delivered via current bank database technology.
Blockchain Necessity: The research finds that blockchain is not essential for achieving the efficiency gains often attributed to it in marketing materials.
Operational Scope: Tokenization offers genuine efficiency only in closed systems, such as large international corporations moving funds within a single global bank’s network.
Settlement Hurdles: The primary bottleneck in finance remains the complex inter-bank settlement process, which involves regulatory compliance and risk management that tokenization does not inherently bypass.

Where tokenization actually adds value

The analysis does not dismiss the technology entirely. There are specific, niche scenarios where tokenized deposits offer genuine efficiency gains. For large international corporations, moving funds between different countries and currencies within the same global banking network can be significantly faster and more automated if the money remains within a tokenized framework, as the funds never leave the bank’s own internal systems.

However, the situation becomes significantly more complicated when money moves between different financial institutions. These transactions require inter-bank settlement, which involves rigorous regulatory compliance, security checks, and the management of financial risk. Converting deposits into digital tokens does not bypass these fundamental hurdles, as the underlying necessity for verification between separate entities remains unchanged.

For the average consumer or business, the shift toward tokenized deposits may offer less of a ‘banking revolution’ than marketing materials suggest. Until structural challenges regarding how banks settle payments between competing institutions are addressed, the mere packaging of money as a digital token is unlikely to fundamentally alter the speed or cost of everyday financial transactions.

Source: Loughborough University Press Releases

Context & actions About this article

Source check Editorial Analysis

This report summarizes findings from an independent policy note written for SUERF by Professor Alistair Milne.

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