Interoperability has become a buzzword - here’s what it means for tokenised deposits

Interoperability is everywhere in today’s conversations on the future of finance. We hear it in discussions about tokenisation, digital assets, instant payments and blockchain based infrastructure.

But what does interoperability really mean? It depends on who you talk to. The term is often used loosely, with very different meanings.

For Swift, interoperability is about how choice and convenience can be delivered safely at scale. It’s about addressing fragmentation and reducing complexity across the financial system.

Rising expectations, familiar constraints

Customer expectations around payments have shifted toward faster, always-on services. Corporates and financial institutions are also looking for payment capabilities that can support greater automation, richer data exchange and, over time, more programmable financial processes.

Banks are responding. Many are exploring tokenised commercial bank money as a way to support 24/7 payment capabilities and greater programmability, while preserving the role of deposits on bank balance sheets. Tokenised deposits can be understood as a programmable representation of commercial bank money, designed to remain broadly consistent with established balance sheet, regulatory and liquidity framework.

Crucially, tokenised commercial bank money gives banks a pragmatic path to introduce new digital capabilities without moving away from well understood and regulated deposit models. While it may require new technical infrastructure - such as distributed ledger environments - the underlying product and legal foundation remains rooted in commercial bank money.

In that sense, tokenised deposits offer a way for banks to participate in digital finance by evolving how deposits are used, rather than redefining what they are. In practice, however, current implementations of tokenised deposits remain limited in scope, and lack scalable, cross‑bank, cross‑border utility.

The challenge is not the creation of tokenised commercial bank money but allowing it to function as usable money beyond silos. Without the ability for institutions to interact, coordinate and transact seamlessly with one another, tokenised deposits risk remaining limited to intra institutional use cases that do not scale across banks.

Why interoperability has become a bottleneck

Across the industry, tokenised deposit initiatives are progressing, but often in fragmented ways. Different platforms, technical implementations and operating models are emerging simultaneously.

While experimentation is healthy, the result is a landscape where deposits issued by one institution are not easily usable by another.

These limitations share common root causes. In practice, transfers of commercial bank money are still anchored in account relationships, with KYC performed by the issuing bank and access defined by existing interbank arrangements. As a result, deposits remain difficult to use seamlessly across institutions, even when they are tokenised. Coordination across ledgers and systems therefore remains complex. Ultimately, tokenised commercial bank money remains operationally constrained and unable to scale beyond isolated use cases.

Interoperability, in this context, is about helping institutions to coordinate payment flows, validate obligations and manage liquidity across multiple environments without introducing new sources of risk or fragmentation.

What interoperability means in practice 

To scale, institutions must be able to interpret transactions consistently, coordinate actions across different environments and maintain a shared understanding of a payment’s status. This depends on common foundations that work across borders and systems.

Interoperability also relies on orchestration and the ability to coordinate transactions across environments and manage cross‑network workflows, all without introducing new frictions or operational risk.

In the near term, they need to interoperate with RTGS systems and settlement models that underpin cross‑border payments. And over time, they will have to align with always-on, programmatic forms of central bank money (e.g. CBDCs) without requiring institutions to abandon existing models.

That’s why scaling tokenised commercial bank money is fundamentally a network challenge, not a product challenge. It requires shared standards, coordinated governance and broad participation across institutions. Fragmented, standalone deployments will not achieve meaningful scale.

Swift will support this evolution across complementary layers. Through standards, connectivity and orchestration, we can help institutions manage transactions across different environments and remain aligned as payment flows move end to end. And a shared execution layer can give banks a common way to see and track interbank transactions as they progress, while legal settlement finality remains with banks and existing settlement systems.

The objective is not to create a new rail, but for different form factors of money to operate together effectively, building on the proven foundations the industry already trusts to deliver operational excellence, resilience and security at scale.

Interoperability as an outcome

The industry momentum toward tokenised forms of bank money is clear. Across markets, institutions are investing, experimenting and moving in the same broad direction.

The challenge is no longer about the creation of tokenised deposits, but in enabling them to function as a usable, interoperable form of money across institutions and borders.

This is where interoperability shifts from promise to practice. By strengthening how institutions connect, coordinate and operate together, Swift can help the industry move from isolated innovation to everyday utility.

In that sense, interoperability is not a buzzword. It is the work required across our industry to make tokenised value usable, scalable and real.