Canadian banks join forces on tokenised deposits

Major Canadian banks are testing a new way to move money using tokenized deposits. While this sounds like high-level banking tech, it has direct implications for how you get paid. The goal is to create a 'programmable' payment system using the Canadian dollar. For a retailer, this means the potential for instant settlement of consumer loans and purchases, reducing the days you wait for funds to clear your account. Currently, when a customer uses financing, the lag between the approval and the cash hitting your bank account involves several intermediaries. Tokenization removes these hurdles by allowing money to move as digital code on a ledger. This technology also enables 'smart contracts.' Imagine a financing agreement where the lender automatically releases funds to your business the exact millisecond a delivery is confirmed or a service is rendered. This reduces your credit risk and improves your cash flow. While this is currently in the pilot phase among Canada's largest institutions, it signals a shift toward a 24/7/365 payment cycle where the traditional 'banking day' becomes obsolete.

Source: Finextra — Lending

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