The Swiss Bankers Association (SBA), PostFinance, Sygnum and UBS have completed a feasibility study enabling legally compliant payments with digitised bank deposits on a public blockchain.

The findings mark a first for the Swiss financial centre.

While today’s payment systems are fast and efficient, they face limitations with emerging digital business models. The deposit token concept seeks to address this by bringing bank deposits onto the blockchain, enabling payments around the clock, fully integrated into digital processes and capable of automation.

Martin Hess, Chief Economist and Head of the SBA’s Digital Currencies Project, said:

“The tested token is a strategic step towards the future of the payment system and underlines the innovative capacity of the Swiss financial centre.”

Alexander Thoma, Head of Digital Assets at PostFinance, noted the practical implications:

“The deposit token offers great potential for making payment transactions more efficient and secure for all parties in the future. The feasibility study has shown that blockchain technology works for this and is legally viable.”

The technology allows for programmable transactions through smart contracts, enabling automatic payments when conditions are met.

Potential applications include automated securities trading and machine-to-machine transactions in the Internet of Things.

Two use cases were examined: payments between customers of different banks and the automated exchange of assets via a trust-like process.

The results confirmed that the technology functions effectively, that payments are legally binding, and that regulatory requirements and depositor protection are met.

This is the first time deposit tokens have been shown to work across banks in a compliant and transparent manner.

The report forms the basis for a broader introduction and further development of the deposit token.

The next phase will require adjustments to the model and wider collaboration with other banks and authorities, with the aim of making blockchain-based payments more broadly available to Swiss bank customers.

The initiative represents a shift towards modernised, efficient financial infrastructure.

It also signals a coordinated effort by Swiss banks to contribute to the development of future payment systems.

Featured image credit: Edited by Fintech News Switzerland, based on screenshot from video by Swiss Banking via YouTube