Natural Progression

Why Tokenisation Really Could be the Next Big Thing

With the volume of conversation around tokenisation becoming ever louder, anyone would be forgiven for thinking the corporate adoption tipping point has already been reached. But with many businesses seemingly uncertain as to what it is, let alone actually using it, the reality is somewhat different. TMI called upon Tony McLaughlin, Emerging Payments & Business Development, Citi, to unlock tokenisation’s meaning, purpose, and potential value.

The regulated financial system today is, by and large, siloed. At the very least it is split by product, bank, and jurisdiction. Certainly, these silos can be made to talk to each other, but it’s often a workaround that involves multiple parties, complex systems, and an element of uncertainty every time a transaction takes place. Arguably, it could be so much better. This is where tokenisation could step up as the next big thing.

Of course, aspects of tokenisation need improvement and development before it could be adopted as the natural successor to the current regulated financial system. That said, as it stands today, with background work ongoing, tokenisation represents an excellent opportunity to deliver more efficient global, 24/7, secure, real-time financial transactions. And for corporate treasurers, the potential of tokenisation should at least place it high up on the list of serious homework topics.

Back to school

“Leaving financial services and blockchain aside, a token is simply a representation of something else,” explains McLaughlin. Generally, it is a stand-in that holds the same value, but is not the same as, the artefact it represents. A cloakroom ticket, for example, is a temporary stand-in for the theatregoer’s coat; it is not the coat but is redeemable for that specific item and no other.

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