3 Swiss Banks Quietly Executed First Cross-Bank Payment On Public Blockchain This Month

by World Offshore Banks

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For decades, the global banking system has relied on a complex and often slow web of intermediaries for international payments. Now, a groundbreaking development in Switzerland is poised to change that.

In a landmark collaboration, three of the nation's leading banks have successfully executed a cross-bank payment on a public blockchain, marking a historic first for the traditional financial sector and signaling a new era of trust and efficiency in interbank transactions.


Swiss Banks Pioneer Interbank Payments on a Public Blockchain
In a development that has sent ripples through the global financial industry, three prominent Swiss banks have made history by successfully executing a legally binding, cross-bank payment on a public blockchain.

This landmark achievement, part of a feasibility study overseen by the Swiss Bankers Association, proves that traditional financial institutions can leverage decentralized technology to create a more efficient, secure, and transparent payment infrastructure.

The successful test not only validates the potential of blockchain but also signals a major shift in how banks are approaching the future of finance.

The project, which included giants UBS, PostFinance, and Sygnum Bank, focused on "deposit tokens" — a digital representation of a payment instruction recorded on the blockchain.

While the actual settlement of the funds occurred off-chain through existing banking systems, the on-chain instructions and smart contracts governed the process, ensuring a legally binding and verifiable transaction.

This hybrid model provides the security and compliance of traditional banking while harnessing the speed and programmability of blockchain technology.

Why a Public Blockchain is a Game-Changer
Historically, interbank payments have been settled through a network of correspondent banks and clearinghouses, a process that can be slow, costly, and opaque, especially for cross-border transactions.

By using a public blockchain, the participating Swiss banks demonstrated a new paradigm where payments can be coordinated and executed with unprecedented speed and transparency. The shared, distributed ledger provides a single source of truth for all parties, dramatically reducing the risk of errors and fraud.

This move is a direct response to the growing demand for faster, more efficient payment systems, a demand driven by the rise of digital assets and the increasing pace of global commerce.

For years, the crypto world has touted the benefits of blockchain for payments, but the traditional banking sector has remained cautious.

This initiative demonstrates that banks are now actively exploring ways to bridge the gap between traditional finance (TradFi) and decentralized finance (DeFi), rather than viewing them as competing worlds.

The successful trial suggests that the future of banking will likely involve a blend of both, with public blockchains serving as a new rail for financial transactions.


Bridging the Gap Between Traditional Finance and Crypto
The implications of this pilot project are vast.

First, it could pave the way for a more streamlined and cost-effective interbank payment system within Switzerland and, eventually, across international borders. It validates the concept of a "deposit token" as a viable instrument for coordinating payments.

Second, it highlights the increasing collaboration between traditional financial institutions and blockchain-native banks. Sygnum Bank, a regulated digital asset bank, played a key role alongside the traditional powerhouses of UBS and PostFinance, demonstrating that these two worlds can work together to innovate.

The Challenges and the Road Ahead
While the results are highly promising, the Swiss Bankers Association noted that scalability remains a challenge.

Integrating a public blockchain into the complex, high-volume operations of a modern banking system will require further technical adjustments and cooperation. However, the success of this initial study is a powerful proof of concept.

It could inspire other major financial institutions and central banks around the world to accelerate their own research and development into blockchain-based payment systems.

The move by these Swiss banks is not just a technical milestone; it's a strategic one. By taking a proactive approach to a technology once seen as a threat, they are positioning Switzerland as a leader in the global financial evolution.

This project suggests that the future of banking will not be about replacing traditional institutions but about empowering them with decentralized tools to build a more resilient, innovative, and user-friendly financial system.