Tokenization is all the rage as financial market participants seek to improve transaction speed, cost and resilience. Most asset classes will go through this form of digitalization in due time, according to Standard Chartered CEO Bill Winters.

Tokenization is defined as the issuance of a digital representation of an asset on a blockchain. Although still nascent, the fintech industry has already dabbled in a number of asset classes such as stocks, bonds or art. And according to Standard Chartered CEO Bill Winters, this trend will likely affect most markets in the long-term. 

«The tokenization of assets, once fully embedded, will be a much more efficient way of transacting and settling,» Winters said during a panel at the 2023 Hong Kong FinTech Week. «As the ecosystem is built, I can imagine that the vast majority, if not all, of certain asset classes will traded in tokenized forms.»

Token Pilots

Like other rivals, Standard Chartered is exploring various opportunities in asset tokenization. In addition to internal developments, it also makes investments in disruptive financial technologies through a separate unit called SC Ventures.

The bank has already undergone more than a dozen pilots in the space. For example, it tested the tokenization of trade receivables in a regulatory sandbox to improve a process that is traditionally inefficient and involves high fraud risk. In another example, it piloted the tokenization of a government bond in Kenya to enable broader access to the country’s investors, many of whom have limited savings.  

«Getting started is hard. But once it becomes mainstream, we’ll wonder how we ever did it the old-fashioned way,» Winters said. 

Bank Participation

One of the major debates about the future of finance is the role that will be played by established financial institutions, like traditional banks. On this matter, Winters noted that participation by such players is not only preferred but necessary. 

«If banks aren't part of the process of engaging in innovation, we will end up with a bifurcated economy which is less efficient and riskier,» he explained.

The Hong Kong FinTech Week is being held from October 30 to November 5 with an estimated 30,000 attendees from over 90 countries.