Banks Rethink Liquidity and Custody Systems
The shift to faster settlement is forcing banks and treasurers to rethink their approaches to liquidity, payments, and custody. This change is driven by the fact that markets now trade 24/7, while traditional custody and payment systems are still tied to conventional banking hours.
According to Lim Soon Chong, group head of Global Transaction Services at DBS Bank Ltd, “We are at an inflection point” as intermediaries reassess their strategies to capture the shift toward an “on-demand” digital economy. Since 2021, DBS has operationalized this shift through blockchain-powered token services, enabling real-time multicurrency liquidity and automated treasury actions.
Custody Transformation
Citigroup Inc.’s Custody+ platform is at the forefront of this transformation, integrating real-time processing with modular delivery. For Amit Agarwal, head of custody at Citi, the goal is clear: “To deliver a frictionless, always-on market, cash and securities for fiat and digital assets must settle in real time, 24/7, supported by custody infrastructure that is equally always on.”
Citi’s patented Single Event Processing (SEP) technology is key to achieving this goal, providing clients with earlier liquidity by compressing timelines for income events, corporate actions, and tax processing. Chris Cox, head of investor services at Citi, notes that clients are modernizing legacy models to address cost and regulatory pressures, and Custody+ is the direct answer to these needs.
Cox explains that “Customers fundamentally want simplification and improved outcomes” and that Custody+ is designed to create front-office benefits rather than just focusing on post-trade processing. However, technological speed alone is not enough, and institutional confidence requires secure key management and transparent recovery, according to Anthony Yeung, chief commercial officer at CoinCover.
Yeung emphasizes that “The regulatory architecture must be matched by institutional-grade safeguards” and that the real measure of success is whether the ecosystem is built with resilience and operational integrity at its core. As the industry moves toward 24/7 markets, major players are stripping away obsolete batch-driven infrastructure, fueled by the rise of 24/7 trading and the need for instantaneous collateral fluidity.
Industrywide Architectural Shifts
Global custodians are redefining the infrastructure layer through digital adoption, with BNY pioneering a unified omnibus architecture that integrates legacy and digital instruments within a single compliance framework. J.P. Morgan’s Kinexys platform leverages institutional blockchain for intraday liquidity and near-instant delivery-versus-payment, allowing managers to pledge tokenized money market shares as collateral during weekends.
State Street Bank and Trust Company is bridging the gap between digital asset solutions and legacy accounting via strategic partnerships, replacing traditional reconciliation feeds with streaming APIs. Specialized players like Sygnum and AMINA are further enabling atomic cross-currency settlements and smart-contract-based custody, driving the push for modernization in the industry.
The buy side is also driving this push, with initiatives like BlackRock’s BUIDL fund and Franklin Templeton’s Franklin OnChain US Government Money Fund using public ledgers to enable round-the-clock share creation and continuous yield opportunities. UBS Asset Management is piloting automated fund servicing through Project Guardian, signaling a shift toward programmable financial services.
Regulatory requirements are shifting from legal filings to operational and technical security mandates. The U.K. Financial Conduct Authority has introduced the crypto asset authorization gateway and CRYPTOPRU prudential rules.
U.S. federal stablecoin rulemaking is also underway, changing how custodians and issuers approach digital asset security. They must now protect off-chain infrastructure, not just smart contracts. Handling this new environment requires a deep understanding of the evolving regulatory system and the ability to adapt to changing requirements.
