Blockchain in banking: navigating beyond the hype

Crypto, for the majority of the last decade was considered a niche interest – one beset by hacks and scams, with almost no interaction with traditional banking infrastructure. “An index of money laundering” is a phrase that summed up the general attitude of the financial services industry towards bitcoin. This was shared by in 2017 by Larry Fink, CEO of Blackrock, the world’s biggest asset manager). Personally, if I had a pound for every time I had heard crypto was declared “dead and buried”, I would own at least a few hundred bitcoins! 

Fast forward a few years, and the overlap between traditional finance aka “tradfi” and decentralised finance, also called “defi”, has become increasingly intertwined. What started as a “toe in the water” approach to investing in a niche asset, now sees institutional investors with significant exposure to crypto as an asset, and increasing use of blockchain technology across a plethora of use cases including payments, lending, borrowing, capital markets and central banks to name a few.

Whilst there is still some philosophical debate about what blockchain is, at a basic level financial services are deploying decentralised databases where transactions are grouped into blocks and linked together in a chain, shared across a network of computers who agree by consensus. The key characteristics and advantages are that this makes the data decentralised, immutable, transparent and cryptographically secure. 

For financial services firms, near‑term value comes less from “crypto trading” and more from replacing expensive, slow financial workflows with programmable, compliant infrastructure. In short, blockchain is a faster, cheaper, and immutable way of moving money. There are several use cases that are driving the adoption of blockchain technology:

- The tokenisation of real-world assets (RWA) is now moving from pilots to production at scale.

- Tokenisation of treasuries, money market funds, private credit, commodities and funds has accelerated sharply, passing $27bn+ on‑chain value by April 2026, led by tokenised US Treasuries and institutional funds from BlackRock, Fidelity and others.

- Stable coins are showing huge promise and uptake, and are increasingly viewed as programmable cash, not purely crypto speculation. This provides huge application for payments, treasury, cash management, cross‑border settlement.

- At the same time, crypto ETFs are redefining institutional access. Spot Bitcoin and Ethereum ETFs continue to attract large institutional inflows, with single‑day inflows hitting ~$1bn in May 2026 and total ETF AUM exceeding $115bn. ETFs have become the default entry point for pensions, insurers and wealth platforms. 

However, there is significant complexity to the blockchain landscape, and navigating “what’s working”, “what’s not”, and “what’s next”, can be challenging.

The financial services industry has always thrived on innovation

It is clear to me that blockchain is increasingly becoming part of the furniture of the financial infrastructure. Banks are quietly building blockchain settlement and custody rails. Furthermore, the narrative has shifted from tech bros trying to replace banks, to blockchains (owned by large firms) as bank infrastructure, driven by cost reduction, T+0/T+instant settlement, and internal efficiency.

The size of the opportunity is substantial – at the time of writing the market cap for crypto is $2.7t USD. More importantly it provides:

• Huge potential across a range of financial products
• Revenue opportunities from issuance fees from tokenising RWA
• Efficiencies from reducing post-trade reconciliation and failed settlements
• Lower transfer-agent and registrar costs
• Cheaper and faster cross payment payments
• Better returns on cash deposits – and so the list goes on.

The financial services industry has thrived on innovation.  We no longer swap sheep for wheat, or barter with shells – the nature of commerce and value has moved on, and blockchain is simply the next iteration of money.

For an overview of blockchain technology and where it can deploy in your organisations, and guidance on reputable vendors in the space, contact your Softcat account manager today or get in touch with our Sales team.