Stablecoins have become the obvious digital-money threat for banks because they appear to challenge one of banking’s most valuable assets: the deposit. But focusing too heavily on whether customers will move money from bank accounts into privately issued tokens may miss a much larger shift already taking shape. The real disruption could come from money becoming programmable, portable and available around the clock, regardless of whether the instrument carrying it is a stablecoin, a tokenised bank deposit or something that has yet to reach scale. If that happens, banks may successfully defend the deposit itself while still losing control of the infrastructure, interfaces and customer relationships through which money increasingly moves.
Stablecoins Have Put Deposits Back at the Centre of the Debate
The concern surrounding stablecoins is understandable. A sufficiently trusted digital token could give consumers and businesses another place to hold transactional money, potentially diverting funding away from traditional bank deposits and changing the economics of banking.
That risk is no longer purely theoretical. Research published by the Federal Reserve Bank of New York this year examined how stablecoins can erode deposit franchises and transmit liquidity pressures into the banking system, while the Bank for International Settlements has warned that significant adoption could increase funding costs and alter the composition and stability of bank liabilities.
Yet the scale needs perspective. The BIS estimated global stablecoin market capitalisation at around $315 billion in early April 2026, compared with roughly $8 trillion of bank deposits in the United States alone. It also estimated that although total stablecoin transaction volumes reached approximately $35 trillion during 2025, payment-related flows were only around $390 billion, with much of the activity still connected to crypto markets rather than mainstream commerce.
Stablecoins therefore matter, but the immediate question may not simply be how much money leaves banks. It is what customers begin expecting money to be able to do.
The Bigger Shift Is From Digital Money to Programmable Money
Most bank deposits are already digital. Customers rarely interact with physical currency when they transfer salaries, pay bills or move money between accounts. What tokenisation changes is not merely the format of money but the functionality surrounding it.
Tokenised money can potentially move continuously rather than according to banking cut-off times. Payments can become conditional, allowing funds to transfer automatically when contractual requirements are met. Money and tokenised assets can potentially settle together, reducing reconciliation and counterparty exposure. Corporate treasury operations that currently involve multiple intermediaries, systems and processing windows could become significantly more automated.
This is why the distinction between stablecoins and tokenised deposits matters. Tokenised deposits are still commercial bank money. They represent claims on regulated banks while introducing some of the programmability and settlement capabilities associated with blockchain infrastructure. The BIS has argued that tokenised deposits may provide a more direct path towards adopting tokenisation while retaining important characteristics of the existing monetary system.
The Dallas Fed similarly noted this year that tokenised deposits can enable near-instant settlement and programmable payments while remaining within the traditional banking regulatory framework.
That sounds reassuring for banks. It could also conceal the more difficult strategic problem.
Banks Could Keep the Deposit and Lose the Customer
Imagine a future corporate customer whose money remains legally deposited with a bank but rarely interacts directly with that bank.
Its treasury platform automatically allocates liquidity. Payments execute when predefined conditions are satisfied. Software agents move funds between accounts. Suppliers receive payment automatically. Foreign exchange is triggered when required. Tokenised assets and tokenised cash settle simultaneously, while APIs connect multiple financial providers behind a single corporate interface.
The bank may still hold the deposit, but increasingly it becomes infrastructure underneath someone else’s experience.
This is closely connected to the shift explored in Your Bank Is Becoming an API. Customers May Never Know It. As banking becomes embedded within software, marketplaces and other digital environments, owning the underlying account does not necessarily mean owning the customer relationship.
Digital money could accelerate that separation. Once money becomes programmable and interoperable, customers may care less about which institution technically holds a particular balance and more about which platform gives them the easiest way to manage, move and deploy liquidity.
The competitive threat then moves away from the balance sheet and towards orchestration.
Tokenised Deposits Could Change Banking From Inside
Ironically, one of the technologies designed to protect banks from stablecoins could become a significant force reshaping banking itself.
Tokenised deposits allow banks to bring existing commercial bank money onto programmable infrastructure rather than surrendering that territory to non-bank issuers. They could become particularly important in institutional payments, securities settlement and corporate treasury, where customers already operate within regulated banking relationships.
But tokenising deposits is not equivalent to simply creating a faster version of online banking. If tokenised deposits eventually become transferable across broader networks, banks will need to reconsider how liquidity behaves when funds can move continuously and potentially much faster than they do today.
Research from the Dallas Fed has highlighted precisely this issue, noting that widespread adoption could affect bank liquidity and maturity transformation. Tokenised deposits could blur existing deposit categories and increase demand for high-quality liquid assets, particularly if tokens become more readily transferable between institutions.
The same characteristics that make digital money attractive to customers can therefore create new challenges for bank treasury operations. Deposits that become easier to move may also become easier to lose.
The Battle Could Move to the Wallet
There is another layer to the competition that receives less attention than the stablecoin itself: where customers actually interact with digital money.
If consumers and businesses eventually hold several forms of value inside a single digital environment, the wallet or financial platform could become more strategically important than the underlying instrument. A customer might hold bank deposits, stablecoins, tokenised investment products and potentially central bank money without thinking extensively about the infrastructure underneath each asset.
Software could determine which form of money is most efficient for a particular transaction.
A domestic purchase might use conventional bank money. A cross-border payment could use a regulated stablecoin. A tokenised securities transaction could settle using a tokenised deposit. The customer may simply press “pay” while the platform decides what happens underneath.
At that point, the institution controlling the decision layer could have enormous influence over where liquidity sits and how transactions are routed.
Banks have encountered a version of this problem before. Card networks, digital wallets, fintech platforms and embedded-finance providers have progressively inserted themselves between banks and their customers. Tokenised money could extend that dynamic from the payment interface deeper into the monetary infrastructure itself.
AI Could Make the Shift Much Faster
Digital money becomes even more consequential when combined with autonomous AI.
Today’s financial applications generally wait for users to instruct them. Emerging AI agents could increasingly initiate financial actions on behalf of consumers and businesses within predefined limits. A corporate treasury agent might continuously assess liquidity, interest rates, foreign-exchange exposure and upcoming obligations before deciding where funds should be held and when they should move.
That creates an entirely different banking customer: software.
An AI agent does not care about branch networks, advertising campaigns or many of the traditional characteristics associated with banking relationships. It may choose providers according to price, liquidity, reliability, API performance, settlement speed and programmable functionality.
Banks could therefore find themselves competing for transactions that humans never consciously initiate.
This is where digital-money strategy starts converging with AI strategy. The institutions preparing only for stablecoin competition may be solving a narrower problem than the one emerging. The larger challenge is ensuring that bank money remains useful when machines increasingly decide how money moves.
Infrastructure May Matter More Than the Token
The debate surrounding digital money often becomes a competition between instruments: stablecoins versus tokenised deposits versus central bank digital currencies. But the long-term winners may be determined less by which form dominates and more by who builds the infrastructure connecting them.
PwC recently argued that the conversation is moving beyond tokenised cash towards broader onchain financial infrastructure, including settlement rails, interoperability, collateral mobility, liquidity infrastructure and treasury services.
That distinction is important for banks because money rarely operates independently. Businesses need liquidity management, credit, foreign exchange, settlement, custody, compliance and risk management around it. Banks already provide many of those capabilities.
Their advantage therefore remains substantial. The question is whether they can translate those capabilities into an environment where financial assets and money increasingly operate on programmable infrastructure.
The strongest response to stablecoins may consequently not be launching another token. It may be making bank money sufficiently programmable, interoperable and useful that customers have little reason to leave the banking system in the first place.
Stablecoins May Be the Warning, Not the Destination
Stablecoins have forced the banking industry to confront questions about deposits, payment infrastructure and the future of commercial bank money much earlier than it otherwise might have. That alone makes them strategically important.
But they may ultimately represent only one stage of a much broader transformation.
The deeper shift is towards an environment in which different forms of regulated and private money coexist, financial assets become increasingly tokenised, transactions happen continuously and software determines how value moves between networks.
Banks can participate successfully in that world. Tokenised deposits could allow them to preserve commercial bank money while offering many of the characteristics customers increasingly expect from blockchain-based finance. The IMF has similarly described tokenised deposits as a digital extension of existing bank liabilities operating within prudential regulation and deposit insurance frameworks.
But preserving the deposit is only part of the challenge. Banks must also preserve their relevance in deciding what happens to that deposit.
What it means for the industry
- Stablecoin competition is only part of the digital-money challenge. The larger transformation is towards programmable, always-available and increasingly interoperable money.
- Tokenised deposits could protect the banking model while simultaneously changing it. Banks can retain deposits on their balance sheets, but liquidity may become more mobile and customer relationships less visible.
- The wallet and orchestration layer could become strategically critical. Whoever determines which form of money is used for each transaction may control more of the customer relationship.
- AI agents could become a new class of banking customer. Banks will increasingly need products and infrastructure designed for software that autonomously makes financial decisions.
- Interoperability may matter more than issuing a token. Digital money that cannot move efficiently across institutions, networks and assets will have limited usefulness.
- Banks need a digital-money strategy broader than stablecoins. The real objective should be ensuring commercial bank money remains competitive inside the emerging programmable financial system.
