Distributed Ledger Technology explained – and what it means for Swiss banks

A customer buys a bond. Typically, before it is credited to her custody account, several parties are involved: the bank, the stock exchange and the custodian. Each checks data, reconciles figures and keeps records. This process is secure – but cumbersome.

Swiss banks are therefore asking themselves if there is a simpler way. One possible answer is Distributed Ledger Technology (DLT).

DLT offers banks advantages

Banks have the potential to develop new services based on DLT technology. This is because DLT simplifies processes: it makes it easier to process and track transactions, as all parties involved have access to the same set of data. At present, this still requires several parties to actively exchange and reconcile data.

For customers, the technology could, in the long term, enable faster processes and new digital services. So-called smart contracts, for example, execute defined processes automatically – such as making a payment as soon as a delivery is confirmed.

Another important use case is tokenisation. This involves converting assets such as shares or property into digital tokens. Trading in these assets benefits from the simple and rapid transfer of information made possible by DLT. Furthermore, tokenisation opens up the possibility of dividing certain assets into smaller units. For investors, this could in future facilitate access to asset classes that were previously only investable with high minimum amounts.

DLT is already in use today

In Switzerland, DLT is more than just a topic for the future. Banks are already using the technology – albeit not yet on a widespread basis.

In recent years, the first payments via DLT have been successfully tested – in some cases almost in real time and around the clock. A feasibility study by PostFinance, Sygnum and UBS, conducted under the auspices of the Swiss Bankers Association, also showed that tokenised bank deposits can be transferred between banks in a legally binding manner via a public blockchain.

In parallel, the SIX Digital Exchange (SDX) – a DLT-based market infrastructure for digital securities – is becoming established, with Swiss banks participating. There, tokenised securities can be traded and settled with fewer intermediaries than in traditional processes. Individual banks are already offering specific services, such as the custody or trading of tokenised assets.

At the same time, it is clear that the existing systems function reliably and will not be replaced, but rather strategically complemented.

Switzerland is at the forefront

Switzerland is one of the international pioneers in the DLT field. One reason for this is the early introduction of regulations: existing laws have been specifically amended to ensure that DLT applications can be implemented in a legally compliant manner – for example, in the case of digital securities.

Furthermore, the regulatory framework is being continuously developed. The Federal Council conducted a consultation on amendments to the Financial Institutions Act from October 2025 to February 2026. Topics under discussion include adjustments to the existing fintech licence and new licence categories for stablecoin and crypto service providers. Legislative changes are expected in the coming years.

Innovation – but safely

As the use of DLT increases, new questions arise. What role will banks play in the future when processes become more direct? How can new forms of money, such as tokenised deposits or stablecoins, be integrated effectively? And how can regulation facilitate innovation without jeopardising stability?

Switzerland is taking a clear approach to this: it is open to new ideas, but without compromising on the security and trust that banks provide. The key will be to deploy DLT where the technology creates genuine added value – for banks, businesses and customers alike.