After SoFi’s launch of its tokenized deposit last week, traditional banks may be wondering if they, too, should be pursuing tokenized deposits. If so, what do they need to think through before moving forward?

SoFi describes SoFi Earn (SOFIE) as the first consumer tokenized deposit issued by a nationally chartered US bank. The new account features a variable annual percentage yield (APY) of 4.40%, offers FDIC insurance on the deposits, and converts deposits one-for-one into SoFi’s stablecoin, SoFiUSD, which can then be transferred using blockchain rails 24 hours a day, seven days a week.

Bringing assets on chain is easier said than done. Tokenized deposits require banks to rethink how deposits move, how they integrate with existing infrastructure, and what customers actually gain from them. However, given the recent regulatory clarity around stablecoins and tokenized deposits, the tokenized deposit opportunity is much clearer.

As more financial institutions consider bringing deposits onto blockchain-based infrastructure, there are four questions they should answer before making the investment.

Tokenization has many known benefits, including the ability to move funds on weekends and after hours. It also allows for programmable payments that automate transactions using logic and APIs, faster settlement, and more efficient treasury operations. While existing payment infrastructure cannot effectively deliver many of these benefits, banks do have access to instant payments using RTP and FedNow.

Before jumping into tokenized deposits, banks should identify the specific customer need or problem they are looking to solve, and the measurable business benefit. For example, a bank serving corporate clients with complex treasury needs may find value in using tokenized deposits to automate payments to suppliers when certain conditions are met.

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