IBM Warns Banks Risk Falling Behind as Tokenization Nears Mainstream Adoption

Global banks may look healthier after years of margin pressure, but a coming wave of asset tokenization could expose how much of that recovery is cyclical rather than structural, according to a new report from the IBM Institute for Business Value (IBV).

In its outlook titled “2026 Global Banking & Financial Markets Outlook: Banking in the Tokenized Economy”, IBM surveyed 500 banking and payments executives worldwide and reached a blunt conclusion: banks have climbed out of a decade-long slump, yet many are not ready for an environment where tokenized assets, stablecoins, and central bank digital currencies (CBDCs) become default financial infrastructure. IBM argues the next 24 months will be decisive, with 2030 likely marking the point at which tokenization shifts from pilot projects to mainstream rails for issuance, settlement, and custody.

The report frames today’s banking landscape as “improved, but vulnerable.” Higher interest rates have lifted net interest margins and profitability metrics, boosting returns for banks that struggled in the ultra-low-rate era—particularly in Europe and Japan. Many lenders have seen price-to-book ratios move toward or above 1x, while non-performing loan (NPL) ratios remain comparatively contained.

IBM’s concern is not that banks lack momentum, but that the rebound is heavily dependent on external conditions. Put simply, rates revived profitability faster than banks reinvented themselves. The report points to rising credit provisioning burdens outside the U.S., alongside the risk that a repricing in AI-linked equities or commodities could pressure wealth management fee income. Layered on top are geopolitical tensions, supply-chain disruptions, and recession risks that could test balance sheets just as banks face a major technology transition.

Nowhere is the gap clearer than in tokenization execution. While 26% of surveyed executives said tokenization is already central to their institution’s strategy, only 9% reported having tokenization initiatives running or ready to deploy within 2026. That disconnect—strong intent but limited delivery—was most commonly attributed to talent constraints. Some 71% cited a shortage of relevant skills, and 14% described the capability gap as a “severe constraint.”

The skill set required for the tokenized economy differs markedly from traditional banking operations. Beyond standard IT modernization, banks need teams fluent in distributed ledger technology, smart contracts, token economics, on-chain settlement design, and digital custody—competencies more commonly found in crypto-native firms, fintechs, and infrastructure providers. IBM notes that while neo-banks and fintech platforms have steadily gained ground in off-chain digital finance, blockchain firms are moving quickly to control the foundational layers of the on-chain economy. Legacy lenders, by contrast, remain tethered to core banking architectures designed for pre-tokenization workflows.

Still, IBM does not portray banks as destined to lose. Their enduring advantage is 'trust'—and the regulatory operating model built around it. Banks are already structured for compliance-heavy functions such as know-your-customer (KYC), anti-money laundering (AML) controls, privacy safeguards, tax and reporting obligations, and servicing institutional clients. As capital moves on-chain, those capabilities could become more valuable, not less—particularly for corporate treasurers and asset managers seeking regulated counterparties.

That dynamic helps explain why 'custody' is emerging as a focal point. In the survey, 61% of executives said they plan to invest in custody solutions, with IBM arguing custody is evolving from a back-office utility into a strategic platform. In tokenized markets, custody extends beyond safeguarding assets; it encompasses secure key management, smart-contract-enabled transfer of rights, 24/7 near-instant settlement, compliance controls, and auditable access to tokenized instruments. Among executives, 74% viewed digital custody as a primary role for their institutions—an expectation that grows as tokenized bonds, funds, real estate, and other real-world assets (RWA) scale.

If custody is a battleground banks believe they can defend, IBM suggests 'wallets' are the frontline many are hesitating to claim. Looking toward 2030, respondents most commonly expected banks to act as service providers (64%), custodians (61%), and issuers (56%). Yet only 32% said they intend to actively provide wallet solutions.

IBM frames that as a strategic warning. In tokenized finance, a wallet is not merely storage—it is the customer interface for payments, identity, and asset ownership. If banking apps were the distribution channel for the mobile era, wallets could become the equivalent interface for tokenized markets. Payments executives appear to recognize the upside: 67% identified wallet management as the most attractive growth pathway. But if banks fail to secure that interface, they risk losing direct customer relationships even if custody remains within the regulated perimeter. In platform-driven finance, losing the customer touchpoint can be more damaging than losing a single product line.

The biggest inhibitor to moving faster, IBM argues, is the weight of legacy infrastructure. In a separate IBM study cited in the report, 94% of core banking modernization projects failed to meet their initial timelines, and more than half fell short of promised outcomes such as cost reductions, agility gains, and improved customer experience. The implication is that tokenization is not a bolt-on blockchain initiative—it requires a fundamental overhaul of processing, risk systems, data architecture, security, and regulatory reporting, all of which are deeply intertwined in existing bank stacks.

Reflecting that view, 77% of respondents said modern computing platforms and hybrid cloud are prerequisites for scaling tokenization. IBM also highlights longer-term cryptographic risk: as quantum computing advances, it could threaten existing encryption schemes used across digital assets. In the survey, 89% supported adopting 'post-quantum cryptography' (PQC) to prepare for that possibility.

IBM’s timeline is uncompromising. Shanker Ramamurthy, global managing partner at IBM Consulting, wrote in the report’s foreword that institutions positioned to thrive will be those willing to make difficult decisions in 2026 and 2027, rather than treating the period as merely exploratory. By IBM’s account, banks that build a token-ready core, deploy custody infrastructure, and secure ecosystem partnerships now could be positioned for higher-margin opportunities by 2030. Those that remain stuck in incremental legacy maintenance may find themselves relegated to the periphery of a tokenized financial system.

The report also points to stablecoins as a catalyst already moving ahead of traditional banking timelines. Stablecoins account for roughly 7% of the total crypto market capitalization, with the majority pegged to the U.S. dollar. In the U.S., IBM notes that regulatory frameworks are taking shape, including proposals such as the GENIUS Act, potentially lowering barriers for institutional adoption as compliance expectations become clearer.

Ultimately, IBM argues tokenization is unlikely to erase banking, but it can diminish the role of banks that do not adapt. The larger competitive threat is not just fintech challengers, but the possibility that corporates, institutional investors, asset managers, and payments companies will choose their own tokenization infrastructure and bypass traditional intermediation. The warning is straightforward: banks may have recovered—but without rapid operational and technological readiness, today’s rebound could harden into tomorrow’s disadvantage.