tokenisation done right

Executing on tokenisation

But initial approvals can often only be the starting point for the real groundwork to begin. Ahead of any technical implementation, successful project execution relies on extensive cooperation across the firm and across the ecosystem.

6. Talent and internal competencies: It takes a village

"We had around 100 people on the first issuance – and at least 50% of our time together was simply education"

The tokenisation journey begins well before any technology solutions are even in the frame. It is simply the ability for a whole firm to see a new model beyond today’s (legacy) infrastructure and processes.

With new applications and usage cases of tokenisation emerging every day, there is an abundance of creativity and innovation being realised across our industry – and firms that have succeeded in their tokenisation journeys have taken the time to educate themselves on the technology, the innovations that it is enabling.

Each major tokenisation project across the industry has relied on a deep, working level of DLT and smart contracts in every department in order to go live – and it is critical to manage the talent element of every tokenisation project in parallel with the technology.

In each project, talent can obviously mean the right volumes of programmers who know the required programming language (e.g. DAML) but it also means people in Operations, Treasury, Compliance, Legal and Risk management who are competent in managing the daily processes and risks that a tokenisation platform entails.

"The technical part of the (bond) issuance was easy. It was the legal framework that was the biggest part – and it took months to get our lawyers comfortable with the concepts and frameworks at play"

Few organisations have these levels of expertise ready and available today – and so it is inevitable that early tokenisation projects include significant amounts of time for stakeholder education. Getting a lawyer to approve a digital asset agreement can take months – as can securing Compliance approval for a new tokenised security.

Every tokenisation project plan needs to account for this learning and development, well in advance of any technical build.

7. The Ecosystem is the project team

"Who defines the standard? Either it’s the ecosystem owner, the issuer (i.e. at the top of the lifecycle) or a major investor. Many other firms will struggle to make standards happen"

Behind every successful tokenisation project to date is an empowered, customer advisory group that spans the entire market ecosystem (including regulators, counterparties and service providers – as well as the platform provider).

Tokenisation is an ecosystem solution at its core – and few efficiencies can be realised without the active engagement of the organisations who will participate in, service and oversee the blockchain. With few firms ever big enough to be able to drive an entire ecosystem on their own, this means constant and repeated engagement with the (asset class) usage system as a core part of any build.

"Our customer steerco has led the project from day one: defining the model, choosing vendors. We’ve not done any of it on our own"

This critical engagement spans the entire lifecycle of a tokenisation project and includes:

Validating and prioritising the target areas for development
Defining the market operating model
Defining standards for interaction
Participating in testing and validating MVPs
Acting as launch clients to deliver immediate scale to live platforms

For many organisations, this level of external reliance is counter-intuitive – it can appear to dilute competitive advantage, devolve decision making beyond their control and add undesirable delays to the project.

Yet, simply put, no project has successfully scaled without engaging the ecosystem that the platform is designed to serve.

"We realised that we couldn’t begin our project until we had 20 market participants working with us – otherwise we would struggle too much with standardisation"

8. Seek out your superstars

Today’s tokenisation journey is a marathon of creativity. Every day new usage cases for tokenisation are designed or tested – building on the ingenuity of the industry’s brightest minds.

Not every ecosystem grouping will be packed with innovators – but the key in successful projects is to actively seek out your ‘super-users’.

These can be either firms (or individuals) who have the deepest working knowledge of existing processes and challenges; or they can be the visionaries who have a clear picture of where tokenisation can transform an asset class.

Rarely though do they all work in one firm – and so all tokenisation project owners need to actively seek out the minds that can properly shape a solution that not only delivers but which transforms.

9. One step at a time

"The headlines are clear – but it’s the starting point and then the roadmap that counts."

“Our DLT journey is a series of small steps – as we’re bound in on many sides by the risks that we have to manage”

Tokenisation is a journey of discovery that includes many cumulative steps.

Whilst we may have significant, “main event” moments in mind, we are not building towards a defined end-state model – and it is important that each of our tokenisation projects focus on realising tangible, micro-benefits over and over.

Each step of our tokenisation needs to deliver its own P&L improvement. Large-scale projects need to be broken down into small, realisable and self-contained pieces – so that our projects deliver returns that ‘feed the dream’ and ensure continuing investment and engagement on the journey. No one can wait five years to see return on investment (ROI) on their project spend.

"We can't take on too many variables. We have to manage uncertainty and acknowledge that we just don’t know everything. That’s hard for a (regulated) bank and so it’s all about risk tolerance"

"This process is to answer your questions – not to have the answers straight away"

"You need to adapt your views as your experience grows"

A second reason for breaking down our projects into micro-steps is because, in many cases, we don’t know enough to move in giant leaps. We simply don’t have enough experience to predict every regulatory, legal, operational or risk issue that will arise during a tokenisation project and so we can not map out a deployment journey with any degree of security. Instead, we have to break each project down so that each small phase will entail a (manageable) level of risk – which the organisation and activity is able to accept. In a regulated institution, there is simply no alternative to this step by step approach

Lastly, most tokenisation plans change as we learn about the technology and how it can be used in each ecosystem. Any roadmap will evolve as customer behaviours shift, as we learn what can (and can’t) be changed and as regulation is refined – and so every project needs to have the in-built flexibility to adapt and change directions over time.

Tokenisation is about taking one step at a time – not about a destination.