Scaling Up: Challenges and Solutions in Enterprise Tokenization

Despite its immense potential to revolutionize the financial industry, many large banks have been hesitant to fully embrace blockchain. Here we’re going to outline some of the challenges financial institutions face as they enter web3, specifically as they start to tokenize assets.

After each challenge we’ll give a quick summary of how our platform makes these challenges easier to manage.

Scalability

Banks must ensure that their systems and infrastructure can scale to accommodate the growth of tokenized assets, as well as the increased transaction volumes and complexity that come with it. Scaling blockchain systems also presents challenges with managing stakeholders, as both internal teams and investors need to be aligned on the value, risks, and opportunities that tokenized assets present.

As banks learn from DeFi markets and design products that leverage some of the benefits public ecosystems uncovered, you need to plug in to existing systems, maintain safeguards, and build systems that can adapt as the technology evolves. All this can be hard—but the right partner can help.

How Kaleido helps banks achieve institutional scale

Consumers know that new tools, experiences, and identity solutions are coming online in the web3 space and they’ll put their money elsewhere if they feel their banking partner isn’t behind market evolutions. We help banks get innovative solutions to the market to compete with emerging ecosystems.

• We support leading token types so you can digitize assets at scale across asset classes as the market defines itself.
• Namespace isolation allows you to build multiple applications in our console and control who can access each, ensuring operations comply with team rules and structures.
• Tokenizing assets can be costly, especially if integrating with public chains. We help you perfect your use case and manage gas for you to minimize cost.
• Banks must invest in educating investors to ensure they understand the risks and benefits of investing in tokenized assets. This is easier with Kaleido, as we get you live quickly and keep your app running, allowing you to focus on stakeholder management.

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On top of all the challenges blockchain presents, banks need to choose a technology partner that can maintain security as it scales. Our platform is built from the ground up to meet enterprise requirements with modern cloud scale architecture, always-up resiliency, elastic performance, and ISO 27k and SOC 2 Type 2 compliance — all backed by SLAs and 24x7 support options.

Technological Integration

Integrating blockchain technology and DLT with existing banking infrastructure can be complex, expensive, and time-consuming. Banks must ensure that their systems are compatible with the new technology and able to handle the increased volume of transactions.

Implementing blockchain and connecting it to legacy systems can also be expensive, requiring investment on resources, infrastructure, and expertise. This can be difficult for large banks to justify if they are unsure of the return on investment. Horror stories abound about projects that took years to build and failed to prove value.

What a bank needs is the ability to connect to various chains and ecosystems, plug in tools and services that make doing business via blockchain easier, and then spend time perfecting the user experience.

Kaleido has built this gateway—allowing enterprises to safely connect to the world of web3. We heard banks say that they want to spend more time onboarding customers and less time making small technical decisions. That’s where our solutions come in.

How Kaleido helps banks master evolving tech

Our platform is built for the enterprise from the ground up. It lets you build on any chain and then customize your app with tools and pre-built services. Not only does this get you live quicker, but it also lets you make the most of internal teams, as they don’t have to build everything from scratch.

• Our enterprise-grade platform makes it easier to stand up networks and removes costly infrastructure builds.
• With both public chain connectivity and industry-leading consortia as a service, banks partner with us to tap into the value of web3 in a cost-effective way.
• From public to private, we provide support for all major clouds, protocols, and web3 technologies.
• We radically simplify the process and tools required to manage digital assets at institutional scale.
• Our click-button customizations allow you to tailor our solutions to your use case.
• Your team can generate APIs from custom and templated smart contracts to simplify development.

Getting into web3 development feels a bit like mounting a horse already at a gallop. We’ve built our products to help enterprises get on and reach their destination in a less risky (less painful) way.  

Regulatory Uncertainty

There is a lack of regulatory clarity around blockchain technology, which adds another layer of complexity when banks want to launch apps or tokenize assets. Just finding what regulations are on the books and keeping up with changes can be a complex and time-consuming process.

Regulations that affect blockchain assets might include:

• Securities regulations
• Anti-money laundering (AML) and know-your-customer (KYC) requirements
• Payment services regulation
• Data privacy regulations
• Evolving taxations
• Cross-border regulations

Financial institutions that want to tokenize assets to manage, trade, or sell need to be aware of the regulatory landscape in which they’re operating and ensure that they comply with all relevant regulations. And, while we can’t make regulations clear or easy to follow, we can make applications easier to use, adapt, and operate so you have the flexibility you need to build compliant solutions.

How Kaleido helps financial institutions build compliant solutions

With click-button governance, transaction policy tools, and the security of a hardened, enterprise-grade blockchain network, you can move forward with confidence knowing your team can focus on customers.  

• Build custom rules and policies to automate who can do what when—all integrated with your existing user directory and SSO systems.
• Deploy your preferred custody solutions, including HD wallets and cloud HSMs, or integrate with third-party custody providers your team has vetted.
• Ensure your system of record is correctly managing state and providing once-and-only-once transactions with true reliability.
• Scale operations on an institutional-grade infrastructure with SOC 2 Type 2 and ISO 27K certifications, built-in HA/DR, enterprise identity management, and more.

Our platform is built for enterprise use cases, meaning our team of solution architects are well-versed in the constraints large businesses face as they enter web3. Put our experience to work for you.

The challenges are worth the value

According to Grandview Research, global decentralized finance market size eclipsed $14 billion in 2022 and they are expecting the market to continue to grow with a compound annual growth rate of 46.0% through 2030. That makes Institutional DeFi an enormous opportunity for players who can quickly get solutions live and put resources toward retaining customers. On a platform like Kaleido, this is easier than ever.

We make the tools of DeFi available at an industrial scale, all backed by open source software, robust API capabilities, and reliable chain connections. Our team and platform are here to help you overcome the challenges of web3 and tap into the power of asset tokenization.