As tokenised asset models enter limited operational use in selected markets, UOB is planning for environments that may involve new forms of digital value, updated settlement processes and higher levels of automation. Activity remains early, yet current implementations are shaping expectations around fund movement, asset lifecycle management and the system capabilities required to support these functions.

UOB formed the Innovation Group in April 2025 to spearhead its work in digital assets, data management, blockchain and enterprise artificial intelligence (AI). The unit consolidates activity across the bank and aligns its efforts with broader industry initiatives, including those led by the Monetary Authority of Singapore (MAS) exploring the safe use of tokenised assets within existing regulatory frameworks. Its remit focuses on internal coordination and establishing a foundation for more consistent progress across the bank’s innovation priorities, including digital assets.

Lee Zhu Kuang, managing director and group head of the Innovation Group, highlights the bank’s direction. He states that “Digital money and tokenisation are reshaping how value moves across markets, and our priority is to build trusted and interoperable systems that enable faster, safer and more transparent transactions.” His remarks reflect the expanding set of central bank led pilots and regional collaborations that are beginning to inform early models for wholesale digital currency settlement.

These developments are influencing how banks assess operational requirements for future market structures. New digital representations of money and assets may change settlement workflows and embed compliance checks directly within transactions. This approach, known as programmable settlement, enables predefined rules such as ownership validation or reporting triggers to execute automatically. Lee explains that UOB is preparing by developing staff capabilities, applying AI to support process redesign and investing in automation tools. He describes initiatives to strengthen the technical and operational foundations needed to support more automated environments, tying together work on interoperability, modular architecture and governance to ensure systems can scale safely.

Putting compliance at the centre of digital innovation

Innovation at scale depends on trust, legal clarity and regulatory alignment, and UOB positions governance as a strategic enabler. Lee notes that the bank works closely with regulators and industry participants, stating that “We participate actively in these initiatives so we understand the frameworks being developed and ensure we scale innovation responsibly while preparing ourselves and our partners for what comes next.” He identifies a core principle guiding this work: UOB embeds “Compliance as a code in everything we do, so innovation becomes sustainable. Whatever we build must first align to regulatory requirements before we consider standards or interoperability layers.” Compliance as code refers to embedding regulatory requirements into system logic so that rules are enforced automatically during transactions.

Lee notes that atomic settlement, where cash and asset transfers occur at the exact same moment so that neither party is exposed to one side settling without the other, eliminates counterparty and reconciliation risk but still requires strong safeguards. “We need safeguards that remove counterparty and reconciliation risk, supported by full traceability, liquidity monitoring and the ability to fall back to traditional rails such as real-time gross settlement or domestic payment schemes like PayNow to complete transactions.” These controls reflect the operational rigor needed as settlement processes become more automated.

Designing systems that work across multiple assets and chains

The future digital finance ecosystem may involve digital money operating across private, public and hybrid networks as experiments progress. Private chains are restricted-access systems operated by regulated entities, while public chains are open networks such as Ethereum that allow broad participation. Hybrid models combine elements of both to balance openness and control. UOB is preparing for this environment through modular, microservices-based and event-driven architecture designed to support new asset classes and interoperability requirements. Lee explains that “Modularity must be part of the design from the start. When we build new services, interoperability is already a core consideration.”

This approach shapes UOB’s blockchain strategy. Lee sees hybrid models becoming more common, noting that “We do not need to choose between private or public blockchains because value will move across networks. We may see hybrid solutions, where assets such as money market funds may be issued on public chains, while certification, custody and control operate on private chains.”

Cross-border activity increases the need for standardisation as participation grows. Asia Pacific jurisdictions operate on varied regulatory timelines, and UOB is working toward practical forms of harmonisation. Lee states that “We agree on shared token standards such as ERC 1400 or 3643 since everyone can handle them.” ERC 1400 is a technical standard for security tokens that embed compliance rules, and ERC 3643 is used for identity-verified digital assets requiring regulated access controls. He adds that “We also build foundational capabilities such as digital wallet infrastructure to safeguard private keys and assets on behalf of clients, along with the connections we need to establish with external settlement layers.” These capabilities support market integration as regional experiments develop.

Integrating intelligence into digital money workflows

With core digital infrastructure in place, UOB is assessing the role of intelligent automation. Lee views emerging technologies as interconnected, noting that “I do not see it as blockchain alone or artificial intelligence. They are components of the overall process we are solving.” AI can enhance blockchain efficiency, and blockchain can provide controls that support responsible AI usage. UOB sees potential in agentic AI, which involves software agents that can request data, validate conditions and execute operational tasks across systems within predefined governance boundaries.

Lee explains that “Smart contracts define a process, but agentic AI can automate and orchestrate the full workflow. It can coordinate different steps, ensure compliance so that we are innovating in a responsible way while also introducing the controls needed for trust.” Agentic AI remains at an exploratory stage and is not yet part of live financial infrastructure in most markets.

Scaling digital money across markets

Several challenges must be addressed before tokenised money reaches institutional scale. Regulatory clarity is one of the main considerations. Projects such as Guardian and Project Genesis — a multi-central-bank initiative examining how blockchain-based platforms can support green bond lifecycle tracking and reporting — have helped regulators assess fixed income taxonomies, lifecycle automation and green bond issuance within existing legal frameworks. Lee states that “Investors need clarity on settlement finality, protection, custody models and tax treatment before confidence increases.”

Liquidity formation is another constraint. Deep secondary markets support adoption, and Lee notes that “Regulators can help institutions understand the business models and economics of these new asset classes so the cost of issuance, servicing and custody becomes viable. This attracts institutional investors and deepens liquidity.” Operational complexity is a further challenge, particularly around custody.

Managing digital assets requires new responsibilities and specialist expertise, as the technologies underpinning them, such as digital asset wallets, introduce unfamiliar risk considerations. Lee highlights that “Digital asset wallets are new technologies and private key safekeeping requires strong operational risk processes.” Private keys are cryptographic credentials used to control digital assets, and institutional safekeeping requires hardware security modules, access controls and multi party approval processes.

Momentum is building as the industry moves from experimentation toward more structured forms of deployment. Lee observes that “Stablecoins and tokenised money are moving from concept to reality. Our focus is to connect systems with trusted rails and practical use cases.” He adds that “Collaboration on cross border standards and trusted corridors will allow digital money to become a regional enabler for the new asset ecosystem.”

Positioning for leadership in the next phase of digital finance

UOB’s approach reflects a shift toward more structured institutional design for tokenised finance. The bank recognises that long-term advantage will depend on embedding these capabilities into revenue-generating businesses and converting pilots into commercial outcomes. It will need to translate pilots into products, build operating playbooks across corridors and develop business cases that support the economics of tokenised assets. The region’s digital money landscape is moving toward interlinked standards and more interoperable settlement layers, and institutions that establish these foundations earliest are likely to influence emerging norms for liquidity, payments and asset servicing.