The average bank is running software that is unrecognizable to modern developers: In the 1960s and 1970s, banks were early adopters of large software systems. The second generation of core banking software started in the 1980s and 1990s (for instance, via Temenos' GLOBUS and InfoSys' Finacle). But all this software has been aging, and is being upgraded too slowly. As such, the banking industry — especially critical core ledgers, the key databases that track deposits, collateral, and other obligations — still often run on mainframe computers, programmed with COBOL, and with batch file interfaces instead of APIs.

The large majority of global assets live on those same core ledgers that are also decades old. While these systems are battle tested, trusted by regulators, and deeply integrated into complex banking scenarios, they are also holding back innovation. Adding key functionality like realtime payments (RTP) can take months or more likely years, and requires navigating layers of technical debt and regulatory complexity.

That's where stablecoins come in. Not only were the last couple years when stablecoins found product-market fit and hit the mainstream, but this year, TradFi institutions embraced them at a whole new level. Stablecoins, tokenized deposits, tokenized treasuries, and onchain bonds allow banks, fintechs, and financial institutions to build new products and serve new customers. More importantly, they can do this without forcing these organizations to rewrite their legacy systems — systems that, while aging, have run reliably for decades. Stablecoins thus provide a new way for institutions to innovate.