Tokenization, Legacy Cores, and the Next Financial Revolution

Will today’s infrastructure choices determine tomorrow’s winners?

The backbone of traditional finance is cracking. Many banks and brokers still run their core operations on systems built in the 1970s and 80s – often written in COBOL – and rely on overnight batch processing to reconcile accounts. These aging platforms were never designed for today’s always-on digital economy. COBOL (Common Business-Oriented Language), now over 60 years old, remains deeply embedded in banking: an estimated 220 billion lines of COBOL code are still in use globally, powering mission-critical functions from general ledgers to loan servicing.

The Cost of Modernization VS. The Cost of Waiting

What was once a strength is now a structural liability, industry leaders know this. They know their COBOL-based cores are monolithic and inflexible, that even small changes are risky and painfully slow. They also know that discussions about core conversions tend to stall, often marked by hesitation, deference, and resistance. And to be fair, that hesitation is understandable. Between 2020 and 2023, I worked at a top banking and wealth management institution in the Bay Area that was in the middle of a major core conversion. From direct experience, I saw that these conversions demand enormous cross-functional effort and are among the most expensive initiatives a financial institution can undertake. Our firm completed the conversion with only minor delays—an outcome many would call a success. But even then, the story illustrates the deeper challenge: not every institution can, or will, commit that level of time, capital, and expertise. And sometimes, even when you do, the payoff never arrives. In the wake of the SVB fallout in March of 2023, our institution was swept up by a competitor in the aftermath, which required us to cease operations before we could fully realize the benefits of the upgraded core. The lesson is stark: markets and macro shocks won’t wait for your technology roadmap.

Timing, not awareness, is the competitive fault line. That’s the crux of this strategic problem - as they say, “timings a bitch.”

The market, the enablers, and the eventual winners are not moved by internal deference or “timing.” An institution’s decision to modernize (or not) directly shapes the competitive landscape. Early movers don’t just “get better tech”; they directly influence and reset client expectations, define new service standards, and quietly capture the upside of being able to ship faster, integrate more broadly, and price risk more intelligently. Competitors that don’t keep up, by contrast, become case studies in missed timing.

Today, the binding constraint is no longer whether executives recognize COBOL's limitations. It’s the chronic deferral of action. Decisions about core modernization get bounced from steering committee decks to hallway conversations and back again, with upgrades consistently relegated to “maybe later.” Meanwhile, “later” keeps getting more expensive. All debts eventually come due - financial, technical, or otherwise. The cost of waiting on core modernization is now compounding. And decision latency, absolutely, has a way of compounding. The inflection point is now, and the opportunity cost of delay is clearer than ever, because the frontier of value creation in finance - AI, tokenization, blockchain-based infrastructure, and the coming Great Wealth Transfer—demands capabilities that batch-era systems simply cannot deliver.

COBOL cores were built for end-of-day updates, not for real-time, data-rich, always-available interactions. Batch processing is the clearest symptom: traditional systems update balances and settle trades in fixed off-hours windows (typically overnight). Customers experience this as cut-offs, delays, and opaque status updates, but the real issue is deeper: the core architecture cannot natively support continuous, event-driven finance. As one industry analysis notes, most U.S. banks still run on COBOL cores “originally built for batch processing,” which “can’t natively support real-time” transactions. That’s why a payment sent late on a Friday can take until Monday, or later on holidays, to fully clear—not because the money can’t move, but because the system governing it is literally asleep between batch cycles.

This is no longer a tolerable annoyance at the edges of the business. It’s a direct cap on what firms can build. Real-time payment networks like FedNow, 24/7 settlement, programmable assets, instant collateral management, AI-driven risk, and personalization—these are all predicated on infrastructure that can see, process, and act on data continuously and reliably.

When Latency Becomes Strategic Debt

The lack of native support for mainframes, like COBOL, extends to existing tech stacks as well, not just future ones. For modern APIs and data formats, forcing banks into fragile workarounds and middleware layers just to connect mobile apps or fintech partners. Many institutions still require overnight reconciliation, making “simple” features, such as real-time balances or instant peer-to-peer transfers, nontrivial and brittle to deliver at scale. The result is unavoidable latency, often measured in hours, precisely where clients and counterparties now expect milliseconds. The burden isn’t only architectural—it’s human and financial. Maintaining these aging systems siphons capital and talent away from the future. The codebases are dense with decades of patches and edge cases, and a shrinking cadre of senior engineers who understand them are aging out. Approximately 68% of the remaining pool of COBOL developers have retired by the start of 2026, creating a structural skills gap at a time when stability and security are most critical.

In that environment, a “simple” change can be dangerous. One quick fix to a COBOL module can trigger cascading failures across tightly coupled components. At the same time, the cost of just keeping these systems alive, mainframe leases, specialized support, niche contractors, keeps rising. More budget is allocated to maintaining the past, less to building the future. It’s not just technical debt; it’s strategic deadlock.

New Market Realities That Core Cannot Support

That deadlock sits in sharp contrast to where finance is headed. Tokenization and blockchain infrastructures are redefining what a financial asset can be—fractional, programmable, instantly settled, and composable across platforms. AI is transforming how risk is modeled, how portfolios are managed, and how clients are served—with an insatiable demand for clean, timely, granular data. The Great Wealth Transfer is reshaping who holds assets and how they expect to interact with institutions—digitally, in real time, and hyper-personalized. All of these shifts share a common requirement: a core that behaves less like a nightly ledger and more like a real-time operating system for value. COBOL-era, batch-based cores cannot be stretched to play that role without increasing fragility and risk.

This is not merely about superficial innovation at the margins; it reflects a fundamental strain in core market infrastructure, which is reaching its breaking point precisely as client expectations, competitive pressures, and technological advancements evolve rapidly in unison. Legacy COBOL cores and batch workflows are colliding with a world that assumes 24/7 access, real-time settlement, radical transparency, and programmable products as baseline. At the same time, crypto, DeFi, and real‑world asset tokenization have moved from curiosities to live proofs of how value can move and be governed on modern rails. The question for incumbents is no longer if this transition will happen, but who will own it—and the rest of this article argues that tokenization, coupled with serious core modernization, will be the structural lever that separates tomorrow’s category leaders from tomorrow’s case studies in missed timing.

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How DeFi Enablement Has Shifted Client Expectations

Now that we’ve established how COBOL-era cores and batch-based workflows have become binding constraints on institutional modernization, the next question is unavoidable: what has changed on the demand side?

The answer lies in timing and client expectations, influenced by DeFi and CeFi (centralized finance) platforms such as Coinbase and Binance.

Before the Genius Act, traditional finance (TradFi) leaders often viewed cryptocurrency and decentralized finance (DeFi) as fringe and risky, unsuitable for their clients. Who can forget in 2023 when Jamie Dimon said, “If I was the government, I’d close it down.” While this view was somewhat valid and understandable in the past, institutions largely dismissed this technology as irrelevant, either perceiving it as a threat or as insignificant.

The growth of crypto has fundamentally altered customer expectations for financial services, with use cases becoming more concrete and established. The convergence of AI and quantum computing has also made this technological intersection almost impossible to ignore. Crypto and DeFi platforms now set new standards for user experience, moving beyond speculation to deliver a real-time, transparent, and programmable financial system that modern clients demand. Progressive traditional institutions can leverage this shift; those who ignore it risk falling behind in a rapidly evolving market.

Real-time access is perhaps the clearest expectation. In the crypto world, markets operate 24/7/365 – there are no “closed” hours. Traders can reallocate assets at 3 a.m. on a Sunday, and payments settle within minutes on blockchain networks. This always-on paradigm has influenced client mindsets well beyond crypto. As one infrastructure provider observed, “Traders now expect 24/7 markets, instant funding…the ability to move capital with the same speed they move information.” By contrast, traditional equity and FX markets, with their limited hours and end-of-day batch processes, feel increasingly archaic. The divide between these systems is collapsing because clients have tasted real-time finance and aren’t going back. Fintech apps like Robinhood and neobanks acclimated users to on-demand service, but crypto took it a step further – proving that even complex transactions can clear near-instantly without intermediaries. The message to TradFi: if Venmo, crypto exchanges, and stablecoins let people transact in seconds, why can’t their bank or broker?

Transparency as Proof, Not Promise

Radical transparency is another defining trait. Public blockchains allow any participant to verify transactions on a shared ledger in real time. DeFi protocols, in particular, are built on open-source code and visible liquidity pools, giving users an unprecedented line of sight into how their funds are used and what yield they earn. This is the opposite of traditional finance’s black boxes and delayed statements. Newer investors increasingly expect visibility and auditability. DeFi users can watch loans and collateral values update block by block and independently confirm that assets are where a platform says they are. Unsurprisingly, surveys show trust in financial institutions is low among younger demographics – they want proof, not promises. To them, blockchain’s transparency is a feature, not a bug. As the World Economic Forum notes, shared ledgers provide “increased visibility into ownership structures, transaction history, and asset provenance,” making fraud or manipulation easier to detect. While TradFi must protect privacy, it can still draw on DeFi’s ethos of real-time verification and push toward more open reporting, such as on-chain audit trails for asset-backed products.

Equally transformative is the emerging expectation of programmability in financial products. DeFi normalized the idea that money can be embedded with logic – “smart contracts” that automatically execute when conditions are met. Want dividends paid at 12:01 a.m. on the due date? That can be coded. Want a portfolio that auto-rebalances, or a loan that self-adjusts collateral requirements? Code that into the smart contract as well. These concepts are moving into the mainstream. Clients now ask why so many financial agreements remain static documents requiring manual intervention, when self-executing code could handle routine processes cheaply, consistently, and without bias.

They see crypto platforms offering programmable yield (interest distributed by code daily or per block) and wonder why their bank savings interest is paid only once a month, often with opaque calculations. They see automated market makers (AMMs) in DeFi enabling continuous, algorithmic trading of assets and wonder why certain securities only trade during specific hours or with human market-makers taking large spreads. Programmability = flexibility + automation, and it speaks to a generation raised on apps and APIs. In the words of a BIS task force, end users increasingly expect transactions that are “instantaneous, programmable and less costly,” with services where they can “manage their digital assets directly, with transparency and immutability”. Crypto didn’t invent these expectations, but it demonstrated them at scale.

What Clients Are Really Signaling

The key insight is that crypto and DeFi are not creating entirely new asset classes but are instead shifting expectations for how existing assets should perform. Prominent financial leaders have begun to acknowledge this shift. BlackRock’s CEO Larry Fink, who had not historically been a crypto supporter, stated in 2025 that, “the next generation for markets... the next generation for securities, will be tokenization of securities.” His sentiment is echoed by many DeFi and TradFi leaders who recognize that ledger technology, the backbone of crypto, is enabling more efficient, more democratized markets. In fact, Jamie Dimon recently said, “We believe there are many uses where a blockchain can replace or improve contracts, data ownership, and other enhancements”.

Overall, crypto's progress indicates where all markets are heading. Institutions that are adopting or testing new products for their clients are more likely to seize these opportunities than traditional finance firms, especially those hesitant to invest in mainframe upgrades, crypto, or AI. Instead of viewing crypto and DeFi merely as external threats, they should be seen as signs of customer-focused innovation. The smart move is to identify key features like 24/7 access, real-time settlement, transparency, composability, and programmability that appeal to clients, and to provide these securely and in compliance. Some innovative banks are already offering instant payments around the clock or experimenting with smart contracts for bond settlements, understanding that customer expectations are evolving. The rise of crypto underscores the need for more flexible, transparent, and programmable financial services, giving traditional finance the opportunity to meet this demand if it acts swiftly.

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The Looming Tailwind: The Great Wealth Transfer, Digital Natives and the Demand for Change

If DeFi, CeFi, and fintech have reshaped expectations for how finance functions, the upcoming Great Wealth Transfer will determine who holds the assets that uphold those expectations. This movement, a significant trend, is poised to unfold over the next twenty years. An estimated $70 trillion to $120 trillion will shift from Baby Boomers to Gen X, Millennials, Gen Z, and eventually Gen Alpha - groups that expect a digital-native, always-on financial infrastructure as standard, signaling the ramifications are far greater than just the transfer of wealth.

A New Cohort With a Different Portfolio

The data makes the mindset shift clear. In Bank of America Private Bank’s 2024 study of wealthy Americans:

• 72% of investors aged 21–43 agreed that “it’s no longer possible to achieve above-average returns solely with traditional stocks and bonds,” compared to just 28% of investors 44 and older.

• Younger wealthy investors show a much higher preference for alternative and digital assets—crypto, private equity, direct investments, and global opportunities—than older cohorts.

In practice, many of these investors started with Robinhood or Coinbase before engaging a traditional broker or adviser. They expect to be able to allocate capital to startups, tokens, fractional real estate, and global opportunities directly from their devices. They are also more likely to trust their own research and self-direct their portfolios using online platforms.

In short, the next generation of high-net-worth clients is digitally native, opportunity-seeking, and unimpressed by the old menu of mutual funds and 60/40 portfolios.

Always-On Engagement as the New Default

Their service expectations have shifted just as dramatically. As Capgemini’s wealth management consultants note, “Younger generations grew up with mobile apps, on-demand everything, and instant gratification. They don’t want to sit down for an annual review. They expect account data, performance, and recommendations in real time, on their phones.”

For advisors and institutions, this is no longer a once-a-year conversation; it is an “active engagement channel” that must deliver:

• Up-to-the-minute account and portfolio data

• Bite-sized, actionable insights delivered continuously

• The ability to execute decisions instantly, from anywhere

Digital natives want real-time financial engagement, period. If a firm cannot provide real-time portfolio tracking, quick answers via chat, and seamless on-the-go execution, clients will simply move to a firm that can.

New Assets, New Values, Old Pipes

Younger investors' preferences are shifting from those of previous generations. They show a much higher interest in private equity, venture capital, cryptocurrencies, global opportunities, and impact investing, while showing less interest in traditional stocks and bonds. This trend highlights the potential for broader macro expansion of tokenized assets, and underscores why the definition of tokenized RWAs should not be limited to yield-generating instruments—something The RWA Ledger strongly advocates. One survey indicates that 88% of young heirs prefer private equity over Boomers. Additionally, about 85% of Millennials and Gen Z are interested in ESG/SRI investing, compared to a smaller percentage of older investors.

Fintechs and digital platforms that offer fractional access to startups, tokenized real estate, art, and other alternatives are filling this gap across both product and user experience. They meet younger investors where they already are: mobile-first, on-demand, and self-directed.

But beneath the front-end apps, much of traditional finance is still running on COBOL-era, batch-based cores that:

• Reconcile cash and positions overnight, not continuously

• Make truly real-time portals difficult, brittle, or expensive to deliver

• Struggle to support 24/7 access, instant settlement, and programmable products that this cohort increasingly assumes as standard

• Hinders modernization and the full potential of AI, blockchain, and quantum technologies.

Some institutions have started to react. For example, one leading custodian, Apex, implemented a real-time ledger with straight-through processing (no overnight batching) so that information is up-to-date whenever a client logs in. Others are experimenting with broadcasting selected back-office data on-chain—as when BNY Mellon began publishing fund accounting data to Ethereum via smart contracts—to embed transparency into asset servicing.

These are not cosmetic UX upgrades; they are early moves toward the real-time operating system that delivers the value the next generation already expects.

A $100 Trillion Stress Test for Legacy Cores

This is where the Great Wealth Transfer intersects directly with the core modernization problem. As trillions in assets migrate to digital-native owners with near-zero tolerance for paperwork, delays, or clunky interfaces, firms face a binary choice:

• Modernize core infrastructure to support real-time, tokenized, programmable finance and capture a meaningful share of this $100 trillion+ opportunity; or

• Continue to patch aging COBOL cores and accept a steady attritional loss of relevance, as each inheritance event becomes a natural trigger for assets to leave for more modern platforms.

This transition won't occur all ‘big bang.' Instead, it will take place gradually through continuous, cumulative reallocations. Every estate settlement and generational change becomes a decision point, whether to reinvest, reallocate, or adjust asset distributions. These decisions will build up over time, influencing the overall shift. Each step presents a choice: should this capital remain in traditional institutions, which struggle to meet clients' urgent needs for flexible access to their finances, or shift to digital platforms that better reflect the modern digital environment?

Viewing the Great Wealth Transfer through this perspective reveals that the mindset of 'capturing all' wealth becomes less relevant. Instead, it prompts the industry to recognize how interconnected factors—such as changing demands, obsolete mainframes, and existing technological use cases—highlight the urgency to update outdated market infrastructure. What was once considered high-risk technology should now be seen as a necessary part of modern architecture, serving as a wake-up call to modernize.

Institutions that update their core systems to meet digital-native wealth expectations, such as real-time updates, transparency, programmability, and tokenization, are poised to become industry leaders. In contrast, those who delay these changes will fall behind. Platforms that operate like the rest of the digital world? This perspective suggests that the Great Wealth Transfer should not be seen as an ambitious “capture of all" by institutions, but as a warning that it is time to address failing legacy market infrastructure. Aligning core systems with the standards of digital-native wealth—instant, transparent, programmable, and tokenized—will position institutions as tomorrow’s leaders. Conversely, those who lag will realize that their main obstacle was never awareness of the issue, but timing.

Conclusion: Modernization as a Survival Decision

Taken together, the picture is clear. Client expectations shaped by DeFi, fintech, and always-on digital experiences are colliding with institutional systems that were never designed to operate in real time. The Great Wealth Transfer adds a clock: control over tens of trillions in assets is moving, on a defined timeline, to clients whose default assumption is immediacy, transparency, and programmability.

In this context, modernization is no longer just an optional upgrade or a matter of tech debt to address later. It is a vital survival choice essential to an institution's long-term success as competition intensifies for the next generation's wealth. Organizations that regard core infrastructure as mere background plumbing will inevitably face slower innovation, limited data capabilities, and services that become increasingly disconnected from the expectations of the populations they serve.

The alternative is uncomfortable but straightforward. Firms that invest in real-time, tokenization-ready cores capable of supporting continuous settlement, programmable assets, and AI-driven engagement will position themselves to shape the next standard in financial services rather than chase it. They don’t merely improve the interface; they re-architect how value moves. The notion that “modernization” is an option will steadily, predictably, and almost imperceptibly erode those institutions, until it is very hard to reverse.

Executives already know their systems are aging. They already see the bar being reset by digital-native platforms. The remaining question is not whether to modernize, or even how, but when institutions are willing to stop treating timing as a reason to defer. In a world where each estate settlement, advisor transition, and client onboarding is a moment of choice, delay is itself a decision—one that quietly hands future clients and future relevance to someone else.

Many technology and business leaders will reasonably ask, “What does modernization actually look like in practice?” There are emerging models—incremental core decompositions, greenfield digital banks alongside legacy stacks, tokenization pilots, and full core conversions—with real case studies, hard lessons, and concrete patterns for risk management and execution. Exploring those options in depth is beyond the scope of this piece, but it is the natural next question. In a follow-on write-up, we’ll examine how institutions are approaching core transformation and tokenization in the real world: what’s working, what isn’t, and how to avoid becoming yet another cautionary tale.

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Marina Mendenhall-Valente
Partner, Tiburon Advisory Group | Founder of The RWA Ledger

The RWA Ledger is written by a former TradFi leader for today’s TradFi leaders, helping them confront the realities of crypto and tokenization before it’s too late.

Views are my own. This publication is for informational purposes only and does not constitute financial advice, endorsement, or investment solicitation.