Swiss banking powerhouse UBS, crypto banking specialist Sygnum and PostFinance, a subsidiary company of the state-owned Swiss Post, successfully tested payments between institutions on Ethereum, according to a press release on Tuesday.

The proof of concept, run under the Swiss Bankers Association, saw UBS, PostFinance, and Sygnum Bank carry out transactions using deposit tokens — digital representations of bank deposits that can move on a public blockchain.

The payments were settled legally between banks without relying on the traditional payment system. The transactions were conducted on Ethereum using a permissioned framework.

Switzerland already has an efficient domestic payments network, but traditional systems can’t handle programmable conditions or integrate easily with blockchain-based markets, the companies said. With deposit tokens, transfers could in the future be processed instantly and tied to automated conditions through smart contracts.

For example, a securities trade could settle as soon as ownership is transferred, or an insurance payout could trigger once a claim is validated.

The trial tested two use cases: peer-to-peer payments between customers of different banks and an escrow-like setup where deposit tokens were swapped for tokenized assets.

While the project confirmed technical and legal feasibility, scaling the system will require broader participation from banks, infrastructure providers and regulators. The Swiss Bankers Association said the work falls under its strategic priority on digital currencies, but the pilot does not mean deposit tokens will be introduced immediately.