FIS Links Digital Money to Smarter Bank Networks

Digital assets are shifting banks’ attention from technology to network strategy. Community banks face different tokenization priorities than global institutions. End-to-end visibility may prove as important as blockchain itself.

Among the challenges confronting digital payments is deciding which forms of digital money belong inside the banking system, which belong alongside it, and how those pieces connect without creating new operational or regulatory blind spots. During a “What’s Next in Payments” interview with David Trecker, vice president and head of strategy, digital assets at FIS, the executive described an ecosystem where several forms of digital money will coexist, each serving different business needs.

While central bank digital currencies have little momentum in the United States, Trecker said banks operating in Europe cannot ignore initiatives such as the digital euro. Financial institutions therefore face a planning exercise that is less about selecting one technology than preparing for several.

Banks also confront another balancing act. Stablecoins have established legitimate payment and settlement use cases, particularly for moving money and holding U.S. dollars outside the United States. At the same time, banks remain focused on protecting deposits, which remain the foundation of their funding model.

“Stablecoins can do things that commercial bank money can’t,” Trecker said. “Banks are now faced with a choice.” They can either adopt stablecoins to deliver those outcomes for their customers, or they can find a viable alternative that can still deliver those things, but works with their business model, he told PYMNTS.

That thinking underpins the Keystone Network, a bank-owned initiative built around tokenized deposits while recognizing that community and regional institutions require a different roadmap than the nation’s largest financial institutions. Trecker argued that those banks need practical business enablement as much as they need blockchain infrastructure.

Network Design May Matter More Than Technology Much of today’s digital asset discussion centers on cross-border payments, wholesale settlement and multinational treasury operations. Trecker suggested that focus overlooks where many banks can generate value sooner. Large global institutions already have natural applications for digital assets because they manage liquidity across jurisdictions and time zones. Continuous settlement and programmable treasury operations solve existing operational problems. Regional and community banks operate under different conditions. Rather than beginning with multinational treasury management, Trecker pointed to smart deposits, programmable commercial banking services, intra-bank liquidity management and tokenized real-world assets as examples where digital assets can produce measurable benefits without requiring a massive external network. Those projects allow institutions to gain operational experience before tackling broader interoperability across the industry. He described th...