For years, payment infrastructure was treated as plumbing: necessary and expensive. But increasingly, financial institutions are approaching it differently, weighing payment architecture as part of liquidity planning, operational continuity and client acquisition.
That context provides the backdrop for Huntington Bank joining CHIPS, The Clearing House’s high-value payments network.
Richard Dzina, senior vice president of core product management at The Clearing House, told PYMNTS that the move reflects more than an expansion of network participation and may signal how institutions are reassessing wholesale payment capabilities after several years spent absorbing industry-wide modernization work.
Why High-Value Payments Are Becoming a Strategy Decision
“There was a bit of a hiatus with respect to new participants joining CHIPS during the industry migration to ISO 20022,” Dzina said. “That is now starting to get realized, and I would suggest Huntington is in the leading wave of an emerging trend with respect to more adds to the CHIPS network.”
His explanation centered on two themes: resiliency and liquidity.
Infrastructure, Liquidity and Resiliency
Dzina countered the idea that financial institutions should think about CHIPS and Fedwire as competing choices.
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“It’s appropriate to think of conceptually the U.S. high-value market, Fedwire Funds and CHIPS as compliments to each other,” he said.
One benefit is continuity. If one operator experiences disruption, the other remains available to support critical wholesale payment activity.
He connected that directly to growing industry concern about resilience planning.
That interest arrives as commercial clients increasingly expect reliability to extend beyond uptime. Treasury teams want confidence that high-value transactions continue to move even under stressed operating conditions.
“One can conceptualize CHIPS as the liquidity savings engine for the U.S. financial system,” Dzina said.
Liquidity Savings Become More Than an Efficiency Story
Dzina drew a distinction between gross settlement and liquidity-saving mechanisms.
“CHIPS relies upon a very sophisticated liquidity savings mechanism, an algorithm that has been honed and refined over 50 years, that continually matches, offsets, nets activity across the network such that only the net transfers settle with finality intraday, not the gross,” he said.
Dzina said CHIPS settles more than $2 trillion in value daily while requiring approximately $70 billion in funding support, creating roughly 26-to-1 liquidity efficiency. He linked that advantage to the present environment of elevated rates, quantitative tightening and heightened competition for reserves.
He also tied liquidity management directly to resiliency.
“The median settlement on CHIPS is about 8 a.m.,” he said. “The median settlement of activity on Fedwire is about 1 p.m.”
Earlier settlement allows institutions and their customers to recycle liquidity earlier and lowers exposure if a participant or network disruption occurs later in the operating cycle.
Network Participation and New Markets
Dzina also discussed the advantages.
“It is not merely a win for the new participant,” he said. “It’s also very advantageous for the network at large. The more volume and value you throw at the network, the better the algorithm performs because there’s more opportunities for matches and offset.”
The network effect becomes relevant as banks pursue larger commercial opportunities and more sophisticated payment requirements.
“A competitive dynamic is starting to emerge among our participants with respect to a race of who can deliver more enhanced services, enhanced analytics, building upon the enriched ISO format,” Dzina said.
Richer data structures may allow institutions to differentiate through information and service design rather than speed alone.
Dzina also pointed to extended operating hours as the next significant development.
Expanded availability would strengthen access to off-hours and cross-border use cases, improve reach into markets including the Middle East, and create opportunities tied to global supply chains and new settlement patterns, he said.
“We very much want to be a first mover with extended operating hours, just as we were a first mover with ISO,” he said.
Ultimately, Dzina framed the issue in terms of system economics.
“The volume and value committed to the network supports the efficiency of the U.S. payment system and equally supports the dollar as a global reserve and settlement currency,” he told PYMNTS.
