Banking associations from 39 US states have formed the BankChain Alliance to build an industry-owned and governed blockchain platform that will allow participating financial institutions to “offer emerging banking capabilities while maintaining the regulatory standards, security, and trust that customers expect from their banks.”
Examples of services that will likely be provided by BankChain members include smart payment tools, tokenised deposits, stablecoins, automated settlement and other applications. The goal is to allow banks of all sizes access to innovative payment capabilities that have to date required the deep pockets of major banks to develop.Strategically, the Alliance is looking to ensure that banks take a common innovation and ownership approach to technology infrastructure as opposed to relying on networks and systems controlled by others.
According to a BankChain Alliance statement: “By building shared infrastructure, we can lower barriers to innovation, reduce unnecessary duplication, and create opportunities that no institution could easily achieve alone. Our collaborative approach allows banks to access advanced capabilities, develop new products, and strengthen their ability to serve customers and communities in an increasingly digital economy.”
Importantly, the statement also states: “Keeping deposits within the banking system helps preserve local lending that supports small businesses, homeownership, agriculture, and economic growth across the communities that banks proudly serve.”
Historically, banks of all sizes have aggressively fought to prevent non-bank stablecoin issuers from offering interest on deposits used to underpin the payment mechanism, fearing competition to their own account services. More recently, mega and regional banks have taken more of a “can’t beat them so join them” approach to offering stablecoins, and BankChain appears to be following that philosophy.
Collectively, the Alliance represents 3,283 banks, with $21.8 trillion in assets. The banking associations involved represent all US regions and span political leanings of states, including Alabama, Arkansas, Connecticut, Delaware, Florida, Hawaii, Indiana, Kansas, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Washington and Wyoming.
Notable absentees from the Alliance are California and New York, both states where major banks and asset managers are headquartered, and where many world-class FinTech companies have been founded.
“This is about banks of all sizes building their own future,” says Kathy Kraninger, Interim Chair, BankChain Alliance, and Florida Bankers Association President and CEO. “Through an unprecedented collaboration representing thousands of banks, BankChain Alliance is developing a secure, regulated, industry-built and industry-owned network that allows institutions of all sizes to provide modern capabilities so they can continue serving customers safely and efficiently in rural, urban and regional communities across the country.”
The Alliance is now undergoing “a rigorous process to select a technology partner and is targeting a 2027 launch. The BankChain Alliance network will be interoperable with other networks and will invite ownership from banks across the country.”
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