Inside FIS' plans to meet banks' interest in digital assets

• Key insights: FIS is seeking bank adopters for stablecoins and tokenized deposits amid signs the digital assets are becoming more popular. 
• What's at stake: Nearly half of banks plan to issue their own stablecoin, according to American Banker's research. 
• Forward look: FIS faces competition from traditional rival Fiserv and fintechs to capture share in the digital asset market.

More banks are developing or considering stablecoins and tokenized deposits, putting FIS executive David Trecker on notice to spot clients that are looking to make a move. 
"Interest is very high, but the question is how that translates into action and what is behind that traction," Trecker, head of digital assets strategy at FIS, told American Banker. 

Thirty percent of banks have stablecoins "on their radar," according to new analysis from American Banker, which is tracking banks that are formulating strategies, developing or testing stablecoins. 

That's 18% higher than three months ago. The number of banks considering tokenized deposits — a blockchain-powered alternative to stablecoins, is also up 18%, with 38% of bank executives having tokenized deposits "on their radar," American Banker's analysis found. An additional American Banker survey found just below half of banks will likely issue their own stablecoins, with more than half of national banks planning to do so. 

Trecker attributes an increased interest in digital assets to progress in regulations that create more visibility for banks in making decisions about stablecoins and tokenized deposits. 

"We are past the point where regulatory clarity is a valid reason to be on the sideline," Trecker said.

What FIS is planning

FIS' primary lane into stablecoins is a partnership with Circle to enable banks to transact in USDC, Circle's stablecoin. Banks can use FIS and Circle to make domestic and global stablecoin payments in USDC. 

"There are banks that are looking at stablecoins as an innovator's dilemma," Trecker said of the theory that incumbent firms may lose ground to disruptors by focusing on existing profitable use cases over more experimental models, which in some cases can grow quickly enough to threaten the status quo. This will drive banks to adopt stablecoins as a hedge against future competition, even if there isn't a clear use for stablecoins now, according to Trecker. FIS' Circle collaboration pairs with the bank technology company's Money Movement Hub, which enables financial firms to connect to multiple payment networks covering different payment types, including cryptocurrencies and traditional money. FIS' digital asset moves are part of a long-term strategic shift to focus more on bank technology, after divesting a large stake in Worldpay, a payment processor.

FIS did not say how many banks are using the Circle partnership to support stablecoin development. 

Banks are considering how to use stablecoins or the supporting distributed ledger technology before making a deeper move, according to Trecker, who adds that not all banks will want to support the digital asset. "So there may be something like ten percent of clients that may want to make an outbound cross-border payment, or a client that wants to make big payments using stablecoin rails," Trecker said. 

FIS has also developed technology to support tokenized deposits, which have drawn interest from banks such as JPMorganChase and BMO as an alternative to stablecoins. Smaller banks are also interested in tokenized deposits. Vast Holdings, the parent company for Vast Community Bank, has partnered with digital asset trading platform Uphold and tokenized deposit issuer USBC to issue a tokenized deposit. "The banks are worried about deposit flight due to stablecoins. But there's also a belief that stablecoins will be an enabler of agentic commerce (due to faster processing), so banks have to look at stablecoins through that lens as well," Trecker said.

Tokenized deposits are backed by deposits at individual banks, making them FDIC-insured. That's appealing for banks, Trecker said, but there are challenges regarding scale.

"Tokenized deposits are limited to the perimeter of a bank. Will another bank that is receiving a tokenized deposit enable instant access?" Trecker said. "And even if there's a multi-bank network, will it be large enough to be valuable?"

What's out there

FIS has also expanded its agentic commerce technology as part of its new bank technology-focused strategy, as it competes with Fiserv, Jack Henry and fintechs. 

FIS' most direct competitor, Fiserv, offers a digital asset platform as well as a suite of AI-enabled payment products. 

Fiserv's digital asset platform includes a stablecoin, FIUSD, which is also part of Fiserv's banking and payments menu. FISUD uses stablecoin infrastructure from Paxos and Circle, and is available on the Solana blockchain. Fiserv declined to provide information about the uptake for its FIUSD or other stablecoin technology. 

Fiserv is looking to agentic commerce and blockchain to boost earnings following a recent slump. Digital assets could provide an opportunity for traditional bank technology companies.

"There is a place for the legacy technology vendors in enabling stablecoins and deposit tokens since they sit between banks and actual money movement," James Wester, director of cryptocurrency and co-head of payments for Javelin Strategy & Research, told American Banker. "That is especially true for smaller institutions that rely on those vendors for most of their [technology.]" 

The question is whether traditional vendors treat stablecoins and deposit tokens as more than just another rail, Wester said. "Tokens and stablecoins change how payments can be structured, not just how they are routed, and if that doesn't show up in vendor platforms, smaller banks won't get much out of them."