How new payments tech is fueling Huntington's merger conversions

• Key insights: Huntington Bancshares has joined The Clearing House's CHIPS corporate payment system.
• What's at stake: The bank is absorbing two acquired banks, creating pressure to improve payment resilience. 
• Forward look: TCH hopes the move toward digital payments and faster processing will boost usage of CHIPS. 

Reducing customer churn is a major challenge when adding a new company, putting successful payments front and center as Huntington Bancshares manages acquisitions.

"We just acquired two banks and that added a lot to our footprint," Deepak Kapoor, the head of payments products at Huntington Bank told American Banker. "And we want to improve international payments." Huntington has joined The Clearing House Interbank Payments System (CHIPS), a private sector-led U.S. dollar clearing and settlement network that's designed for high-value bank-to-bank payments. "The remit for Huntington is to modernize our payment system, and our partnership with TCH is part of that," Kapoor said.

Huntington's deals

The $285 billion-asset Huntington acquired Dallas-based Veritex for $1.9 billion andHouston-based Cadence Bank for $7.4 billion in 2025. The merger conversions are ongoing. The acquisitions were accompanied by a branch expansion and a more aggressive commercial banking business.Huntington is particularly interested in Texas, where it was one of the first firms to list on Nasdaq's Texas exchange, giving it a dual listing. .

This expansion is designed to bring in more corporate clients, which is expected to increase the number of large payments, as well as the volume. Huntington has added CHIPS to provide an option beyond FedWire, the Federal Reserve's transfer system.

"We want to make sure our customers are always live," Kapoor said. "They're doing investments, they're closing deals, managing properties. If you can't get instant validation, that's a problem."

Expanding CHIPS

Huntington's addition is a win for TCH's CHIPS, which is looking to add more banks as digital payments and settlement draw more attention to resiliency and liquidity challenges due to shorter processing windows. CHIPS transactions include interbank funding, capital market transactions, foreign exchange, supply chain finance and other large transitions, normally in the millions of dollars. CHIPS has 43 participants covering 43% of the U.S. banking market and processes about $2 trillion per day for 500,000 payments, according to TCH.

To expand CHIPS and TCH's RTP rail, TCH and its member banks recently launched an initiative to connect "on-chain" (or blockchain-supported) payments with traditional currency payment rails. TCH's aim is to enable easy clearing and settlement of tokenized bank deposits, which banks are adding as an option to support digital assets. Banks, particularly large banks, are attracted to tokenized deposits as a way to enable instant and programmable settlement. The CHIPS integration opens large corporate payments to digital assets.

"We're enabling those banks to clear and settle in a seamless and secure way," Karakaplan said.

TCH doesn't view CHIPS as a rival to FedWire but a redundancy that can improve resilience, according to Richard Dzina, senior vice president of core product management at The Clearing House, adding there are more banks in the pipeline.

"If one network operator goes down, the other is able to maintain continuity," Dzina said.

As banks try to improve payments resiliency, Dzina hopes to grow adoption for CHIPS, particularly following the the migration to ISO 20022, a standard designed to improve digital payments by including greater volume of information in data fields–and making that information consistent. The adoption of ISO 20022 means banks are no longer working on the migration, and also have a way to more accurately execute international digital payments, according to Dzina.

"Interest in CHIPS was frozen," Dzina said. "But now that the ISO migration is complete, we're anticipating more uptake."

For banks, CHIPS offers more accurate netting and pooling, and intelligent pushing and pulling of settlement means less capital set aside to cover potential commitments from one bank to another, according to Hugh Thomas, lead analyst for commercial and enterprise payments at Javelin Strategy & Research.

"This means you don't need to keep funds in your outgoing accounts to cover contingencies, making for an overall more productive use of capital," Thomas told American Banker. "This calibration and coordination of optimal netting and pooling by the network is why banks sign up for CHIPs."

Huntington's other recent business banking moves include adding embedded payments and banking technology for business clients, using application programming interfaces to enable business clients to integrate ACH, Apple Pay, Google Pay and other payment options into inventory, supply chains and other back-office functions.

Embedded banking uses permissioned data sharing, or "open banking," to bring banking closer to consumer functions such as shopping and buying from e-commerce apps — or business activities. Embedded payments, which is often grouped with open banking, is similar — allowing people to use their payment account directly within another service.

The concept is drawing lots of investors. The embedded banking market is expected to expand from $39 billion to $161 billion between 2025 and 2030, according to Precedence Research. "Businesses can benefit from the combination of having CHIPS and FedWire as a backup," Kapoor said.