The new network is set to be integrated into community banks’ mobile banking apps, in an attempt to reduce friction for consumers that want to move money between apps, log in to check balances or transfer funds from other applications.
Alloy Labs states the network will enable consumers to, “Send money from their banking app (desktop or mobile), and let recipients choose where they want the money to go, including some of the popular payment networks. Financial institutions now have a choice when it comes to providing instant payment capabilities and don’t have to settle for an expensive, restrictive, and closed network.”
The network, created by Alloy Labs member banks, will initially launch with a peer-to-peer (P2P) payments offering, but is also expected to introduce business-to-consumer (B2C) and business-to-business (B2B) services.
Participating banks will also see significant cost savings in the initial setup, transaction fees and through reductions in fraudulent activity, according to Reading Cooperative Bank CEO Julie Thurlow.
“This is a network for community banks, by community banks,” said Thurlow, speaking for a bank that was reportedly instrumental in creating the network. “We have an extensive roadmap of applications that will provide community banks with the fast, flexible infrastructure they need to remain competitive over the long term.”
So what is the difference between this and other money transfer services, like Venmo, CashApp, and Zelle? DJ Seeterlin, Chief Information Officer at consortium member Chesapeake Bank, says that CHUCK is being developed as an open loop, industry-wide payment service.
This means that sender and participant do not need to be using the same service, and while other networks have garnered wide adoption, there is no single ubiquitous payment service.
“Our vision is to support sending funds anywhere. Our focus includes support for faster payments rails like The Clearing House’s RTP and eventually FedNow,” Seeterlin said.
In order to reach across the entire banking landscape, CHUCK will have to take on the existing money transfer platform, Zelle. The pre-existing network has already been working hard to achieve industry ubiquity, with almost 1,700 financial institutions in its network.
While CHUCK will provide similar services, the new network does not expect to switch all participating banks away from Zelle. Instead it intends to allow banks to use both services, and focus on marketing to the large list of credit unions in need of money transfer services.
“Many banks will choose to implement CHUCK instead of Zelle. At Chesapeake Bank, however, we’ve made the strategic decision to support both solutions. This is part of our strategy to be where our customers are,” Seeterlin said.
In other recent fintech news, Equifax says it will begin including ‘Buy Now, Pay Later (BNPL)’ installment purchases on consumers’ reports within the next year. In addition, JPMorgan Chase was hit with $200 million in fines related to record-keeping violations.