Just before the new year, a consortia of community banks known as Alloy Labs announced the launch of their new open payments network, CHUCKTM powered by Payrailz®. At that time, it was met with a bit of fanfare and a fair dose of confusion. What is CHUCK? How does it work with/compete against offerings like Zelle®? Why do we need another option?
So, we decided to sit down with Julie Thurlow, CEO of Reading Cooperative Bank, a $730 million-asset institution in Reading, Mass., and a founding CHUCK participant; Jason Henrichs, founder and CEO of Alloy Labs, the organization that oversees it; and Fran Duggan, CEO of Payrailz, to get the scoop on CHUCK. What we heard left us with six key need-to-know insights for our members.
- It's not a new P2P app. While most of the P2P solutions in the marketplace today come in an app form, CHUCK has been specifically designed by Payrailz to integrate directly with an FI's digital banking platform, creating a trustworthy, seamless transaction for customers/members.
"We looked at our banks' customer data and utilization of other networks, and we found there's a digital divide based on experience, education, economics, fear, and awareness that left many behind," said Henrichs. "But these same people know and trust their community banks, and we wanted to find a solution to bring them into the fold."
In addition, while CHUCK is primarily being billed as a P2P solution at launch, it was built in partnership with Payrailz, whose digital payment architecture allows for other use cases on the horizon, and with them, new opportunities for community banks and credit unions of all sizes.
"We're leveling the playing field," Henrichs noted. "We announced just before the holidays that the first bank was live, and now we have several live. We've got things we're working on, and we're building a lot more to continue to extend functionality."
- It's designed to drive openness. Existing P2P solutions create a closed network of people transacting within a particular framework. With CHUCK powered by Payrailz, payments come from an FI's online banking app, but they can be routed to another bank account, a Venmo or PayPal account, debit card or other similar accounts. Taking this open loop approach means that the FI supports its customers/members in sending and receiving money according to their preferences or the recipient's preference.
"Banks can't afford to give up payments rails; they are an important point of interaction and differentiation for us," said Thurlow. "Remaining a key player in our customers' lives means being good at payments, and we can't wait around for other people to do it for us; we have to take action. From that idea, CHUCK was born."
CHUCK means that a customer/member no longer needs to have multiple applications to move money. They can use a bank-sponsored functionality to move funds out of their accounts without having to go outside the banking system to do so. It creates a more secure environment for those funds than sitting in non-insured "accounts" at PayPal, Venmo, etc., and it gives customers/members greater line of sight into their full financial picture.
- It's payments-system agnostic. Because CHUCK is powered by Payrailz' integrated payments platform, the FI has control over the payment channels it offers, including options like ACH, RTP®, and when it becomes available, FedNowSM.
"It's up to the FI," remarked Henrichs. "Through Payrailz' architecture, they have choices beyond the payment flow, including building the ground-up experience. There are standard templates they can configure, but the details of what the user interface looks like and what limits the customer encounters- those, the bank determines."
"At Payrailz, we were very excited to work together with such a thought-leading group of banks to further drive innovation and provide a competitive P2P solution advantage to the market, "commented Duggan. "This collaborative partnership dispels the myth that community banks can't be tech-forward, and we could not be prouder of this effort."
- It's not cost-prohibitive. Because CHUCK was designed with the smallest FIs in mind, its cost structure is an inclusive one. While pricing details aren't publicly available, an FI can gain a greater level of specificity and insight by reaching out to the CHUCK team.
"Our goal was to make it as easy as possible to participate, so cost won't be a prohibitive factor," summed up Thurlow. "It needs to be available and implemented in a timely fashion at a cost that's reasonable, and the operating of the network needs to be reasonable."
- It was built by FIs for FIs. Alloy Labs' founding members-and the visionaries behind CHUCK-are community banks, and through collaboration, they were able to drive down costs and create a viable solution for banks of all sizes. This bank-focused design also meant that CHUCK's development accounted for several different core scenarios and confirmed the details of how the solution would interact with each. Through the cooperative nature of Alloy Labs, founding participants shared best practices to introduce a solution designed to improve outcomes for all who participate.
- Your FI can join the network. The CHUCK team's philosophy is the more, the merrier. To be a truly open network, that inclusivity is important to its success.
"We want to grow the ecosystem," said Henrichs. "Our participating banks are happy to chat about what we are doing to go forward, and they will share best practices. Our collective goal is to drive utilization."
As for NEACH, we will continue to monitor the evolution of this new payments platform and provide updates as they are available. In the meantime, for more information on CHUCK, visit www.alloylabs.com/chuck.
AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.