Industry News

Community Banks Joining Forces to Create Zelle Rival

Alloy Labs Alliance in a partnership with digital payments company Payrailz has announced the launch of their open network for instant payments called CHUCK. The platform was created to rival Zelle, the network owned by the nation’s largest banks. CHUCK will be integrated into the community bank’s mobile apps to help facilitate peer-to-peer payments and add business-to-consumer as well as business-to-business services in the near future. 

Founding banks include American Bank, NA (Le Mars, IA), American State Bank (Sioux Center, IA), Chesapeake Bank (Kilmarnock, VA), Citizens & Northern Bank (Wellsboro, PA), First Northern Bank (Dixon, CA), Five Star Bank (Warsaw, NY), Mercantile Bank of Michigan (Southbridge, MA), Reading Co-Operative Bank (Reading, MA), Savers Co-Operative Bank (southbridge, MA), and Union Bank (Morrisville, VT). 

Julie Thurlow, CEO of Reading Cooperative Bank said “This is a network for community banks, by community banks. The first product we are launching is an innovative approach to peer-to-peer (P2P) payments. 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.”

Geoff, Forshag, Director of Product and Strategy at Washington Trust Bank (who, was unaware of the CHUCK announcement at the time) had the following to say “The industry needs to be more proactive in driving payments standards and solutions rather than letting the Too Big To Fail organizations create their own rails and/or networks as proprietary solutions.”

Zelle currently has nearly 1,700 financial institutions in its network, reaching nearly three-quarters of all checking accounts in the US. Given it’s competitor’s ubiquity, CHUCK is seemingly developed as a means of consumer convenience. According to Chief Information Officer of Chesapeake Bank DJ Seeterlin, “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.”

Along with consumer convenience, CHUCK is also anticipated to pay dividends for member institutions with significant cost savings, relating to the initial setup as well as transaction fees. Additionally, the network is expected to help banks experience a reduction in fraudulent activity, according to Thurlow. 

Seeterlin also sees CHUCK as a competitor with nonbanks such as Venmo and CashApp. “ We think we can help banks be part of those transactions again, and not abdicate our role in payments to nonbanks. We can also create compelling use cases to help make our small business customers’ lives easier. Our support for faster payments like [real time payments] will play a big part in this.”

Meanwhile, the Zelle network is owned and operated by Early Warning Services (EWS), which is owned by a group of member institutions such as Wells Fargo, Bank of America, JPMorgan Chase, Capital One, US Bank, Truist, and PNC. Melissa Lowry, EWS’s Vice President of Marketing and Branding touts that EWS has more than doubled Zelle’s marketing budget in 2021 relative to the last two years. 

As technology and convenience drive consumer decisions, CHUCK aims to help community banks move in the same direction as some of the larger banks. By affording their customers the same conveniences as those of larger institutions, community banks now have a choice in their instant payment services. 

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