Huntington National Bank announced it has joined the CHIPS network to clear and settle high-value domestic payments. Operated by The Clearing House (TCH), the network is the largest private-sector U.S. dollar clearing and settlement system in the world.
With the move, Huntington Bank said it will have greater capacity to support high-value payment activity through a secure, reliable and well-established settlement infrastructure widely used by financial institutions globally. The CHIPS network processes more than $2 trillion in payments daily, according to a company press release.
By minimizing the amount of capital required to support large-value payment activity, CHIPS also enables participating banks to redeploy liquidity into other productive uses such as lending, investment and client financing.
“At Huntington, we drive our Payments strategy by putting our customers at the center of everything we do,” Huntington Bank Head of Payments Product Deepak Kapoor said in the release. “Participating in the CHIPS network strengthens our ability to deliver reliable, high-value and scalable payment solutions to our clients and support their domestic payments needs, particularly in an increasingly dynamic economic environment.”
The CHIPS system continuously matches and offsets payments throughout the day, supporting the settlement of high volume of payments with a comparatively small funding base. This results in significant economic benefits for participants and their clients, including reduced operational friction and improved access to funds.
Financial institutions globally rely on the CHIPS network for the secure and final settlement of U.S. dollar payments for critical domestic and cross-border activity.
“The addition of Huntington Bank to the CHIPS network reflects the continued demand for liquidity-efficient, resilient and reliable payment infrastructure,” TCH Senior Vice President, CHIPS Product Management Michael Knorr said. “CHIPS enables participants to reduce funding demands while supporting growing payment volumes, creating meaningful economic value for banks and their clients.”
The liquidity efficiency of the CHIPS network, where each dollar of funding supports $26 in settled payments, is intended to provide participants with flexibility to manage liquidity strategically while maintaining high throughput and performance, according to the release. The CHIPS network provides network participants collectively with a daily average economic savings of $15.4 million, translating to annualized savings for participants on the network of approximately $5.5 billion.