Citizens Bank is evaluating its own place and strategy in the stablecoin realm as U.S. financial institutions  await regulatory clarity. 

“It’s early … to say much about our strategy toward stablecoins,” Michael Cummins, executive vice president of treasury solutions, told Bank Automation News.

A consortium approach, like Zelle, for stablecoin is being discussed by the industry, Cummins said, adding that the bank is also evaluating working with major payments giants, including Visa and Mastercard.  

Zelle is run by a private financial services company owned by Bank of America, JPMorgan Chase and several other U.S. banks. 

“We, as an industry, need to educate ourselves on all of the alternatives, but we also have to wait for the legislation to be passed,” Cummins said.

Chief Executive Bruce Van Saun said a consortium may be the way to go, but adding that Citizens will be patient.

“I wouldn’t call it out as something that in the near term is that dramatic that will have a that dramatic of an impact on us,” he said during the $220 billion bank’s second-quarter earnings call today. “I think we’ve got smart people looking at these things … I think we’re positioned well.”

Read more on stablecoin legislation. 

Bank of America Chief Executive Brian Moynihan also mentioned a possible consortium for stablecoins during his bank’s Q2 earnings call July 16.  

THE BIG PICTURE: Citizens is undergoing a multiyear AI-driven transformation strategy called “re-imagine the bank,” Van Saun said. 

“The objective is to redesign how we serve customers and run the bank, taking advantage of new technologies like gen AI and agentic AI,” Van Saun said. “This requires changes to our organizational model, our underlying technology and data architecture, and imparting new skills to our colleague base.” 

The initiative differs from Citizen’s Tapping Our Potential (TOP) program, which was launched nearly 10 years ago, Van Saun said. The TOP program focused on modernizing bank infrastructure while the new initiative builds on TOP, embedding new tech to further modernize the bank. 

Citizens President Brendan Coughlin will lead the initiative for  few quarters, Van Saun said. 

Some use cases by Citizens of gen AI are: 

• Fighting fraud; 

• Aiding customer service representatives; and 

• Coding assistance. 

“We are bullish on long term value creation from AI and agentic AI,” Coughlin said. The bank is going to scope out how AI can result in short-term wins and how it can be used mid to long term to drive meaningful returns. 

“We’d like to free up the capacity to do more investment in some of our growth,” through the savings the new initiative will drive, Van Saun said.  

The bank reported equipment and software expenses of $193 million, up 1.6% year over year. 

Like other FIs opting for a similar strategy, Goldman Sachs aims to deploy AI tech to drive cost savings and redeploy the saved capital in growth areas. 

BY THE NUMBERS: In Q2, Citizens reported: 

• Total revenue of $2 billion, up 3.7% YoY; 

• Net Income of $436 million, up 11.2% YoY; and 

• Efficiency ratio of 64.7%, down 151 basis points YoY. 

NOTEWORTHY: While preparing to use new technology, Citizens is also paying keen attention to serving customers who prefer legacy banking services like paper checks, Cummins told BAN. 

Despite widespread use of digital payments, some customers still use paper checks due to a lack of alternative payment channels and older customers’ preferences, Cummins said, adding that the bank is deploying AI tech to clamp down on fraud associated with paper checks. 

“The bigger the company, the more sophisticated they are and the more leverage they have to push electronic alternatives to payments,” Cummins said. “Smaller companies don’t necessarily have that leverage, and in many cases, they don’t have the technology to be able to deliver the electronic alternative.” 

Until easy online payments channels are developed and adopted by SMBs, checks will still be used and FIs need to address the fraud that comes with it, Cummins said. Citizens is educating customers on using digital payments channels to avoid check-related fraud.  

MARKET REACTION: Shares of Citizens (NYSE: CFG) were up 3.94% from market open today. Citizens has a market capitalization of $21.2 billion.