Investing.com -- Fiserv’s launch of its own stablecoin, FIUSD, is aimed at helping smaller U.S. banks compete with bigger players and defend their share of deposits, according to BTIG.
The payments technology firm announced FIUSD this month as part of a broader trend in which traditional finance firms move to adopt blockchain-based payments.
Fiserv’s move follows Circle’s strong post-IPO performance and growing interest in stablecoins as an alternative to legacy payment rails.
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Learn More Powered by Money.com - Yahoo may earn commission from the links above.BTIG said the key driver for Fiserv (NYSE:FI) is to arm its regional and community bank clients with digital dollar tools they cannot build themselves.
"If stablecoins are ultimately successful, they could pull deposits out of the banking system and ultimately pressure net interest income," the brokerage wrote, noting that several large U.S. banks are already developing their own tokens.
In the near term, BTIG sees the most viable uses for stablecoins in business-to-business (B2B) and cross-border peer-to-peer (P2P) payments, where faster settlement and lower costs offer immediate appeal.
Consumer payments using stablecoins face tougher hurdles, especially when compared to credit and debit cards that already offer rewards and widespread acceptance.
The programmability of stablecoins, such as triggering automatic payments via smart contracts, was described as one of the most attractive long-term features.
While stablecoins have been viewed as a possible threat to card networks like Visa (NYSE:V) and Mastercard (NYSE:MA), BTIG said they could also be partners in enabling stablecoin adoption at scale.
The firm does not expect stablecoins to trigger deposit flight from banks, citing limited yield advantages over money market funds.
Still, widespread adoption hinges on interoperability and rewards, BTIG said, especially if large retailers like Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) begin using their own tokens.
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