From Fortune · John D’Agostino · · 1m 50s
Small banks should compete on tech, not fear it
Community banks are scared stablecoins will drain deposits. The real loss is happening somewhere else entirely.
In brief
Community banks are scared stablecoins will drain deposits. The real loss is happening somewhere else entirely. Guarding the deposit while a fintech takes payments, FX, and treasury means you keep the balance and lose the customer. Originally reported by Fortune.
You don't have to issue one
Community banks can benefit from stablecoins without minting their own. What they cannot do is let customers reach new digital money only by walking out of the bank relationship.
“Community banks do not need to issue a stablecoin to benefit from stablecoins.”
The squeeze started long ago
Banks under $10 billion in assets held about $2.5 trillion as of April 2025, a figure barely changed in thirty years while the biggest banks ballooned. Stablecoins did not cause that.
An exposed pool, not an outflow
The ABA flags $6.6 trillion in transactional deposits as theoretically at risk. But community bank deposits grew 26%, roughly $482 billion, from June 2019 to March 2026, right through the stablecoin boom.
“That figure describes an exposed pool, not an observed outflow.”
The real loss is the relationship
A business parks its balance at the local bank while a fintech runs payments, FX, merchant services, and treasury. That platform gets the data, the fees, and the daily contact.
“The bank remains the place where money sits, but no longer the place where the customer's financial decisions happen.”
Tomorrow's clients never arrive
Mercury already serves more than 300,000 businesses and individuals. A ten-person startup wiring its finances into a fintech today is a major corporate account in a decade, one no bank will win back cheaply.
“The community bank never loses the depositor because the depositor never arrives.”
Two rails, not one winner
Stablecoins bring always-on connectivity across open networks, strong for cross-border. Tokenized deposits keep a familiar bank liability while adding faster settlement and software controls. Pick both.
“Neither should be treated as the single winner.”
Buy the plumbing, keep the trust
Don't build a blockchain. Partner for infrastructure, keep compliance, liquidity, lending, data, and routing in house. ACH still moved 33.6 billion payments worth $86.2 trillion in 2024.
“The goal is not to replace a system that works, it's to give customers the right rail for each transaction.”
The one thing
Guarding the deposit while a fintech takes payments, FX, and treasury means you keep the balance and lose the customer.
