As banks expand into embedded payments and digital assets, Richard Dooley of Fifth Third Bank argues that firms must treat these initiatives as balance sheet businesses, not innovation experiments. Sustainable returns will depend on liquidity modeling, em
Payments and digital assets are no
longer fringe experiments inside financial institutions. They are increasingly
central to strategy, client engagement, and revenue growth.
But according to Richard Dooley, Vice
President, Treasury Management, Embedded Payments, Fifth Third Bank, many
organizations still misunderstand the risks embedded in that expansion.
“Stop treating payments and digital
assets as innovation experiments and start treating them as balance-sheet
businesses,” he says.
For Dooley, every new rail, wallet,
or tokenized capability directly affects liquidity timing, capital allocation,
funding strategy, operational resilience, and regulatory exposure.
If those implications are not modeled
from the outset, he warns, profitability can quickly prove illusory.
“Every new rail, wallet, or tokenized
capability affects liquidity timing, capital allocation, funding strategy,
operational resilience, and regulatory exposure,” he explains. “These have to
be modeled upfront, otherwise profitability will be illusory.”
The distinction between speculative
and infrastructure exposure is critical. Firms often focus on asset price
volatility when considering digital assets, but Dooley argues that operational
factors such as settlement design, custody structure, prefunding requirements,
and fraud controls often carry greater long-term impact.
He also stresses the need to
explicitly price operational and irreversibility risk in instant and
blockchain-based environments, where settlement finality can compress recovery
windows.
Supervisory transparency, he says,
should not be retrofitted later but designed into the architecture from the
start.
The tension between innovation and
governance is a familiar challenge. Dooley believes firms frequently get the
sequencing wrong.
“Speed slows down when governance is
layered on after launch,” he says. “It accelerates when risk architecture is
embedded in product design.”
He advocates for cross functional
design authority at the ideation stage, bringing risk, treasury, compliance,
and technology together before products are built.
Modular control libraries can provide
reusable frameworks for wallet risk, custody governance, and liquidity
thresholds, avoiding repeated reinvention.
Tiered risk parameters allow firms to
calibrate controls based on transaction size, customer segment, and complexity.
“Governance should function as a
guardrail system while enabling innovation within defined boundaries, rather
than acting as a brake,” he adds.
Assessing whether investments in
payments infrastructure or digital asset capabilities are delivering
sustainable value requires discipline beyond headline revenue metrics.
