The first word that comes to mind when you hear about a company that started in 1976 in Monett, Missouri may not be “innovation.” But for decades, Jack Henry & Associates has provided core and complementary solutions for thousands of banks and credit unions in the U.S., as well as created a network of hundreds of fintech providers. In 2014, Jack Henry acquired Banno, a digital banking platform, which supercharged its tech-based offerings for banks and credit unions. Jack Henry has worked to foster an open, API-based approach— it believes that fintechs can work in concert with regional and community banks and credit unions to improve the financial lives of consumers and businesses.

We gave Joshua Jordan, Jack Henry’s Senior Strategist of Digital Experience, a call to learn about Jack Henry’s fintech strategy. Being around since 1976 means Jack Henry has an especially long view of how finance has changed and where it’s going — we wanted to find out what the next five years will look like.

In what ways has Jack Henry started embracing fintech?

Jack Henry has a long history of being an open company, from our culture and technology to relationships with fintechs. We’re committed to providing our financial institution customers with flexibility and options to select third parties of choice designed to meet their unique business needs and serve their respective markets. Over the decades, we’ve built a network of over 850 fintechs, making it easier for financial institutions to quickly go-to market with relevant products and services. At the same time, we’re actively encouraging fintechs to leverage our Banno Digital Toolkit, the same set of APIs our Banno Digital Platform is built on, allowing innovation to be more accessible and deeply integrated within a financial institution’s digital experience. We’ve made our API, design, and authentication frameworks publicly available at jackhenry.dev and jackhenry.design, further delivering on our commitment to being an open company. We’ve also taken a platform-as-a-service approach to many of our solutions, including digital and payments, encouraging financial institutions to build a platform that better meets the needs of their communities.

We’re a strong supporter of fintechs and their role in our ecosystem. As a well-rounded technology provider, we’re in the position to offer strategic solutions as well as foster connections between fintechs and financial institutions, helping to improve the financial health of today’s consumers and businesses.   

For a time, there seemed to be a push-pull between banks and fintech. There was some fear that one might negate or replace the other. But what would a future where the security and dependability of institutions were married with the innovations of fintech look like?

To successfully compete, banks and credit unions must establish and maintain the primacy of the customer relationship. We've started to see primacy displaced by companies like Venmo, PayPal, Square, Coinbase, Robinhood, and many others. There's a growing chorus of large fintechs calling for banking-as-a-service; while this presents strategic opportunities, the bank or credit union is further removed from the banking relationship. The success of community banking isn’t banking-as-a-service or embedded finance, but embedded fintech.  

That's what we've been doing at Jack Henry. Delivering tools to leverage the open-banking ecosystem to bolster the bank or credit union’s offerings. The community FI still wins where they always have, on service, but now they embed competitive services like credit scoring tools, buy-hold-sell capabilities, payments tools, and more within their digital-banking experience. This strategy enables banks and credit unions to remain at the center of consumers’ financial experiences, achieving top-of-app status for their consumers’ financial needs.  

There are huge perks, relationship-wise, with a community bank or credit union account. What can access to innovative financial technology offered by the Big Banks mean for the smaller players in America’s banking landscape?

Many believe a big bank, Venmo, PayPal, etc. has bottomless pockets to acquire customers and technology. But their biggest weakness is the biggest strength of a community institution: personal service. At the end of the day, consumers want to be able to speak to a human who deeply understands their financial situation and provides personalized advice.

We’ve created tools to humanize the digital channel, so the relationship-based service a customer/member has always enjoyed in-branch can be delivered via the digital channel. Consumers want to be able to go to a branch, pick up the phone, or have a secure, authenticated chat on their mobile-banking app, not a chatbot or lengthy FAQ. They want to know there is a banker who they know and trust available to offer support in their moment of need within the digital context. By taking a human-centered approach to technology, banks and credit unions can maintain primacy in today’s highly competitive landscape.  

At Jack Henry, you guys have been around long enough to see the finance industry change again and again. What do you expect the biggest difference for the average American to be in the next five years when it comes to investing, saving, and spending?

The rates at which money is moving have changed. We're in a transitional moment with global financial systems in how we settle money and how quickly it moves. Today, there's same-day ACH, real-time payment movement through Zelle, RTP network, and soon FedNow. The rise of these services and others points to the US, and even the world sitting on the precipice of real-time payments being a standard offering. Right now, real time movement is unique, it's a cool feature, it’s not the standard and it’s certainly not required to do business. But in a very short amount of time, with new payment rails and the adoption of crypto, stablecoins and even a digital dollar, the idea of money settlement in an instantaneous fashion, with no overnight, will be transformative.

The way we think about our future with money is shifting and will continue to do so drastically. There was a time when the average professional  might rely on a pension as their retirement strategy. Slowly, we see pension plans fade and make way for more directed retirement investments in the form of 401k and IRAs. Today, we have a rise in individualized fractional-based investment platforms that don’t just support stock or commodity-based investment, but also cryptocurrencies, ETFs, NFTs, and more. There will be a dramatic shift in the rather-near future of “retirement savings” turning into hands-on, self-directed, interactive, real-time engagements.