About Jack Henry & Associates Inc

Jack Henry & Associates, Inc. (JKHY) operates as a well-rounded financial technology company. The company provides core information processing solutions for banks. The company’s extensive array of products and services includes processing transactions, automating business processes, and managing information for over 7,800 financial institutions and diverse corporate entities. JKHY provides its products and services primarily to financial institutions: Core bank integrated data processing systems are provided to over 950 banks ranging from de novo to multi-billion-dollar institutions with assets of up to $50 billion. The number of banks the company serves has decreased in the last year due to acquisitions and mergers within the banking industry. The company’s banking solutions support both on-premise and private cloud operating environments with three functionally distinct core processing platforms and more than 140 integrated complementary solutions. Core credit union data processing solutions are provided to credit unions of all sizes, with a growing client base of nearly 720 credit union customers. There is one flagship core processing platform and more than 100 integrated complementary solutions that support both on-premise and private cloud operating environments. Non-core highly specialized core-agnostic products and services are also provided to financial institutions. There are more than 100 complementary solutions that offer highly specialized financial performance, imaging and payments processing, information security and risk management, retail delivery, and online and mobile solutions. These products and services enhance the performance of traditional financial services organizations of all asset sizes and charters, and non-traditional diverse corporate entities with over 7,800 customers, consisted of nearly 1,650 of the company’s core customers included in its bank and credit union customers listed above, as well as over 6,150 other non-core customers. The company’s products and services provide its customers with solutions that can be tailored to support their unique growth, service, operational, and performance goals. Its well-rounded solutions also enable financial institutions to offer the high-demand products and services required by their customers to compete more successfully, and to capitalize on evolving trends shaping the financial services industry. Business Strategy The company’s fundamental business strategy is to generate organic revenue and earnings growth augmented by strategic acquisitions. The company executes this strategy by: Providing commercial banks and credit unions with core operating systems that provide excellent functionality and support on-premise and private cloud delivery environments with identical functionality. Expanding each core customer relationship by cross-selling complementary products and services that enhance the functionality provided by the company’s core information processing systems. Providing non-core highly specialized core-agnostic complementary products and services to financial institutions, including institutions not utilizing a JKHY core operating system, and diverse corporate entities. Maintaining a company-wide commitment to customer service that consistently exceeds the company’s customers’ expectations and generates high levels of customer retention. Capitalizing on the company’s acquisition strategy. Solutions The company’s core banking solutions support commercial banks with information and transaction processing platforms that provide enterprise-wide automation. The company has three functionally distinct core bank processing systems and more than 140 fully integrated complementary solutions, including business intelligence and bank management, retail and business banking, digital and mobile internet banking and electronic payment solutions, risk management and protection, and item and document imaging solutions. The company’s core banking solutions have state-of-the-art functional capabilities, and the company can re-market the hardware required by on-premise use of each software system. The company’s banking solutions can be delivered on-premise or through its private cloud delivery model and are backed by a company-wide commitment to provide exceptional personal service. The company is a recognized market leader, supporting over 950 banks with the company’s technology platforms. The company’s core credit union solutions support credit unions of all sizes with an information and transaction processing platform that provides enterprise-wide automation. The company’s solution includes one flagship core processing system and more than 100 fully integrated complementary solutions, including business intelligence and credit union management, member and member business services, digital and mobile internet banking and electronic payment solutions, risk management and protection, and item and document imaging solutions. The company’s credit union solution also has state-of-the-art functional capabilities. The company also re-markets the hardware required by on-premise use of the software system. The company’s credit union solution can be delivered on-premise or through its private cloud delivery model, and is backed by the company-wide commitment to provide exceptional personal service. The company supports nearly 720 credit union customers. The company’s non-core solutions for financial institutions are specialized products and services assembled primarily through its focused diversification acquisition strategy. These core-agnostic solutions are compatible with a wide variety of information technology platforms and operating environments and offer more than 100 complementary solutions, including proven solutions for generating additional revenue and growth, increasing security and mitigating operational risks, and/or controlling operating costs. The company’s non-core products and services enhance the performance of financial services organizations of all asset sizes and charters, and diverse corporate entities. The company has over 7,800 customers, including over 6,150 unique non-core customers. These distinct products and services can be implemented individually or as solution suites to address specific business problems or needs and enable effective responses to dynamic industry trends. The company strives to develop and maintain functionally robust, integrated solutions that are supported with high service levels, regularly updating and improving those solutions using an interactive customer enhancement process; ensuring compliance with relevant regulations; updated with proven advances in technology; and consistent with JKHY’s reputation as a premium product and service provider. Core Software Systems Core software systems primarily consist of the integrated applications required to process deposit, loan, and general ledger transactions, and to maintain centralized customer/member information. The company’s core banking solutions consist of three software systems marketed to banks and its core credit union solution consists of one software system marketed to credit unions. These core systems are available for on-premise installation at customer sites, or financial institutions can choose to leverage its private cloud environment for ongoing information processing. Core banking platforms are: SilverLake System, a robust system primarily designed for commercial-focused banks with assets ranging from $1 billion to $50 billion. Some progressive smaller banks and de novo (start-up) banks also select SilverLake. This system is in use by nearly 450 banks, and automates over 9% of the domestic banks with assets less than $50 billion. CIF 20/20, a parameter-driven, easy-to-use system that supports approximately 332 banks ranging from de novo institutions to those with assets of $4 billion. Core Director, a system with point-and-click operation that supports nearly 200 banks ranging from de novo institutions to those with assets of $2 billion. Core credit union platform is: Symitar, a robust system designed specifically for credit unions. It has been implemented by nearly 720 credit unions with assets ranging from $3 million to $35 billion, and according to National Credit Union Administration (NCUA) data, is the system implemented by more credit unions with assets exceeding $25 million than any other alternative core system. Customers electing to install the company’s solutions on-premise license the proprietary software systems. The majority of these customers pay ongoing annual software maintenance fees. The company re-markets the hardware, hardware maintenance, and peripheral equipment that is required by on-premise use of its software solutions; and the company performs software implementation, data conversion, training, ongoing support, and other related services. On-premise customers generally license the company’s core software systems under a standard license agreement that provides a fully paid, nonexclusive, nontransferable right to use the software on a single computer at a single location. Customers can eliminate the significant up-front capital expenditures required by on-premise installations and the responsibility for operating information and transaction processing infrastructures by leveraging the company’s private cloud environment for those functions. The company’s core private cloud services are provided through a highly resilient data center configuration across multiple physical locations. The company also provides image item processing services from two host/archive sites and several key entry and balancing locations throughout the country. The company prints and mails customer statements for financial institutions from three regional printing and rendering centers. Customers electing to outsource their core processing typically sign contracts for seven or more years that include ‘per account’ fees and minimum guaranteed payments during the contract period. The company supports the dynamic business requirements of its core bank and credit union clients with ongoing enhancements to each core system, the regular introduction of new integrated complementary products, the ongoing integration of practical new technologies, and regulatory compliance initiatives. JKHY also serves each core customer as a single point of contact, support, and accountability. Complementary Products and Services The company has more than 140 complementary products and services that are targeted to its core banks and more than 100 targeted to credit union customers. Many of these are selectively sold to financial services organizations that use other core processing systems. These complementary solutions enable core bank and credit union clients to respond to evolving customer/member demands, expedite speed-to-market with competitive offerings, increase operating efficiency, address specific operational issues, and generate new revenue streams. The highly specialized solutions enable diverse financial services organizations and corporate entities to generate additional revenue and growth opportunities, increase security and mitigate operational risks, and control operating costs. JKHY regularly introduces new products and services based on demand for integrated complementary solutions from the company’s existing core clients, and based on the growing demand among financial services organizations and corporate entities for specialized solutions capable of increasing revenue and growth opportunities, mitigating and controlling operational risks, and/or containing costs. The company’s Industry Research department solicits customer guidance on the business solutions they need, evaluates available solutions and competitive offerings, and manages the introduction of new product offerings. JKHY’s new complementary products and services are developed internally, acquired, or provided through strategic alliances. Implementation and Training Most of the company’s core bank and credit union customers contract with it for implementation and training services in connection with their systems and additional complementary products. A complete core system implementation typically includes detailed planning, project management, data conversion, and testing. The company’s experienced implementation teams travel to customer facilities or work remotely with clients to help manage the implementation process and ensure that all data is transferred from the legacy system to the JKHY system. The company’s implementation fees are fixed or hourly based on the core system being installed. The company also provides extensive initial and ongoing education to its customers. The company has a comprehensive training program that supports new customers with basic training and longtime customers with continuing education. The curricula provide the ongoing training financial institutions need to maximize the use of JKHY’s core and complementary products, to optimize ongoing system enhancements, and to fully understand dynamic year-end legislative and regulatory requirements. Each basic, intermediate, and advanced course is delivered by system experts, supported by professional materials and training tools, and incorporates different educational media in a blended learning approach. The program supports distinct learning preferences with a variety of delivery channels, including classroom-based courses offered in JKHY’s regional training centers, Internet-based live instruction, eLearning courses, on-site training, and train-the-trainer programs. Support and Services The company serves its customers as a single point of contact and support for the complex solutions it provides. The company’s comprehensive support infrastructure incorporates exacting service standards; trained support staff available up to 24 hours a day, 365 days a year; assigned account managers; sophisticated support tools, resources, and technology; broad experience converting diverse banks and credit unions to the company’s core platforms from competitive platforms; highly effective change management and control processes; and a best practices methodology developed and refined through the company-wide, day-to-day experience supporting over 7,800 diverse clients. Hardware Systems The company’s software systems operate on a variety of hardware platforms. It has established remarketing agreements with IBM Corporation, and many other hardware providers that allow JKHY to purchase hardware and related maintenance services at a discount and resell them directly to the company’s customers. The company sells IBM Power Systems; Lenovo, Dell, Hewlett Packard, and Cisco servers and workstations; Canon, Digital Check, Epson, and Panini check scanners; and other devices that complement its software solutions. Digital Products and Services Jack Henry Digital represents a category of digital products and services that are being built and integrated together into one unified platform. The company’s main offering is the Banno Digital Platform. It is an online and mobile banking platform that helps community and regional financial institutions strategically differentiate their digital offerings from those of megabanks and other financial technology companies. It is a complete, open digital banking platform that gives community financial institutions attractive, fast, native applications for their customers and members and cloud-based, core-connected back office tools for their employees. Payment Solutions Electronic payment solutions provide the company’s customers with the tools necessary to be at the forefront of payment innovation with secure payment processing designed to simplify complex payment processing, attract profitable retail and commercial accounts, increase operating efficiencies, comply with regulatory mandates, and proactively mitigate and manage payment-related risk. JHA Card Processing Solutions (CPS) supports full-service and in-house debit and credit card programs backed by a comprehensive suite of tools for fraud mitigation, digital payments, dispute management, plastics manufacturing and personalization, loyalty programs, data analytics, and terminal driving. In addition, advisory services are offered to support a variety of needs, including card portfolio growth, start-up program consultation, and customized fraud management; all tailored to individual financial institution goals and concerns. Enterprise Payment Solutions (EPS) is a comprehensive payments engine. It offers an integrated suite of remote deposit capture, Automated Clearing House (ACH), and card transaction processing solutions, risk management tools, reporting capabilities, and more for financial institutions, businesses and FinTechs of all sizes. EPS helps its clients succeed in competitive market to increase revenue, improve efficiencies, better manage compliance, and enhance customer relationships. iPay Solutions provides consumers and businesses with money movement options through their financial institutions’ digital platforms, including paying bills, sending money to anyone and transferring funds between their own accounts. iPay’s extensive application programming interface (API) and hosted interfaces allow for multiple levels of integration by digital platforms and financial institutions. iPay provides financial institutions with services and tools to increase adoption, support end-users and monitor fraud. The money movement options keep the consumers and businesses engaged with the financial institution. JHA PayCenter provides the company’s customer financial institutions with a single entry point to both Zelle and Real Time Payments (RTP) real-time networks with plans to accommodate the Federal Reserve's FedNow in 2024, with testing to begin in 2023. PayCenter manages the certification process and mandatory updates from the networks, simplifies integration with toolkits and provides fraud monitoring. Financial institutions are able to send and receive transactions instantly 24 hours a day, 365 days a year, through the company’s core and complementary solutions. Payments as a Service (PaaS) ties together and further enhances the complete array of electronic payments functionality with a front end Payments Developers Experience Portal and back end data analytics. Research and Development The company’s research and development expenses were $121.4 million for the year ended June 30, 2022. Sales and Marketing JKHY serves established, well-defined markets that provide ongoing sales and cross-sales opportunities. The marketing and sales initiatives within the core business lines are primarily focused on identifying banks and credit unions evaluating alternative core information and transaction processing solutions. The company’s non-core specialized core-agnostic niche solutions are sold to complement existing technology platforms to domestic financial services organizations of all asset sizes and charters. Sales executives are responsible for the activities required to earn new customers in assigned territories, and regional account executives are responsible for nurturing customer relationships and cross selling additional products and services. The company’s sales professionals receive base salaries and performance-based commission compensation. Sales support staff provide a variety of services, including product and service demonstrations, responses to prospect-issued requests-for-proposals, and proposal and contract generation. The company’s marketing department supports sales with lead generation and brand-building activities, including participation in state-specific, regional, and national trade shows; print and online advertising; telemarketing; customer/client newsletters; ongoing promotional campaigns; and media relations. JKHY also hosts annual national education conferences, which provide opportunities to network with existing clients and demonstrate new products and services. JKHY has sold select products and services outside the United States, primarily in Latin America and the Caribbean and Canada. Regulatory Compliance JKHY’s compliance program is coordinated by a team of compliance analysts and auditors that possess extensive regulatory agency and financial institution experience, and a thorough working knowledge of JKHY and the company’s solutions. These compliance professionals leverage multiple channels to remain informed about potential and recently enacted regulatory requirements, including regular discussions on emerging topics with the Federal Banking Agencies (FBA) examination team and training sessions sponsored by various professional associations. Government Regulation The company’s products and services must comply with the extensive and evolving regulatory requirements applicable to its customers, including but not limited to those mandated by federal truth-in-lending and truth-in-savings rules, the Privacy of Consumer Financial Information regulations, usury laws, the Equal Credit Opportunity Act, the Fair Housing Act, the Electronic Funds Transfer Act, the Fair Credit Reporting Act, the Bank Secrecy Act, the USA Patriot Act, the Gramm-Leach-Bliley Act, the Community Reinvestment Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act. JKHY’s operations are governed by the same regulatory requirements as those imposed on financial institutions, and subject to periodic reviews by FBA regulators who have broad supervisory authority to remedy any shortcomings identified in such reviews. JKHY provides private cloud services through JHA OutLink Processing Services for banks and EASE Processing Services for credit unions. JKHY provides data centers and electronic transaction processing through JHA Card Processing Solutions, internet banking through NetTeller and Banno online solutions, bill payment through iPay, network security monitoring and Hosted Network Solutions (HNS) through the company’s Gladiator unit, cloud services through Hosted Partner Services and Enterprise Integration Services, and business recovery services through Centurion Disaster Recovery. The private cloud services provided by JKHY are subject to examination by FBA regulators under the Bank Service Company Act. In the support of the program, the company’s systems and services undergo regular reviews performed by the same regulatory agencies that review financial institutions: Consumer Financial Protection Bureau (CFPB), Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation, NCUA, and the Office of the Comptroller of Currency, among others. Competition The company’s core solutions compete with large vendors that provide information and transaction processing solutions to banks and credit unions, including Fidelity National Information Services, Inc.; Fiserv, Inc.; and Finastra. History Jack Henry & Associates, Inc. was founded in 1976.