You Don’t Know Jack Henry

Jack Henry & Associates (JHA; Monett, Mo.) has prepared itself to better approach billion-dollar banks with a series of strategic acquisitions over the past 18 months. The company has acquired a dozen software companies (see chart), in areas ranging from operational risk management to ATM management, and from electronic check processing to biometric security.

JHA's traditional strategy had been to offer a suite of products centered around its five distinct core banking software packages for banks and credit unions. Ancillary products, such as Internet banking, cash management and item processing, were built into the respective suites. "Through 2004, you need the core [system] to buy other complementary products," says Tom Walsh, JHA's general manager for marketing. "That restricted us to a market segment of our existing core customers."

JHA has a customer base of approximately 2,400 financial institutions. Of those, about 80 customers have over $1 billion in assets. But growth in the midtier and above requires additional flexibility beyond core banking software, which many larger institutions are loathe to switch. Thus, JHA will begin to offer its expanded portfolio of software on an a la carte basis. "We recognized that we need to expand our market opportunities, which we're doing through these acquired companies," says Walsh. "Now we can sell these products into all 18,000 [U.S. financial] institutions." Furthermore, the applications-centered strategy can bring JHA outside of the domestic banking market. "In addition to going to banks and credit unions, a number of these products can go into the insurance, brokerage, healthcare and international markets," notes Walsh.

Underlying the strategic shift is a Microsoft .NET-powered technology architecture dubbed "jXchange." With IT consulting firm Geniant (Dallas), JHA has undertaken an initiative to enable all of its various software products as Web services components that can be made accessible through a service-oriented architecture (SOA). Development commenced in 2004, with rollout of an implementation solution scheduled for late 2005. The company plans a phased deployment of all of its software, including core banking, as .NET components through 2006 and 2007.

By creating products that can fit into virtually any standards-based technology environment, JHA does expose itself to a greater degree of competition. "By opening ourselves up to open integration with competing third-party products, we're going to put pressure on our own complementary products to be best-of-breed," says Walsh. "We think we can bring best-of-breed products into the marketplace for any institution."

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Jack Henry & Associates: https://www.jackhenry.com/