You Don’t Know Jack Henry

Jack Henry & Associates (JHA) has prepared itself to better approach billion-dollar banks with a series of acquisitions over the past 18 months. The Monett, Mo.-based company has acquired a dozen software companies, in areas ranging from operational risk management and ATM management to electronic check processing and 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 needed 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 about 2,400 financial institutions. Of those, about 80 customers have more than $1 billion in assets. But growth in the mid-tier and above requires additional flexibility beyond core banking software, which many large 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.

SOA Components Strategy

Underlying the strategic shift is a Microsoft (Redmond, Wash.) .NET-powered technology architecture dubbed "jXchange." With IT consulting firm Geniant (Dallas), JHA has undertaken an initiative to enable its software as Web services components that can be made accessible through a service-oriented architecture (SOA). Development commenced in 2004, and rollout of an implementation solution is 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 for standards-based technology environments, JHA does expose itself to more competition. "By opening ourselves up to open integration with competing third-party products, we're going to put pressure on our own products to be best-of-breed," says Walsh.

Outside the Suite:

Recent Acquisitions by JHA

Company-Technology/Solutions

Banc Insurance Services -Outsourced insurance agency

e-ClassicSystems-ATM channel management

Optinfo-Exception management system

Regulatory Filing Group-Compliance software

Select Payment Processing -Electronic check processing

Stratika-Relationship profitability

Synergy Group-Document management

Tangent Analytics-Business intelligence

TWS Systems-Check image processing

Verinex-Biometric security