Jack Henry is revamping digital banking strategy for its core business in a move to provide local and regional banking clients with a fintech-enabled open banking ecosystem.

When the Missouri-based core provider released its Q2 2022 earnings this week, discussion focused on its long-term digital banking strategy, which involves an open banking application that will give customers the ability to construct custom platforms, Chief Executive Officer David Foss said during the call.

“We are focused on developing an open banking platform that enables easy access to a broad ecosystem of Jack Henry solutions and third-party fintech offerings,” Foss said. “The technology is component-based. Services are isolated and able to run independently, giving community and regional financial institutions the ability to customize and build platforms that work for them.”

The strategy itself consists of four non-linear steps: “Unbundling” core processing systems for a public cloud migration, providing options for open banking integration, delivering services through a single platform and facilitating the banking environment.

Jack Henry executives pointed out that the strategy and platform are long-term changes that will not make new options available to customers “overnight.”

“This wasn’t as much driven by anything that we saw competitors doing,” Foss said. “It was driven by the disruption that’s happening in a lot of financial services and the concern we had for our customers being positioned to compete effectively in the future.”

Q2

Jack Henry’s earnings presentation revealed growth in several segments. Revenues grew to $494 million, a 17% increase YoY, bolstered by data processing fees, conversion and merger revenues and automated clearing house (ACH) transactions.

Operating income shot to $126 million, a 34% increase YoY. Earnings per share (EPS) grew 38% YoY to $1.30, while research and development expenses, owed mainly to higher personnel costs, increased 12% YoY.

Executives reported during the call that more than 90% of employees are working from home, with no immediate plans for a return to the office.

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