Jack Henry and Moov to Simplify Digital Payments for Small Businesses

Rhea-AI Summary

Jack Henry (Nasdaq: JKHY) has announced a collaboration with Moov, a digital payments processor, to enhance digital payment services for small and medium-sized businesses (SMBs) through community and regional financial institutions. The cloud-native service will allow SMBs to accept payments via phone tap, receive same-day funds, and automate reconciliations with accounting software. This initiative aims to help financial institutions better serve their business clients' deposit and payment needs.

The collaboration aligns with Jack Henry's technology modernization strategy, offering API-first services to help community and regional financial institutions compete effectively. The service is expected to reduce fragmentation in SMB banking relationships and help financial institutions capture SMB deposits, which are typically higher than retail deposits. Beta testing for this multi-phased approach is anticipated to begin by mid-2025.

Positive

• Collaboration with Moov to offer enhanced digital payment services for SMBs
• Cloud-native service allows same-day funds and automated reconciliations
• Potential to help financial institutions capture higher SMB deposits
• Aligns with Jack Henry's technology modernization strategy
• 78% of Jack Henry clients plan to expand small business capabilities in next two years

Negative

• Beta testing not expected to begin until mid-2025, indicating a long timeline for implementation

Insights

Financial Technology Analyst

This collaboration between Jack Henry and Moov represents a strategic move in the fintech landscape. By offering enhanced digital payment services to SMBs through community and regional financial institutions, Jack Henry is positioning itself at the intersection of traditional banking and modern fintech solutions. The cloud-native, API-first approach aligns with current industry trends, potentially giving Jack Henry a competitive edge.

The focus on capturing SMB deposits is particularly noteworthy. With SMB deposits typically higher than retail deposits, this could significantly boost the assets under management for participating financial institutions. The planned beta testing by mid-2025 suggests a thoughtful, phased approach to implementation, which could mitigate risks associated with new technology rollouts.

Investors should monitor the adoption rates among Jack Henry's clients and the impact on deposit growth once the solution is fully implemented. This partnership could potentially increase Jack Henry's recurring revenue streams and strengthen its position in the competitive fintech market.

Small Business Banking Specialist

This collaboration addresses a critical pain point for SMBs - the fragmentation of financial services. By offering a comprehensive solution that includes payment acceptance, same-day fund availability and automated reconciliations, Jack Henry and Moov are creating a compelling value proposition for small businesses.

The statistic that 56% of small businesses bank with the four largest banks highlights the opportunity for community and regional institutions to capture market share. This solution could level the playing field, allowing smaller institutions to offer competitive, tech-forward services.

The one-click enrollment and integrated payment relationship features are particularly attractive, as they reduce friction for SMBs. However, the success of this initiative will largely depend on the ease of integration for financial institutions and the quality of user experience for end-users. The planned beta testing phase will be important in refining these aspects.

 Alliance will enable community and regional financial institutions to offer enhanced payments to SMBs and capture deposits

MONETT, Mo., Sept. 3, 2024 /PRNewswire/ -- Jack Henry™ (Nasdaq: JKHY) announced today a collaboration with Moov, a modern digital payments processor, to enable community and regional financial institutions to offer enhanced digital payment services to small and medium-sized business (SMB) customers.

The cloud-native service will allow SMBs to accept payments with the tap of a phone, receive same-day funds for payments accepted, and automate reconciliations to accounting software packages. The service will be offered through financial institutions, enabling them to more fully serve their business clients' deposit and payments needs.

"This innovation is made possible by our technology modernization strategy to offer community and regional financial institutions cloud-native, API-first services that allow them to differentiate strategically, compete successfully, and meet the evolving needs of their customers," said Jack Henry President and CEO Greg Adelson. "We are pleased to collaborate with Moov on this unique solution that will provide modern, innovative business payment capabilities to our clients that are seamlessly integrated with deposit and core banking services."

Jack Henry Chief Technology Officer Ben Metz said small businesses typically have multiple relationships with banks and fintechs to serve their specialized needs, resulting in inefficiencies, increased costs, and integration issues.

"This service will reduce fragmentation and place community banks and credit unions at the center of the relationship," Metz said. "It also will help financial institutions capture SMB deposits, which tend to be significantly higher than retail deposits. This is especially compelling, as our clients have identified growing deposits as their top strategic priority."  

There are approximately 33.3 million small businesses in the U.S., making up 99.9% of all U.S. firms, according to the Small Business Administration. A Datos Insights 2023 survey shows that 56% of small businesses bank with one of the largest four banks, while only 18% bank at a small financial institution.

Banks and credit unions are increasing their focus on small businesses. In Jack Henry's 2024 Strategy Benchmark Survey, 78% of clients said they planned to expand their small business capabilities over the next two years. Of those clients, nearly seven out of 10 cited payments as the SMB service they planned to add.

Wade Arnold, co-founder of Moov, said the digital payments solution will enhance the ability for community and regional financial institutions to serve small business customers and simplify the experience for SMBs.     

"We look forward to working with Jack Henry to modernize payments for SMBs through community and regional financial institutions," Arnold said. "This solution will provide many benefits to SMBs, including one-click enrollment, automated itemized transaction processing and reconciliation, instant balance transfers from linked accounts to cover same-day transaction needs, and an integrated payment relationship with the financial institution."

Jack Henry and Moov are working toward a multi-phased approach with beta testing expected to begin by mid-2025. Jack Henry will share more information about the solution at its 2024 Investor Day on Thursday, Sept. 5 beginning at 2 p.m. ET. A live audio broadcast and presentation materials will be accessible from Jack Henry's Investor Relations website, and a replay will be available after the event.

About Moov
Moov is a new kind of payment processor, built from scratch in the cloud to make payments easier for developers & businesses. With Moov, businesses accept, store, send, and spend money — all through one simple integration. Moov is driven by a give-first mindset and supports a thriving network of developers with open-source libraries and a growing community. Discover how Moov can transform your payment operations at moov.io. 

About Jack Henry & Associates, Inc.^®
Jack Henry™ (Nasdaq: JKHY) is a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve. We are an S&P 500 company that prioritizes openness, collaboration, and user centricity – offering banks and credit unions a vibrant ecosystem of internally developed modern capabilities as well as the ability to integrate with leading fintechs. For more than 48 years, Jack Henry has provided technology solutions to enable clients to innovate faster, strategically differentiate, and successfully compete while serving the evolving needs of their accountholders. We empower approximately 7,500 clients with people-inspired innovation, personal service, and insight-driven solutions that help reduce the barriers to financial health. Additional information is available at www.jackhenry.com. 

Statements made in this news release that are not historical facts are "forward-looking statements." Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in the Company's Securities and Exchange Commission filings, including the Company's most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Any forward-looking statement made in this news release speaks only as of the date of the news release, and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise.

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SOURCE Jack Henry & Associates, Inc.

FAQ

What is the purpose of Jack Henry's collaboration with Moov?

Jack Henry is collaborating with Moov to enable community and regional financial institutions to offer enhanced digital payment services to small and medium-sized business (SMB) customers, allowing them to accept payments easily, receive same-day funds, and automate reconciliations.

When is the beta testing for Jack Henry (JKHY) and Moov's digital payments solution expected to begin?

Beta testing for the Jack Henry and Moov digital payments solution is expected to begin by mid-2025.

How many Jack Henry (JKHY) clients plan to expand their small business capabilities?

According to Jack Henry's 2024 Strategy Benchmark Survey, 78% of clients said they planned to expand their small business capabilities over the next two years.

What percentage of small businesses bank with small financial institutions according to the Datos Insights 2023 survey?

According to the Datos Insights 2023 survey, only 18% of small businesses bank at a small financial institution.