New banks

As community banks strive to modernize, Jack Henry zeroes in on payment-focused pain points

  • In November 2021, Jack Henry announced that its clients made up 67% of financial institutions on the Clearing House’s RTP network.
  • While community banks look for faster ways to tech up their services, companies like Jack Henry are finding ways to secure their spots as solid solutions.

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As community banks strive to modernize, Jack Henry zeroes in on payment-focused pain points

Real-time disbursements made up 17% of all disbursements in 2021 – compared to 5.7% in 2020, according to research by PYMNTS. Meanwhile, according to Elena Whisler, senior vice president at The Clearing House, RTP volume is expected to double by the end of this year.

One reason this is happening is the rise in the gig economy – with people needing to get paid faster, employers need to be able to pay faster.

Meanwhile, consumers continue to opt for speed, as well, as they get used to the instant gratification they get from things like streaming services.

“Third-party fintechs like Venmo and PayPal are changing customer expectations and challenging financial institutions to offer faster, more convenient payment options, or risk attrition and disintermediation,” said Rusiru Gunasena, managing director of JHA PayCenter. “In response, many banks and credit unions are relying on financial service providers to enable easy access to real-time payments, helping them remain at the center of their customers’ financial lives.”

JHA PayCenter is one of Jack Henry’s banking software solutions. It’s a payments hub that allows banks to offer close to real-time payments, including sending and receiving funds. The platform’s infrastructure makes it easier for financial institutions to connect with faster payment solutions, like Zelle from Early Warning and RTP from The Clearing House.

In November, Jack Henry announced that 67% of financial institutions on the RTP network from The Clearing House are its own clients. That means that of the 177 banks and credit unions currently live on the Clearing House’s RTP network, 118 are connecting through JHA PayCenter.

Incrediblebank, a first-of-its-kind digital-only community bank, is an example of a bank currently live on the JHA PayCenter. It’s been incorporating Zelle since August 2020 and RTP Receive since May 2020.

At this point, offering real-time payment solutions is pretty much non-negotiable for banks, says Strasser. It speaks to consumers’ demand for speed.

“We believe it’s critical,” she said. “Otherwise they’ll go somewhere else.”

Another example of a bank powering real-time payments through JHA PayCenter is Bridge Community Bank, a bank in Iowa with three locations.

The bank’s been around since 1903 and specifically caters to small business owners like farmers.

Historically, Bridge Community Bank has been proactive from a tech standpoint for a long time. It was early with check imaging in the 90s, and was also early in same-day ACH. Bob Steen, CEO of Bridge Community Bank, said he was on the NACHA board “pounding the table that we haven't changed the network for 30 years, we need to move on some day.” 

Because of its past involvement in payments innovations, The Clearing House’s RTP felt like a ‘natural next step’ for the company. 

Another reason has been to make its services more accessible to un- and underbanked people. According to Steen, some of the poorest people weren’t able to get their stimulus checks because they didn’t have a bank account or even an address to get the money sent to. Real-time payments can be a solution to these sorts of issues, as well.

“These are real life circumstances that matter. And so we're trying to solve for that and improve the payment system,” said Steen.

As community banks look for efficient ways to modernize their solutions, banking software platforms get a chance to solidify their importance in these companies’ digital transformation strategies. 

Jack Henry, for example, seems to be securing its spot in providing faster payment solutions.

“The future of payments will be a deeply embedded experience, and we’re continuing to keep community and regional financial institutions at the center of it. They can strengthen connections with accountholders by offering a full array of solutions backed by modern technology and a wide network of fintech partners,” said JHA’s Gunasena. 

“Our payments and broader technology strategy supports the evolving need of our clients to offer Banking-as-a-Service (BaaS) options.” 

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