Dive Brief:

• The Independent BankersBank, also known as TIB, has selected Jack Henry & Associates to improve its technology infrastructure, TIB said in a Monday press release. A spokesman for the financial technology services company declined to comment on the relative size of TIB as a Jack Henry customer.
• The Farmers Branch, Texas-based TIB delivers banking products and services to almost 1,400 community banks across the country, according to the announcement. The upgrade could help TIB’s community bank clients compete with larger financial services firms, the bank said.
• Jack Henry’s technology will enable smaller banks to execute functions such as real-time payments, per the press release.

Dive Insight:

The new contract with TIB follows the announcement by Monett, Missouri-based Jack Henry earlier this year that it is modernizing its technological infrastructure. The banking and payments technology company said it’s overhauling the way it sells services to its community and regional bank customers, unbundling the services and making them available on the public cloud, along with third-party services. 

“It was important for us to find a well-rounded technology company that can support our unique business model and operational requirements with customizable, open, and proven solutions,” TIB CEO Michael G. O’Rourke said in the release. Migrating to Jack Henry’s platform “will provide TIB with greater efficiency and the scalability we need to serve the future needs of our partner institutions.”

In addition to tech modernization efforts, Jack Henry has also said it’s positioned to make acquisitions as companies that might otherwise have gone public are on the market at a discount due to the challenging economic environment. CEO David Foss noted during the company’s fiscal first-quarter Nov. 9 earnings call with analysts that the acquisition pipeline hasn’t been as robust as he anticipated, but he touted the success of the Payrailz purchase this year.

Payrailz is expected to contribute about $12 million in revenue to Jack Henry’s fiscal year 2023, CFO Mimi Carsley said during the earnings call. In its fiscal first-quarter results, the company reported a 4% bump in net income to $106.5 million and an 8% increase in revenue to $529.2 million. 

After acquiring Payrailz, Jack Henry in October launched a peer-to-peer payments tool, enabling customers to pay one another using the recipients’ contact information.

Regulators have their eye on the industry’s growth. The Consumer Financial Protection Bureau this year named Jack Henry among the service providers it’s watching, also including Finastra, Fidelity National Information Services (FIS) and Fiserv. The agency said it’s concerned about the companies’ market concentration, given they serve nearly 8 in 10 of the country’s banks. CFPB Director Rohit Chopra in July warned that such dominance over the industry could negatively affect their community banking clients.