Turning Data Into Better Banking

Jim Marous (0:01)

Many banks and credit unions have the technology, data and insights they need. However, many are waiting too long to put this to work. That's the execution gap that customers are becoming more and more frustrated with.

Greg Adelson, CEO of Jack Henry, has watched this scenario play out across thousands of institutions. What surprised me is his read on the gap itself. He has seen the technology gap between big and small institutions narrow significantly while the execution cap keeps getting wider. The largest banks have the people and money to move faster. Small institutions often wait for the technology to be built, and still need the people to put it to work. As Greg puts it, nobody has more data than a bank or crediting. We already know where our customers' and members' money goes every month. The question is whether we really turn that into a better experience before the relationship moves somewhere else. That's where the right partner matters. Even Greg admits, no provider can be the best at everything. Community banks and credit unions need a partner that works well with others, brings what is learned from hundreds of institutions, and will help you deploy at speed and scale because we're only as fast as our slowest partner.

We also talk about using AI without losing the service, relationship, and trust that sets community institutions apart, and why Gen Z is the opportunity he'd act on first. The key is to execute against the capabilities we all have already.

So welcome to the show, Greg. You know, you have an interesting perspective from your seat as to what's going on in the industry, and you've been in the industry for quite a while, as I have. Have you seen the gap between community banks and credit unions and the largest banks? Let's say the top 10 and the fintechs. Is it wider or narrower than it was five years ago? The gap in capabilities, what they're able to do day in, day out?

Greg Adelson (2:04)

Yeah, it's a great question, but I think it's one that actually is on both sides. I think there's some aspects of it that are widening and some that are actually lessening. So I'll give you a couple of examples. So I think on the lessening standpoint, you can look at folks like ourselves, Jack Henry, that provides technology to banks and credit unions and really all aspects of technology, is it's incumbent on us to ensure that we're creating the right level of technology improvements and new age innovation to allow them to compete with the larger tier one institutions, right? So those are the ones that are typically in their markets that they potentially could be losing share to. But then they're also potentially losing share to some of the fintechs. So whether that's neo banks or fintechs that are driving. So we spent a lot of time working on that technology and really driving our strategy, which is to ensure that our banks and credit unions win in the markets that they serve.

From a widening standpoint, I think that some of it's around the level of execution. So a lot of the larger institutions are able to, they have the resources, they have the care with all and the funds to go do things potentially faster or at their own pace, where a lot of the smaller community institutions are not only waiting for the technology to be done or built, but then they also need people to help them with the implementation of that. So we believe that we're providing the right level of technology to shrink the gap, but there's still a level of execution from the larger institutions.

Jim Marous (3:41)

You know, we're seeing the same thing that honestly, I think from a capability and from a lack of friction standpoint, the biggest banks, as you said, have the financial wherewithal.

Many of the smaller institutions have the leadership that allows them to do things. And now we have composable solutions that are... You don't have to replace a quarter to improve your new account open. You don't have to replace a quarter to improve your payments. You can do things on a, I'm going to call it piecemeal, but an integrated piecemeal basis. I think the challenge also is with the mid-size organizations, because they're saddled with less investment capability than the largest. And in many cases, legacy leadership gets in its own way. That makes it so that the gap may still be there, but the smaller organizations can certainly outpull their weight in the capabilities. When we look at the industry as a whole, we're starting to see some consolidation that is shrinking the number of community banks and credit unions.