Wetherington’s 2023 projection
Cloud adoption will continue to increase as companies realize the benefits of the technology.
What are the technology trends to watch this year, both with what Jack Henry does in software for financial institutions and the industry at large?
We will continue to see the abstraction of the tech stack underneath everything, including banking. Every single domain of business type and organization type, including chartered financial institutions, by the way, sits on a particular stack of technology. What’s been happening, especially in the banking industry, in earnest over the last four to five years is that each layer of that historical tech stack has been abstracted into the cloud for consumption by one form or other of subscription. What that really means is that over time using that more modular form of technology consumption, it becomes easier, faster, better and cheaper to run a business but also to run a bank or to run a credit union. (That) is the biggest ongoing shift, change and trend impacting, reshaping and transforming the complexion of our industry. It’s an exciting time.
What’s the state of the cloud? What’s causing businesses to stay away from it, and what kind of movement could we see in 2023?
I think that the picture and the psychology around this has certainly shifted, especially rolling into 2023, but over the last several years, there have been waves of hesitation ... and a misunderstanding of what cloud is, how it works, and more specifically, what benefits it brings tactically and concretely to a bank or credit union, or even a business of any kind. This is the awakening that’s happened. The reason why 30% of businesses around the world are now operating out of cloud native technologies is because these days, the only way to take advantage of the best security algorithms, the best privacy algorithms and technology, the best databasing technologies and tooling, that is only exclusively available in public cloud settings. Now that said, not every public cloud provider is created equal. In fact, this is where they get differentiated.
Coming out of the pandemic, we heard that technology was pushed forward by a decade in a matter of years. What does that look like now?
The best way to look at those accelerated changes in and over the course of the pandemic is really behavioral more than technical. We were already tracking toward a digital-first world. We are in that world now for sure. If you’re looking at the financial industry, in particular, we would call this the new open banking era because of the new, stable, standardized real-time connectivity that connects all financial accounts. A lot of folks used to, in our world, physically go to the bank or go to a branch. Suddenly, we’re forced to try the digital way of doing things. When they did that, they suddenly realized ... I can do these things without getting up from my chair. What behavioral psychology tells us proved true and was borne out during the pandemic, which is that any time a human being either voluntarily or involuntarily tries a different way of doing something, and that different way is faster, easier, better, cheaper or a combination of those, they will never go back to the former way of doing that.
How active do you expect the fintech industry to be in the merger and acquisition space in 2023?
You will see M&A but probably not as much in 2023 as you did in 2022, and certainly not as much as we saw in 2020. At Jack Henry, we’re always looking for value. There’s a vetting going on with these macroeconomic headwinds. The players with the sturdiest legs, the most seasoned management and, more importantly, the best business models will survive and thrive. Some of them will acquire some of the weaker players, but many of the weaker players will simply fall to the wayside.
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