Jack Henry pushes for mobile technology

It is no surprise smartphone usage is growing. New Federal Reserve research shows 87 percent of Americans own a mobile phone and 51 percent have used it for mobile banking within the past 12 months up 3 percent from last year.

Incoming Jack Henry & Associates Inc. President David Foss knows that fact all too well.

Currently president of the Monett-based financial technology firm’s ProfitStars division, when Foss takes the reins July 1, he said expanding the company’s mobile offerings is one of his top priorities.

“A lot is happening in mobile banking right now. It’s been happening for years, but now it’s coming into its own,” he said. “We are in a big mobile push right now.”

On March 4, Jack Henry (Nasdaq: JKHY) announced it completed its purchase of Cedar Falls, Iowa-based Banno, a company that provides Web and transaction marketing services with a focus on mobile devices. Terms of the acquisition were undisclosed.

Foss said Jack Henry has provided mobile services through its goDough platform since November 2007, but the Banno acquisition offered the company a chance to branch out.

“Banno’s system is flexible and has a broad market base,” he said of the company’s current 375 financial institution customers. “This is a system we can sell to anybody and we plan to.”

Foss said Jack Henry claims about 2,100 core customers – those who utilize multiple Jack Henry systems – and of those, about half use the goDough mobile banking solution. However, about 8,500 customers carry another provider’s mobile system, and Foss wants to change that.

“Those customers are our new target audience,” he said.

The acquisition isn’t Jack Henry’s first interaction with the Iowa company. Foss said the two formed a partnership nearly two years ago as Jack Henry began selling outside its base.

“I met CEO Wade Arnold at a conference about three years ago, and we started talking,” Foss said.

The Monett company is no stranger to acquisitions. Foss said Jack Henry acquired 20 companies when creating the ProfitStars division in 2004 and has acquired about 50 total in his 10 years with the division.

“Like our other acquisitions, Banno will stay where it’s at. We will retain the location and the talent, it will just come under the Jack Henry umbrella,” he said, noting Banno’s employee internship program was another selling point. “They train kids in college through internship programs and really pull the best of the best. We hope to replicate in other locations.”

Responsive advertising platform Kernel, is the final piece of the Banno puzzle for Jack Henry.

“When a customer logs on to a bank website, Kernel recognizes what products they already use, and don’t use and tailors the advertising,” he said. “For example, if they already have a car loan, it won’t show auto loan ads. It might recognize they don’t have a mortgage and use homebuyer ads instead.”

Mobile movement
Most local financial institutions already utilize some form of mobile banking, a trend experts expect to grow beyond checking balances and transferring funds.

According to the March Federal Reserve Consumer and Mobile Financial Services report, mobile banking is most commonly used – by 93 percent of the survey’s respondents – to check account balances or recent transactions, up 3 percent from last year. Transferring money between accounts is the second-most-common use of mobile banking at 57 percent, up 15 percent.

Fayetteville, Ark.-based Arvest Bank recently expanded its offerings to include mobile banking alerts and an application for iPad. Arvest Bank Marketing Officer Michael Gandy said Arvest mobile banking customers will now be able to create text-message, email and iPhone push notifications to manage their finances, as well as access their banking information via iPads.

“We’ve had mobile for years, but you can’t rest on your laurels, you have to keep improving,” Gandy said. “When given the options, customers always want more mobile channels.”

More than 240,000 of Arvest’s 600,000 customers take advantage of its mobile app through global Web developer Monitise Group Ltd. Gandy declined to disclose app startup costs.

Gandy said customers aren’t satisfied with stagnant mobile offerings and expect banking technology to follow tech trends.

“We realized our customers want options to bank when they want and how they want,” he said. “They want multiple channels, they want Internet, phone, iPad and text.

“We have to determine what new channels customers are using and pursue them full force.”

Still standing
In January and February 2013, the average number of Arvest mobile check deposits was 23,914. During that same time period in 2014, the bank recorded 73,148 mobile check deposits, a 202 percent increase. Since November 2012, Arvest customers have deposited more than 798,800 checks and more than $250 million via mobile devices.

However, Arvest officials said mobile won’t kill the traditional banking experience, pointing to new stats from Bankrate.com. According to its March Financial Security Index charts, older people were still more likely to visit a bank branch. Twenty-nine percent of those between ages 30 and 49 said they visited their bank within the past week, versus 19 percent of those between ages 18 and 29. The survey also found more education equated more trips to the bank. Thirty-five percent of respondents with college experience said they visited the bank within the last week, versus 21 percent who had a high school education or less.

“The number and location of bank branches, as well as their functionality, will continue to evolve, but clearly they’re not going away,” said Greg McBride, Bankrate.com’s chief financial analyst, in a news release.  

According to the Federal Deposit Insurance Corp., the number of FDIC-insured institutions fell to 6,812 in December 2013, down from 7,083 a year earlier.

Jack Henry’s Foss believes the next step in mobile banking combines new technology with traditional branches.

“Imagine if you walk into your bank and there are no teller lines,” he said. “As soon as you walk in, an employee approaches you armed with a tablet and you take care of everything you need right there.

“I want to integrate the mobile experience into the branches. There’s lots of evolution going on right now. I think this is the next step.”