Jack Henry & Associates, Inc. (JKHY) Earnings Call Transcript & Summary

[Audio Gap] [Operator Instructions] And now I will turn the meeting over to Mr. Kevin Williams, Chief Financial Officer and Treasurer with Jack Henry & Associates. Kevin?

Thanks, Tom. I appreciate it. Welcome to the Jack Henry & Associates 2021 Analyst Day. We're glad everybody is here. I think we've got a very good schedule for you today, packed with a lot of good speakers. First, I need to do this. Today's presentation includes certain forward-looking statements, including remarks or responses to questions concerning future expectations, events, objectives, strategies, trends or results. Like any statement about the future, these are subject to a number of factors that could cause actual results or events to differ materially from those which we anticipate due to a number of risks and uncertainty. The company undertakes no obligations to update or revise these statements. For the summary of these risk factors and additional information, please refer to the quarterly press release and the sections in our 10-K entitled Risk Factors and forward-looking statements. Also during the presentations, we will potentially discuss some non-GAAP financial measures, including but not limited to non-GAAP revenue, non-GAAP operating income, but the reconciliations for historical non-GAAP financial measures can be found in our quarterly press release. Also, as a reminder, to comply with Regulation Fair Disclosure or Reg FD, the entire day is being webcast and recorded, and the presentations are out on our Jack Henry website for your viewing. As a reminder, to all you analysts, this is your once a year shot at the presenters with questions, any future attempt for you to contact them will then simply direct you to me. So I'm going to go to the agenda real quick to give you an idea of kind of the flow of this. As soon as I'm done here, I'm going to have David Foss, our President and Chief Executive Officer, come up. After he's done, I'm going to do a financial overview. Obviously, we didn't get through this last year, even though we did the earnings call last week. I'm going to give a little financial overview. Then Greg Adelson, our Chief Operating Officer, is going to go over basically everything operations. And then Tede Forman, Head of Consumer and Commercial Payments, will do everything payments. Then I think everybody would be ready for about a 10-minute break. And then Stacey Zengel is going to talk about our open and banking core. Ben Metz is going to talk about everything digital, which includes Banno and everything that goes with Banno. Scott Spain is going to talk about everything private cloud, which is basically our Outlink Processing Services that we talk about. And then a little bit different twist and we have Jeff Vandevelde, our Senior Director of Marketing, talk a little bit about markets and how we go to marketing. I've also included these websites for you if you want some more detailed product information after days event. And with that, are there any questions before we get started? If not, I'll turn it over to Mr. David Foss, our President and CEO, for a corporate overview.

Very good. Thank you, Kevin, and welcome, everybody. We're glad to have you all with us this year. I am thrilled that so many of you chose to join us for a virtual conference. I'm very hopeful that we'll be doing an in-person conference again next year. And in fact, I'm hopeful that this summer, we can maybe do some in-person meetings. I've realized as a result of this pandemic, that I really like people. I like being with people. I like being with you guys. And so I'm very hopeful that we can start to do some of these in-person sessions again soon. So as Kevin mentioned, we have a lot on the agenda for today. As far as my section is concerned, I'm going to start off by giving you a little bit of a look back at this current fiscal year, a year in review, some key things that we've been focused on this year. Then we'll kind of summarize Jack Henry today, what does our company look like today. I'll switch over to talk about some of the strategic direction items, things that we're focused on. We'll touch on our sales performance. And then we'll get into customer strategies, things that we're working on, specifically for our customers to address the needs that they have today and many of these will kind of tee up the presenters that are coming later on in the day. I'm not going to dive real deep on these topics, and I'm going to try and kind of set the stage so that the other presenters have -- or you have a framework for what the other presenters are going to be talking about. And then we'll end with a look toward the future from Jack Henry's perspective. So first off, as far as year-end view, as I talked about on the earnings call so far this fiscal year, we really have posted a solid financial performance in spite of the impacts of the pandemic. Certainly, we've had some impacts to the financials, but we really have done, I think, a pretty solid job. The team has done a really solid job of posting a good financial performance. We did complete the significant card migration that we've been talking about, more than 20 million cards that we've migrated in 3.5 years. I gave you on the earnings call last week, all the other statistics, but that was one that I hadn't shared. So I think that's a significant number for you to be aware of. Our workforce strategy, so we have continued to effectively manage our associates throughout this pandemic and have had really good responses from our associates and our customers to how Jack Henry has dealt with the pandemic, and I'll show you employee engagement scores and customer sat scores here in just a minute, but I think bear that out because these are very recent numbers. And the last thing here is our One Jack Henry initiative. So this is something that we launched early on in this fiscal year. Greg Adelson is going to talk to you about this in quite a bit of detail in his presentation, but just wanted to be -- you to be aware that we have a pretty significant initiative going on at Jack Henry to really try and bring the organization closer together and ensure that we are delivering a consistent experience for our customers and even for our associates, but this consists of greater levels of transparency, consistency and collaboration across the organization. So again, Greg is going to address that more fully in his section. As far as sales so far in the fiscal year, as I highlighted on the last call, we've had a really, really good run here, but it's been different from a normal year. So on the December call, you'll -- or I guess, the February call, you'll recall me highlighting the fact that in December, although core sales weren't where we're used to from prior years, complementary sales were way up. So there's a lot more interest in our complementary solutions until we had a very strong sales quarter in our fiscal Q2. And then, of course, last week, I highlighted the strengths of fiscal Q3, which was really heavy on the core side. So it's been a little more up and down as far as the different categories through this pandemic experience. But overall, the sales organization on the whole has -- had a pretty good year so far this year. So a few statistics here for you, 132 new Banno sales so far this year. As far as Jack Henry Banking, 11 new core wins and 6 on-prem to Jack Henry private cloud migrations. Symitar, so 17 new core wins and 15 on-prem to private cloud migrations. And then for ProfitStars, 2 key statistics here that those of you who've been with us at these meetings before will recall we've highlighted, we signed 38 new customers through our ProfitStars division that had never done business with Jack Henry before. And if you consider, we have around 8,500 customers now through ProfitStars, and there are only 11,000 banks and credit unions in total in the U.S. Finding customers that haven't done business with us before is a challenge. So to get 38 so far this year has been a strong performance. And then the really significant number is the one that's down there right below that, that's highlighted. We're now to 3.95 ProfitStars products per client and those of you who have been tracking this, you'll recall that 10 years ago, we were less than 2 ProfitStars products per client. And keep in mind, this is on 8,500-ish clients, right? So we've slowly but surely been building that penetration, cross-selling into those existing ProfitStars customers. So we're now at 3.95 products per customer. So really good, solid progress by the sales organization in that cross-selling to non-Jack Henry core customers. Additionally, this year, so far this fiscal year, you all know that we published our first sustainability report on December 31, have had great feedback in response to that, largely focused on the ESG initiatives and reporting expectations around ESG. But then within that, we highlighted also some of the successes that we're having specifically around DE&I. So diversity, equity and inclusion. I highlighted in the report that we had 5 business innovation groups, BIGs at Jack Henry, business innovation groups. We had 5. We now have 6. We're just rolling out another one called Go Green. We announced it on Earth Day. And so a lot of engagement from the employees at Jack Henry around these initiatives with the business innovation groups. And then the statistic right below that, the 3,900, so we, earlier this year, rolled out unconscious bias training. And I've been amazed at the desire among the associate base to receive that training. This isn't mandatory training. This is something that you sign up for, if you want to learn more. So far, 3,900 of our 6,800 or so associates, 3,900 have taken that training and have been through the unconscious bias learning process. And so I think that's really significant, and it's a great sign of the desire among our employees to learn more and really be active participants in what we're trying to do here around DE&I. So if you look at our company today, we're roughly 6,800 associates strong. We support 4 core processing systems. Those of you who have been with us before, know we used to always say 5. Last year, we spun out the Cruise division, so we had a very small core solution that supported some very small credit unions. We sold that off to somebody else because that wasn't strategic for Jack Henry. So we now have 4 core processing solutions. 63% of our core customers are hosted in the Jack Henry private cloud environment today. And of course, in this past fiscal year, we reported $1.7 billion in revenue. And maybe the most important thing on this slide is right there in the middle, this is our 45th year in business at Jack Henry. So we're celebrating 45 years this year. We'll be ringing the Bell, NASDAQ Bell, in September, and we're excited about that ongoing celebration for our company and the successes that we've seen over those 45 years in business. A little bit about our strategy. And this has not changed significantly. So those of you who've been with us for a while can be pretty comfortable that this is a consistent message with what you've heard before, start-up at 1:00 and kind of go around the circle. We provide core processing systems to financial institutions. And you may say, yes, okay, old news, but the significance about that is; number one, core is a significant piece of revenue for Jack Henry; but number two, we are continuing to actively take share in our market in the core piece of our business, and that continues to be a real strength for our company. So that's always at the top of the list. Even though we do a lot of other things, that's always at the top of the list because it is an important part of our strategy. Right below that, we offer additional technology solutions to those financial institutions who buy a Jack Henry core. Of course, we wrap those around the core. We integrate them very tightly. We're known for tight integration of our own solutions. We focus on digital and payments. So digitally, you're going to hear from Ben on just a little bit about all the things we're doing in digital. And of course, you've heard from me about the great success we've had in not only signing customers but implementing those customers and adding our customers' customers, end users to the platforms that we offer now. So digital is certainly a key part of our strategy. But then payments as well. And one of the things maybe you've heard me say, we are not a payments company at Jack Henry. We are a well-rounded financial technology company. But we do a lot in payments, right? That's a key piece of our strategy. We just don't tout that as the piece of our strategy. And so we are very focused on payments and expanding our offerings in the area of payments technology. We offer stand-alone solutions to institutions who run other people's cores. And that is the ProfitStars' strategy, continues to be a winning strategy for Jack Henry. We do partner with some who are outside the financial services vertical to deliver some of our solutions to nonbanks, noncredit unions. We emphasize integration and superior customer service. I'll show you some customer sat ratings here in just a minute. We focus on developing our people and culture. I've highlighted that just a little bit on the last slide, but I'll talk more about employee engagement here in a moment. And then we pursue acquisitions that support our strategic direction. And of course, many of you have asked on the earnings calls about where we are with acquisitions. And I've said over and over, it's a tough market right now for a strategic to complete an acquisition because valuations are seemingly crazy in our space. But we're always looking, we're always talking to folks about potentially joining the Jack Henry family, and that won't stop. We're going to continue to be active in that space. But we are very disciplined about the way we pursue acquisitions, and we don't overpay. We don't want to be foolish in putting our shareholders' money to work. So as we run the company, we lean on these 3 pillars of success. And when Greg presents, you're going to see him approach this from a little bit different direction, but it's the same message. It's about the idea that we focus on our employees, try to create a great work environment for our employees. If our employees are happy, they'll deliver a great service and great technology to our customers. If our customers are happy, they will continue to buy stuff from us, and they will continue to be customers. And they tell their friends because this is a reference selling business we're in. They'll tell your friends about how great it is to do business with Jack Henry, and ultimately, that rewards the shareholders. So let me share just a little bit on each of those 3 pillars to give you a bit more detail about what I'm thinking there. So first off, on the focus on our employees. One of the best ways that we have to gauge how we're doing with our employees, although we do employee engagement surveys with third-parties every year, one of the best ways we have to gauge is all these Best Places to Work awards that we're winning, and you see just some of them presented here on the slide. The key thing here is these awards are presented based on objective survey data that has gathered from our employees by these publications around the country who conduct these contests. So it's objective survey feedback that determines who wins these awards. I'm not going to go through all these on the screen here. I'm going to highlight 2 of them, however. In the middle on the top, you see Forbes best -- America's Best Large Employers. So we won with Forbes in 2017, '18 and '19. In 2020, they suspended their contest because of COVID. But now in '21, we've already won again as Best Large Employer. And so that's Forbes magazine. That gets a lot of attention. It certainly aids us in recruiting new talent to our company. And then right below that, you'll see American Banker Best Places to Work in FinTech. And I highlighted this on the last earnings call, the American Banker read by pretty much every banker in our space, not the credit union side, but on the banking side, and American Banker recognizes 50 companies and only 50 companies as Best Places to Work in FinTech. And as I said on the earnings call, just as you can imagine, almost every company on that list is a fintech, the way we all think of fintech. So less than $50 million in revenue, fewer than 500 employees, smaller companies. There was one mortgage technology company that was larger than Jack Henry, but then there's Jack Henry on the cool-kids list. And I believe strongly, the reason that happens and the reason that American Banker has recognized us that way for so many years, and none of our major competitors have ever been recognized on this list. The reason we're getting that recognition is because of the entrepreneurial spirit that you see at Jack Henry. And this commitment to delivering innovative technology to our customers. And then, of course, this commitment to outstanding service. So I'm very proud of that recognition, very proud of our employees who are giving us that opportunity to be recognized by American Banker. So switching. So that's a little bit about our employees, a little bit of our customers. So we survey our customers a lot. We get thousands of surveys returned every month as far as customer satisfaction is concerned. So this is an actual rating for the month of March. Our customer sat rating was at 4.75 on a 5-point scale. So if you think about that for a minute, if you're going to average a 4.75 on a 5-point scale, almost every survey you're getting back rates you as extremely satisfied, meaning a 5, and it's rare for us to get even a 4. I will mention that if any survey comes back with a rating of 1 or 2, the customer service manager is required to call the customer and say, what happened? Where did we do wrong? And then we have to deal with that. And that's the focus that we put on customer sat. And that, I think, is what drives a lot of this is because the customer service managers know that they're being held to account on a monthly basis for ensuring that their numbers are solid. And so great numbers there for our teams. So a little bit about our employees, we talk about our customers and then, of course, our shareholders. So Kevin will go into a lot more detail in his presentation. But just put this in here to show you the progression on revenue and earnings, of course, 2018, impacted by TCJA, but we've normalized that in the column, that's just to the right of the 2018 column to give you an idea of the progression for revenue and EPS over the last several years. One thing that people -- that investors or buyers in our space, customers in our space, really pay attention to is the fact that we're putting so much revenue back into R&D. We are continuing to run at about 14% of revenue back into R&D. So that's a combination of expensed R&D and also capitalized software. So we believe we're well above anybody else in our space as far as -- the larger players in our space as far as the percentage of revenue that we're putting back into new innovation and new technology, and I've listed for you here, just a few of the things that we're focused on when it comes to investment in the R&D number. So digital, of course, no surprise to anybody that, that's at the top of the list. And these are not in priority orders for our spend. I just wanted to capture some of the key themes for you. So digital at the top of the list here. Core feature and UI enhancements. So I didn't want to leave that out. That is something that continues to be a focus for us. If you're going to lead the way in core, you have to continue to put new investment and continue to innovate in the core solution, particularly around user experience and the user interface. And so we are doing a lot of work in that area, but also just normal feature enhancements. We have the Jack Henry payments hub, PayCenter, that we've talked quite a lot about on earnings calls. And of course, we've done press releases. This is what supports our real-time and P2P payments connectivity. So that's been a significant focus for us. Our open banking strategy, which Stacey is going to focus on later on today, and I'll touch on again here in just a minute. A lot of work around that. Our treasury management platform. When we first rolled this out a couple of years ago, at the time on the earnings call, I said, you don't roll a product like this out and say, okay, we're done. No more investment required. This is something that requires ongoing investment. And so we're very focused on ensuring that we deliver a best-of-breed solution when it comes to treasury management. And then commercial lending. You've seen us -- you heard us talk a lot about this. You've also seen press releases. We just did one recently about our addition to the commercial lending suite of a marketplace for people to buy and sell loans. And so that is another key strategy for us as far as investments in technology. So let's shift gears now a little bit and talk about -- instead of talking about what is Jack Henry focused on, let's talk about what our customers are focused on. What are the things that we are anticipating, they're going to need us to help them be successful in the future. Those of you who listening our earnings calls know that I tend to highlight a couple of surveys during the year. There's Bank Director, which I talked a lot -- quite a bit about in November on the November call. And then there's the Cornerstone Advisors survey that just came out in January that I talked about on the last call as far as reporting some of the numbers. The next couple of slides here are bits of information from the Cornerstone survey that I thought you would find interesting. A few themes on this slide. This, again, is from the Cornerstone survey. Improving efficiency is back in the spotlight, one of the top 3 concerns for banks and credit unions in 2021. Our customers realize that their vendor relationships are critical to their ability to be successful. So I think the concept of fintech partnerships and openness really comes into play in that discussion. And then digital, including digital account opening, key themes for our customers and those customers in general, in the community bank, regional bank and credit union space. So let's look at a little bit of detail here. So here's the FI's tech spending expectations for the coming year. So this is -- how much do you expect your spending to increase year-over-year? And you'll see that on the banking side, 22% of those who responded to the survey said they expected their spend to increase more than 10% in '21 over '20. 19% of credit union said the same thing. And then if you drop one line lower, 1% to 10%, for banks increased 51% and 58% on the credit union side. So really a pretty significant expectation of increased spending in '21 as compared to 2020. Okay, what are you spending money on? Well, the survey didn't specifically ask about products, what it did was ask more about themes and priorities. And so what they did was they asked people to rate their top 3. So give us your top 3 areas of focus. So you'll see that improved customer experience, 67% of banks had that in their top 3, 70% of credit unions. Generally, that comes down to a discussion of digital, right? It's all about how do we make the experience for the account holder better experience, and that usually involves a discussion of digital. I think that's very logical for any of us who are in this space. Get more value from existing technologies and vendor relationships. So that is making sure that we're getting more of what we already have and being able to connect things together to what we already have, and then improving efficiency. And there are several aspects to that. There's back office efficiency. There's the way you interact with the end consumer and how efficient is that process. So there's digital in that. There are workflow implications. There's even fraud implied in some of that discussion. So a lot of, I think, interesting tidbits in this survey and generally good news for technology providers like Jack Henry as we look forward further into 2021. So with that as a backdrop, a few key strategies that we're focused on right now. I already mentioned digital, of course, Jack Henry Lending, our payment strategies, fintech partnerships and open banking. So let me share with you just a little bit of detail on each of these. We'll start at the bottom here. So for Jack Henry Payments, I've highlighted before in various settings that we created when people really started to talk about real-time payments, and there was more talk about P2P connectivity and when Zelle came on the scene, we could have developed point-to-point integration for Zelle to each bank, for example, we could have been live quickly. But as we look to what was coming, what we decided was that wasn't the best solution for our customers. The best solution was to create a hub, to create a solution that any emerging technology as far as real-time and P2P payments, any of those could connect into a single hub. And then our customer, all they had to do was connect from their institution to that hub, and they could support the existing technologies and be prepared for new technologies. So it took a little extra time but I absolutely believe it was the right thing to do for our customers to succeed in the future. And that's what we've created with the payments hub. We currently have 174 contracts for Zelle but we, of course, also have a number of customers live with The Clearing House, and we've been very active with The Clearing House. And as we've talked about on the previous earnings calls, we've been very active with the Fed in developing their FedNow solutions. So we're really well positioned, I think, to handle real-time and P2P. And if we move to the left-hand side of the screen, there's lending. So we offer a seamless lending experience for our banks and credit unions that incorporate all digital loan origination, decisioning and portfolio management into a single platform. And as I just mentioned, we also now have this marketplace where if a bank wants to take on a credit, but it's too large for them to book themselves, they can go out into this marketplace, and they can essentially sell the loan through the marketplace through buyers that are coming into that marketplace. So we're really trying to create a complete ecosystem, digital-first for the commercial borrower and for the bank that wants to be offering or credit union that wants to be offering and a larger commercial credit. So very successful with that initiative. Moving back to the right, fintech partnerships. So at Jack Henry, we have been a believer in this idea of facilitating partnerships since the beginning of this company. That does not mean Jack Henry is there getting a spiff or getting a referral fee every time a bank signs up with somebody else. It means that we believe that for our customers to be successful, we need to allow them. We need to provide the tools for them to connect up to third-parties. And so with that in mind, as the stat, just to the right there says, we have more than 600 third-party integrations today, third-party companies, third-party products that are integrated into our solutions today using the existing technology through this fintech partnership strategy. Moving back again to the left. So Jack Henry Digital. And again, Ben is going to spend a lot of time talking about that later on, but we have this ecosystem now that we've created. We really believe that digital is a key for our customers to be successful in the future. And ultimately, for Jack Henry, to be successful in the future. And so we absolutely believe we have a best-of-breed solution today. Up at the top on the right-hand side there, you see we have more than 5 million monthly users on the Banno platform today. And then right below that, you see the 250 number, that's how many are leveraging the open API infrastructure that we have that's tied to the digital platform that we have at Jack Henry. So I think we've really created a wonderful ecosystem for our customers and for third-parties that they choose to work with that want to leverage the ecosystem that we've created. And ultimately, at the very top, all of this helps facilitate open banking. So we have these open APIs. We help our customers create these partnerships, and we really believe in supporting them in what they want to do as far as connecting different solutions together. Now as I've mentioned before, some people think it's counterintuitive that Jack Henry would be so open and be so willing to provide that connectivity without trying to monetize every single bit and bite. But it really is consistent with who we are, the company that we've been for 45 years. Since the founding of this company, we believed in the idea of our customer success. In order for our customer to be successful, we have to allow them to connect other things into Jack Henry platforms easily and not punitively as far as the charge is concerned, so that they can succeed. And I think, ultimately, that's a key part of what makes our company so successful. So in summary, today, we have a highly motivated workforce, highly engaged group of employees. Customer satisfaction is very high and continues to be very high. We can see from the survey data that FIs are expected to spend more this year than they have in the past. So we believe that positions us well. And overall, we have great new solutions, and we're positioned to help address our clients' needs every day. So as we look to the future, we're focused on financial services. We are intensely focused on financial services. We get the question once in a while about other verticals that we could go into. Yes, we could maybe do that. But we have a very intense focus, and we intend to continue that focus in the financial services space and broadening our offerings in the space that we're in. We're continuing to enhance our products and services, deliver new technology and new services. We're focused on customer service, as I've indicated already, and I think the survey results bear that out. And then we're very committed to this idea of openness. I remember on -- maybe it was 2 or 3 earnings calls ago, one of the analysts asked me about our opinion about openness. And I said at that time, that is a hot topic for us. We are absolutely all in on that concept, and we will continue to support the concept of openness going forward. And then the last bullet here, we pursue acquisitions that fit our strategy. We're a disciplined acquirer, which means we endeavor to not overpay for acquisitions. That doesn't mean we won't stretch once in a while, but we are really trying to be judicious in how we use our investors' money and position us to be successful in the future. So with that, hopefully, you've learned a little something about our company that you didn't know before you showed up here. And I am happy to answer any questions that any of you may have. So Tommy, I think I'm going to turn it over to you.

Thank you, Mr. Foss. [Operator Instructions] Looks like we have David, if you can let us know where you are from?

Yes. So Dave Koning at Robert W. Baird.

Hi, Dave.

Yes. So I guess a couple of quick ones. So first of all, in Banno, you mentioned 132 new Banno clients, I think either year-to-date or something. I think you had a press release, you even said 400 maybe in the last couple of years, that seems like such a big amount of wins. I can't even imagine too many banks switching. I'm almost wondering -- it seems like you're probably growing a lot faster than any other fintech out there. Do you think that's right? You're probably gaining a lot of share from the fintech's even maybe?

So today -- it's a good observation, Dave. Today, we are focused entirely inside the Jack Henry core base, but of course, there are a number of different mobile and internet banking providers that are installed inside the Jack Henry core base. And so we are certainly displacing a number of them. And we are upgrading some customers off of our NetTeller platform. You're aware that we've had NetTeller for a long time. It's a terrific internet banking platform. And then goDough is a terrific mobile banking platform, but they were 2 separate platforms. So we have customers that are making the move from NetTeller and goDough, but also customers that are leaving third-party solutions. And so yes, we're having tremendous success with that platform. And again, Ben is going to be up here in a little bit. He'll give you a lot of detail. He's going to compare for you where we were in 2018 as compared to where we are today. I think the numbers will really, really startle you because I think it's a great representation of the success we're having. And the reputation that Jack Henry is creating for being an outstanding provider of digital technology.

That's great. And maybe one just quick one on complementary solutions. The processing line of that is growing really fast. I saw in the 10-Q, it's been growing like 20% year-over-year. And it's growing a lot faster than the support line. What is it that you're selling in that complementary line that's driving it? And maybe that is Banno, but I was just wondering why that's so good?

Yes. So Banno is in that line. Banno is in the complementary section. The lending solutions group is in the complementary section. There's a -- if it's not payments and it's not core, everything else is in complementary. So several of those things that we highlight on the calls, they show up in that line because almost everything today in the complementary bucket, we sell as a private cloud or public cloud-hosted solutions. So the revenue primarily shows up on that line.

And next, it looks like we have Michael Del Grosso. Michael? Okay. We will move on to David Togut.

Dave, are you there?

Yes, I am. What are your expectations for the timing of the rollout of FedNow? And how will that impact other solutions in the market like Zelle and, let's say, broader P2P apps, in your view, like Venmo, which historically has had viral growth?

So I don't know that I can quote accurately the rollout schedule for FedNow. Tede Forman, who's going to be up later today, would have that information. Maybe I'll ask Kevin, can you IM Tede and ask him to give me a date for that. But to the second part of your question, it will be interesting because the Fed is a trusted partner to virtually all, not every bank, but virtually all banks out there and certainly the credit unions, and so as FedNow comes online and becomes an active player in this space, my expectation would be that they would see some real success because these banks and credit unions are working with the Fed regularly anyway as opposed to another third-party application. So it will be interesting to watch. My expectation is that it should be a pretty successful roll out, a pretty successful solution. The question is how long will it take to get to scale, right? Are our bankers or just bankers in general, able to really ramp that up quickly? Or will it take a lot longer to ramp? And of course, I can't answer or anticipate that answer for you. Early '23 or '24 on the FedNow rollout from the Fed, Dave.

Well, thanks for that. And just as a quick follow-up question, any longer-term strategic ambitions to take Jack Henry international, especially since the small FI market for core is relatively mature. I know you're moving upmarket, and that will be a focus of today. But what about outside of the U.S., are there any particular markets that make sense to consider?

It's an interesting topic. And one we talk about around here literally every year. So every year when we have a strategy meeting, this is always a topic that's on the discussion list. Do we want to make an international move? And if so, what does that look like? The challenge that we would have taking one of our core systems internationally is the same as the reverse challenge that companies like Temenos have had trying to bring their solution into the U.S., right? The regulatory environment is totally different. You get into currency conversion and language conversion and all that kind of stuff. So what we've decided here is, it would probably be unlikely that we would try to take one of our cores international. But we have such a broad suite of other solutions, it's very possible that we could take some of those things internationally. So I think if I were to estimate how would we do that. Chances are we would probably find an acquisition that's already international, based internationally, probably somewhere in Europe and complete that acquisition but with an eye toward rolling out other Jack Henry solutions, integrating them in and rolling them out beyond the U.S. borders, that is a very doable, I think, proposition. But first, you have to find the acquisition. You got to find the property that you're going to you're going to establish kind of that be told with and then wrap things around. And again, that is not a strategic imperative for us today, but it could be at some point.

Next, we have Vasundhara, if you want to unmute. Let's see if we can -- Vasu?

Can you hear me now?

Got you.

Sorry about that. Good to talk to you, David, and thanks for taking my question. I guess the first question I wanted to ask was about the openness that you just talked about. You've stressed time and again how that sort of core to Jack Henry's culture and philosophy. I was wondering if you could comment a little bit about how the landscape of third-party vendors that your core platforms are working with today has changed over time? Have you seen that landscape become a lot larger than it was a few years ago? And then what does that mean for growth prospects of your ProfitStars division? I mean, is it -- on the one hand, there's more competition, but are you also seeing more acceleration of your ability to be able to work with other players?

So the answer to both of those questions is yes. So certainly, the number of players has broadened. I think it's interesting, though, that my sense is that as the number of players has expanded significantly. They tend to be very focused, very single threat, very specific in what it is that they're trying to do. So there are a lot more players, but they tend to have a really specific mission than maybe 10 years ago or something like that. But as I highlighted earlier for our ProfitStars group, we've -- about 10 years ago, we were less than 2 products per customer. We're at 3.95 today on an 8,500 customer base. And so our ability to cross-sell and leverage our solutions into those customers has also expanded during that same period of time where the number of players has continued to grow. And I think the reason for that is: number one, we're delivering great technology. I mean a lot of these solutions that we're delivering through the ProfitStars group are innovative bits of technology, really outstanding solutions; number two, you have banks, in particular, not as much on the credit union side, but on the banking side, there is regulatory pressure for banks to reduce the number of vendors that they work with. The vendor management push is pretty intense for banks. And so if you're ProfitStars, we, at Jack Henry, with ProfitStars, we have this broad suite of solutions that are noncore. A customer who chooses to business with our ProfitStars group, even if they want to keep whatever core they're running, that's not from Jack Henry. If they choose to do business with the ProfitStars, they can help satisfy that vendor management mandate that they have from the regulators, but they get all this great technology from one company being Jack Henry in the form of ProfitStars. So I think that has really helped us as we've continued to face many more competitors in that space. We've also had much greater success at the same time.

And then I had a quick follow-up on the prior question about real-time payments and P2P, et cetera. So if you -- I know you put out number of how many Zelle wins you have. But if you think about the total and addressable market, what does the penetration look like today? How many banks have adopted to Zelle or other real-time payment solutions versus the growth opportunity being there?

Yes. I don't know that I can quote that off the top of my head as far as the opportunity for Zelle or any P2P. And when FedNow comes online, the opportunity for FedNow. Zelle penetration isn't particularly significant. I mean it's -- and again, I don't want to quote numbers because I don't have them off the top of my head. But when Tede comes up, I'm sure that he can quote you accurate information later on. The interesting challenge for people like us is Zelle is offered as a free solution to -- by banks and credit unions to their customers. And it's tough to make money off of free, right? So they're trying to figure out where are those opportunities to monetize these types of payments, maybe with a different technology. So that's where The Clearing House comes into play. That's where I think FedNow is going to come into play. There are other solutions, other opportunities to maybe monetize that. And so I think you'll see some settling in and probably some shifting in the coming years regarding the solutions that customers offer and why they offer them. And that's back to that key point I made earlier. The reason we created PayCenter was so that as new technologies emerge in this area and as people try to figure out what's the best one for me so that I can monetize some of this stuff, we have the hooks built with our PayCenter solution. So the bank or credit union only has to connect once, and we'll take care of all the rest of that connectivity for them. So I think we've really positioned them well to be successful in the future.

Next, we have Kenneth. Ken?

Yes. Can you hear me?

Yes.

Great. Thank you, David and the team. Really appreciate all the detail on the slides. David, I just -- I think you mentioned that you continue to take share on the core side. So I was wondering if you could talk about where you're taking share, which segment of the market is that coming from? Is that more on the credit union side or the bank side? And then which competitors are seeing the most share? And I guess, how much of an opportunity is there going forward to continue to take share?

So as you can probably appreciate, I'm not going to share competitor names by name, but what I will tell you, if you go back to the sales slide that I had a little bit back, you see that so far this year, we booked 17 credit union deals and 11 new banking deals. As far as new core competitive wins, we did 15 just this quarter, as I reported on the earnings call. So of course, things were running slow during the height of the pandemic, but now the gates have opened again. So it's still tremendous opportunity for Jack Henry to take share. We are winning customers across the board. We may win more from 1 or 2 players than others, but it's not restricted to 1 or 2 players. We win across the board. And I think it's because of that reputation that we have for great service, some of the things that I highlighted, great service, great technology. The fact that we're recognized by American Banker as a top fintech, and none of our major competitors are on that list. That says things to people. That's why I mentioned earlier, pretty much every banker reads American Banker. Credit unions certainly do, but almost every banker is reading American Banker. And so when they see that, that Jack Henry is the only large provider that's on that list of fintechs, that means something. That's significant to them. And so we're getting that type of recognition, and it is certainly helping us win deals across the board. And so as far as I'm concerned, we still have a lot of opportunity to take share and there are another number of potential donors as far as share is concerned.

Okay. Really helpful. And then just the 3.95 ProfitStars products per client, up from 2 products per client 10 years ago. I mean that's basically double in 10 years, so call it roughly 7% CAGR. And I think you mentioned that regulators are pushing kind of this agenda for banks to have fewer vendors. So maybe you could just provide a little more detail on why they're pursuing that, why they're pushing that? And I guess how much of a tailwind is that going forward?

Yes. That's not new. The vendor consolidation or the vendor management initiative from the regulators has been going on for at least 5 years, I would say. And so it certainly has been a tailwind for ProfitStars for the past several years. It's definitely part of what's led to that significant growth on the ProfitStars side of the house. That's not brand-new news. And I don't see that slowing down at all. And the logic from the regulator's point of view is that the more vendors you're trying to manage, the more risk you're introducing into the organization because they expect you to really keep close tabs, particularly when it comes to security, cyber and those types of things. They expect you to keep close tabs on your vendors. And so if you've got a list of 20 versus a list of 5, right? It's just logically easier to manage that list of 5. You can have a list of 20, but you got to be prepared for a lot of questions from the examiners about why are you doing that and have you really checked all these boxes? Have you really quizzed your vendor on how well they're positioned to manage risk? And so it's just a logical thing for the banker to start thinking about how do I pair that list down some? If this ProfitStars group has all these things that I need, and I can get them from 1 vendor, and I can manage them as a single vendor, that's good for me on the risk management side. And so as I say, that has definitely led to some success for our sales group.

Next, we have Nik Cremo. If you can let us know what organization you're with?

Credit Suisse. It's great to see how focused Jack Henry is on open banking. And my question relates to that. Does Jack Henry have a strategy for enabling customers to become partner banks or fintech to give them another way to participate in all the growth in digital financial services? And is this topic being brought up more by customers recently?

Yes. It's an interesting topic. So I've described it recently. We deal with such a wide variety of banks and credit unions at Jack Henry from our smallest are in the $200 million range, our highest are up about $40 billion or so, and we have everybody in between. And so you have very different approaches to this question or this topic. You have some who kind of take that attitude, blinders on, I don't want to even talk or think about it. I just want everything to remain the same. You have others that are being very progressive in their thoughts about what they want to do and how they want to do it. And so we are well positioned to help our customers who want to pursue something like that. We haven't had any that have done that yet where they become the charter for a fintech, but we're well positioned to help them do that. We're supporting a bunch of banks now in digital-only deliveries. So they're positioned to compete with the neos with a different model, but they're competing with the neos with a digital-only bank. So that's going to continue to evolve. We are very active. And as I've talked earlier, we have this focus on fintech partnerships, not just for Jack Henry. This isn't -- as I said before, this isn't about us getting a referral fee or a spiff. This is about us creating connectivity so our customers benefit. So you put that together with the openness focus that we have, and I absolutely believe that we'll have customers in the future, we'll be taking advantage of that to deliver that type of solution. We just don't have anybody doing it today.

And now we have Tim Willi, if you can let us know which organization you're with?

Tim Willi with Wells Fargo. David, how are you?

Hey, Tim. Good.

Two questions on the open topic. Number one, I guess, your comment around vendor management and sort of the openness philosophy you have. Do you feel like Jack Henry is becoming, I guess, a gatekeeper, if you will, for innovative sort of point fintech solutions that, again, are sort of looking for that credibility and that cultural fit that will allow them to scale up given all the focus around reliability, compliance and trust that the regulators are sort of pushing out to the banks around their vendor management? And then I had a follow-up.

Yes. I would hesitate to use the word gatekeeper. I'll maybe use the word gate opener because it's not our decision whether somebody gets to play in the sandbox or not. What we're trying to do is make sure there's sand in the sandbox for them to play with. And so we've created -- we've then created a separate website that any fintech and access, they don't need any special log on credentials. They can go to the website, they can learn all about how to integrate into our APIs. They can take advantage of the API suite that we have out there at their discretion. They, of course, need a bank to work with, but we're trying to make it as easy as possible. So again, I really hesitate to characterize it as being a gatekeeper because we're really just trying to create that environment to be open. And yes, as a long-term strategy, we believe that it'll pay dividends for us. We become the reputation that we have is as being the player that you want to play with because they provided the sand and the sandbox, and they're going to make it easy for you. It's the reputation we've had for years at Jack Henry with more traditional integration approaches. And now with the onset of APIs and the focus on API integration, we're doing that same thing. We're trying to enable that same type of environment for other players in our space.

And my follow-up was -- I apologize if I missed it, I logged on just a couple of minutes tardy here. But you talk a bit about the partnership that I guess was announced yesterday with Akoya. I guess I'm just sort of curious you've always listened to your bankers when you do M&A or product development, and was this something that bankers were really pushing you to try to create sort of, again, that sort of environment? Or is this something where you're in front of your customers knowing that it's probably going to make sense for them and that over time, you see them warm up to the concept of the open banking and all the connectivity?

Yes. We're most -- it's a good question. We're mostly in front of our customers on this one. There certainly are some that are asking, but we're mostly in front of them. A key aspect of that relationship, and I hesitate to use the word partnership because everybody assumes that means there's money exchanging hands, and there is not. It's a relationship. We're trying to facilitate the tools that they have. The financial data exchange concept, FDX, is becoming a bigger topic among our customers and certainly among fintechs, trying to enable people to -- consumer to leverage technology that they found and they like, get the data from their bank that they want without doing what's called screen scraping. And screen scraping is the old technology, and many of you have probably used it without even knowing you were doing screen scraping. You provide your credentials to some third-party, you give them your user name and your password and your account number, and they use that to go and grab data from the bank and pull it into a combined statement for you. Usually, it's an investment statement or something like that. That's screen scraping. It's highly risky because you're giving the keys to the kingdom, right? You're giving your user name, password and account number to somebody who's going to go and pull that information. They're going to simulate being you using technology to go pull that information. That's been going on for years. Well, the idea here is that you get away from that because we can use the financial data exchange concepts to get data freely back and forth, secure without having to share confidential information. So again, we're ahead of most of our customers on that. There are certainly some who are asking, and it's kind of a hot topic right now, but we're trying to position so that our customers are better positioned for the future. But also so fintechs know that we're there, we're active in trying to support their success.

And next, we have Michael Del Grosso.

Michael?

Can you guys hear me?

Yes. Yes.

Awesome, awesome. I am with Compass Point. So on the survey, some pretty encouraging data points, 73% of FI...

You're gone Michael. Tommy, is -- I'm not hearing anything, so... I can hear Tommy talking in there.

Okay. It looks like we are back, Michael. I apologize for that. If you will ask that question one more time for Mr. Foss, and he'll be able to get right with you with that.

Great. Yes. So just a question on the survey, really encouraging data points there, 73% of FIs and they anticipate higher or significantly higher spend. How does that compare to your expectation? I'm really surprised by that data point. I mean as you think about preparing for next year, your budget process, is that an upside relative to your expectations?

So the piece that surprised me was the 22% who said they expect to increase spending by more than 10%, that part surprised me. The 50-some-percent that said they were going to increase 1% to 10%. That wasn't the shocker. We were expecting up at least 5% year-over-year. But the 22% that said greater than 10% increase year-over-year, that was the surprise. And so one of our tests right now or one of the activities we're working on right now is to figure out is that real. We go into budgeting here in June because, of course, we're a July 1 fiscal beginning of the year. So June will be our budgeting time. And so we're really trying to tease that out and make sure we understand is that number real? Or is that -- what should we expect? But I would definitely admit that the 22%, over 10%, that was a surprise.

And next, we have Steven Comery. If you can let us know which organization you're with?

David, I'm with G. Research. Just wanted to ask a question on the competitive front. So as we come out of the pandemic and our RFPs start to ramp again, hopefully, want to ask for updated thoughts on risks from core start-ups, both domestic and foreign. And the viability of public cloud core technology and sort of how your views have evolved on that since most of these stock companies started pre-COVID?

Yes, it's interesting. So we are paying attention to all the start-ups in the space, and we've kind of watched them evolve their strategies, and we're pretty in tune with how they're thinking about going after the market. Now several have originally thought that we're going to go after community banks and regional banks. And because of the intense complexity of dealing with the number of customers we deal with, they've kind of tried to move upmarket and maybe land a whale instead of a whole bunch of dolphins along the way. So I think we've seen some of those strategies change. We have international competitors that have been trying to establish a foothold in the United States for some time. The regulatory environment for whether you're coming international or whether you're starting up from bottom-up, the regulatory environment is a high hurdle for anybody. We've been dealing with this for the life of our company. But it's a high hurdle. And the reason is you not only have federal regulation that you have to comply with, but you have all these state and territory regulations you have to comply with. And so if you're a start-up, that creates a pretty complex environment. So we're paying attention to all of those players out there and trying to anticipate what they're doing and where they're going and ensuring that we are in a competitive position. As far as your question about public cloud, so we are very active in the public cloud environment today for many of our solutions. We got a bunch of them installed in Azure, some installed in AWS. We are not -- we don't have a Jack Henry core solution in the public cloud environment today, primarily because there hasn't been much demand for a public cloud core solution. Most bankers, most credit unions are pretty hesitant to put their core in the public cloud, but it's coming. There is no question about it. It will be -- Jack Henry will be a player in that space in the not-too-distant future. Others in our space are moving in that direction. It's just a natural evolution, I think, for any of us that are core providers to, over time, move into the public cloud environment. But there's got to be a reason to do it, right? What's the reason that you're doing that? What's the benefit to the customer? Generally, it's processing power, right? It's the ability to expand and contract the services that you need. And so as long as customers see that opportunity, and we see that opportunity, that will definitely be a part of our future.

Okay. And it looks like our last question will be coming from Dominick Gabriele. If you can let us know which organization you're with?

This is Dominick Gabriele from Oppenheimer. Great presentation. So David, if we think about the cycle of product demand as your partner's loan growth sort of reaccelerates over time. And you think -- what types of products do you think will come for the product demand cycle as we head into the next economic expansion? I mean, right now, it's sort of digital, right? But that's for now. I guess, how do you see the future? You guys have, like you said, 45 years of cycles. I mean, what do you think the product cycle is going to be over the next 5 years or whatever it may be, even more?

Yes. It's an interesting question because the result of the pandemic or one of the results of pandemics -- pandemic has been this going away or the shutdown of all these small businesses out there, whether it's restaurants or other businesses that really were in trouble, and so there's -- we believe there's going to be a real resurgence in small business going forward. That creates a lot of opportunity for bankers. It creates opportunity for lending. So commercial lending, either small or even large commercial loans. It creates the money management opportunity. So whether it's cash management or treasury management. There's new technology that their customers will expect in those areas. It creates this opportunity for different type of financing. So it may be accounts receivable financing. It may be factoring because these businesses are starting up again, but they're expecting to grow quickly as the economy really rebounds, but they don't have the track record since the pandemic to really justify a large loan. So they may be looking for factoring or accounts receivable financing technology. We have all of those things through Jack Henry. We have those things tightly integrated together. So I think that's one of the key areas this growth in small and medium business that's going to kind of rebound as we come out of the pandemic here, that's going to create a lot of demand among bankers for new services, new solution, and everybody is going to expect it to be digital first. They're all going to -- want to be able to do these things on their phone or on their tablet. And again, we're well positioned to satisfy that demand.

Great. And then maybe one more quick...

Sure, go ahead.

Sorry. And then maybe just on the neo banks. There's obviously a bunch of neo banks that have started coming to market recently through SPAC deals and whatnot. I guess how does Jack Henry think of targeting neo banks if that's where the growth in the -- perhaps the digital age of banking, how do you target those customers that are coming to market for their core solutions or whatever it may be?

Sure. Yes. There's kind of a combination when you think of the neos. There are some that are digital-only banks, and we have many of those already today that are digital-only. They're running on a Jack Henry platform. And then there are the neo banks that are depending on somebody else's charter. So they're not chartered financial institutions. They're kind of setting their technology on top of somebody else's charter, and obviously, we call on banks all the time and credit unions. And so there may be an opportunity for us to work with some of those as a result of customer pursuing a chart -- or a neo bank pursuing a charter to use as the underlying means of processing accounts. One of the challenges that a lot of the neos may face in the future here is they've been making a lot of money off of interchange. And they've kind of been leveraging a loophole in the rules regarding interchange. And so the question is, will that loop hole close? Will the rules change? How will that impact their business model? So we're certainly paying attention and active in that space, but we are very active in supporting these chartered digital-only banks around the country. And as I said before, we have many of them in production today. And so with that, I think Kevin is ready to give me the hook, and I will turn it over again to Mr. Williams.

So thanks, everybody. That was a lot of really good questions. And a lot of those questions, other people will be covering as well, like [indiscernible] and some others, but very good questions. And like I said, the earnings call was just last week. So I'm going to go through these fairly quickly to try to get us somewhat back on schedule. So here's just our revenue, and Dave already had this chart. And obviously, we could take this back to basically 2001, and it'd be up to the right, the entire way. Obviously, we've had a very good performance in the first 3 quarters. I predict we're going to have record revenue and record EPS again this year, going forward, even with the challenges, the pandemic and other things that have occurred. And again, this is FY '20, FY '19 because we didn't have this meeting last year. Very nice growth in every one of our segments; 9%, 9%, 11%, with 9% overall. But if you remember, it's kind of the tale of 2 cities. We had -- last year, we had a huge increase in deconversion fees. This year, we have a huge decrease. So deconversion fees last year was up about $23 million from the prior year. So on a non-GAAP basis, we still had nice revenue growth of about a little bit -- about 7.3%, I believe. And here's the GAAP operating income for the different segments. Again, core and complementary influenced quite a bit by the deconversion fees last year, but still a solid year, both for '20 and '19. And then here's the revenue year-to-date, this year, for the first 3 quarters, obviously, core is down a little bit. Complementary has a little growth. But again, those are the 2 that are impacted most by deconversion fees, which if you remember, are down $33 million for the first 3 quarters, but we still managed to eke out 2% growth with those headwinds. The other things that you have to remember in the first half of the year, we took our user group meetings virtually, so we didn't have that revenue. And then obviously, our billable travel and convert merge revenue are down significantly as well. Operating income year-to-date, again, very much impacted by a lower deconversion fees, but still solid performance. Now on a non-GAAP basis, we've had really nice growth, especially in the payments and complementary, overall 5%. Again, with all those headwinds that also affect our non-GAAP revenue, like the virtual user group meetings, the billable travel being down, convert merge, any number of things. Operating margins are up nicely in both core and complementary year-to-date. Payments is down slightly again because of the migration to the new payment platform, which, as Dave mentioned, that we've completed 100% of that in Q3. A little bit of our revenue growth drivers, and this is a slide I've had in here for a couple of years, and really, nothing has changed. So if you think about 29% of our revenue is in our private and public cloud, which Scott Spain is going to talk about outsourcing later, growing at 9% historically. That's about 3% growth, processing, which is primarily a card and digital. It's 40% of revenue now, growing at 8%. 2% from cross-sell of new and existing products. And then we will continue to have headwinds primarily from license and hardware as we continue to move our on-prem customers into our private cloud. Operating cash flow continues to go up nicely. We had a really good year last year. This year, it's going to be down just a tad, partially because of deconversion fees. But the other thing I want to remind you is a big part of our operating cash flows in Q1 and Q4 from our annual maintenance billings for our on-prem customers. And even though we're moving those quickly over to our private cloud, that's still a big billing that goes out June 1. Capital expenditures are down quite a bit this year, and that's primarily because we had some big projects in FY '19, FY '20. We actually accelerated some projects so we can get the full advantage of the Tax Cuts and Jobs Act. There were some tax benefits there. Capitalized software. We continued to reinvest in our products, both new and enhancing existing products. So it's going to be up again this year when we finish out the fiscal year. And there's just the components that make up our free cash flow. Our primary focus, continue to return value to our shareholders. We do this through dividends, stock repurchase and acquisitions. Dividends have come up. I could take this chart back to 1992 when we started the dividend program. Obviously, it's going to be up again this year after we pay Q4 dividends, which is yet to be announced. Share repurchases, we were pretty steady for the last 3 years. Obviously, Dave mentioned the valuations in the M&A market. There's just nothing out there. We had some cash. Our stock price fell back down to about $150. Our Board told David now to get more aggressive. So we stepped up the repurchase in Q3. So we bought quite a bit back so far this year. And Dave mentioned acquisitions. We have not done one since July 1, '19. It's not from lack of looking and trying. We would like to find more of it. They're just hard to find. And I think we do more, there are probably going to be tuck-ins like Geezeo and Bolts, where we already had a relation with, where they want to become part of Jack Henry. And then just select financial metrics. Even with the debt we took on and spent a lot of cash this last quarter to buy back shares, our current ratio, we still got a very stellar balance sheet. Our return on average assets of 13.3%, I think it's one of the highest in the industry. I know return on invested capital, and return on equity of 20.9% is definitely very high compared to the industry. So that's a quick overview. With that, I will open up for questions.

Okay. It looks like our first question is from John Davis, if you can let us know which organization you're with.

John Davis from Raymond James. Kevin, I just want to talk a little bit about the headwinds from both the T&E pass-through as well as the convert merge revenue kind of for the first 9 months of this year. Obviously, you called out the $33 million deconversion fees. But just trying to get a handicap of what that's been down year-over-year. So as we think about next year, what potentially could come back?

Yes. So -- I mean, well, if you think about just the user group meetings that we didn't have, I mean that's typically $3 million to $4 million of revenue. Now that's also benefits of our operating income because even though we get that much revenue and our cost for those are actually higher than the revenue. So there's a headwind on revenue. The billable travel is probably down. I can't remember, John. I mean I don't have those numbers right in front of me, but both of them are down significant. So there is -- I mean we're going to have some fairly easy comps in 2 or 3 lines of revenue last year if the M&A activity picks up and the economy keeps above one.

Okay. And then just a little bit on the margin. I think there's been a lot of kind of noise with the platform migration. Just remind us, on an operating basis, how much kind of operating leverage you guys would expect on annual, I guess, on an annual basis? And then also what the total margin impact of the payments platform migration should be once that's kind of done? So I think you said $16 million, but just wanted to confirm that.

Yes. So John, I'm sticking to that number. I mean the cost takeout is about $16 million. Obviously, we finished the migration at the end of March. We started the platform decommissions at the end of last month, so there will still be some costs that's in there for this quarter. There's still some things in development on -- for the new platform that's going to take through Q2. So we're not going to get the full benefit of the cost in Q4. There's going to be some additional cost takeout in the first half of next fiscal year, but we will get the full $16 million, I feel like that's a conservative number. So you're going to see a nice increase in margins in fiscal '22 compared to '21. I am very confident it will be well over 100 bps, and part of that is from the payment platform. But then just our normal margin expansion, John, from not only payments because now we're adding new customers with payments, but also the continued move from on-prem to our private cloud, we should go back to getting our normal fits to 100 bps even when we get through FY '22.

[Operator Instructions] Our next question is coming from David, if you can let us know which organization you're with.

David Togut with Evercore ISI. Two questions. First, where do you expect software cap to end FY '21? And what are your expectations for software cap for 2022?

So David, I think the quarterly cap that you've seen in the first 3 quarters, you're probably going to see that same amount in Q4. And actually, our software cap is actually behind our budget a little bit for FY '21. But FY '22, we have not -- as Dave said, our budget is in June. So I would assume FY '22 cap software will be pretty much in line with FY '21. But I'd also point out that our external auditors, I mean there is 2 things that they really, really dig through the details there. And obviously, that's revenue recognition and cap software. And so -- I mean obviously everything that gets capped is required to be capped by GAAP.

Understood. Just as a quick follow-up. As noted, you've stepped up the pace of share repurchase year-to-date. To the extent acquisitions remain a little too expensive for your criteria, how should we think about the balance between share repurchase and dividend growth for FY '22? Could we see you step up the pace of dividend growth if you're not active from an acquisition standpoint?

Well, I mean that's a discussion that the Board has almost like on a quarterly basis, David. Could we step up the dividends? Probably. We've increased the dividends at a pretty steady pace for the last 20 years to kind of equal to the earnings growth. So I don't know how aggressive the Board is going to get. I mean we have a Board meeting later this week that I'm sure stock buybacks and dividends will be on the top of your discussion at that meeting. Also, I'd point out that we're almost through the current authorization. So the Board is going to have to approve more -- a bigger stock buyback before we can get back in the market.

Our next question will be coming from Kartik, if you can let us know which organization you're with.

Yes, Northcoast Research. Can you hear me, Kevin?

Yes, Kartik.

Yes. Kevin, I know you and Dave have talked a lot about acquisitions and the price being too high. I'm wondering what is that you would want to acquire? If price wasn't the issue, what's kind of like the nirvana acquisition Jack Henry would want to do?

Kartik -- I mean that's a good question. And we've talked about this before. I mean after being in business for 45 years, we don't have a lot of empty white spots on the board, which is almost a double-edged sword. It almost would be good if we did have some that we can actually aggressively go out and look for an acquisition. So it's really what out there is coming to us, and we look at them. Obviously, anything that we can expand in payments, probably anything that we can expand our Banno platform in digital like Geezeo did. So those are -- I don't know if I'd call them nirvanas, but those are the type of things that we would really have a big interest in.

And then, Kevin, I know we've talked a little bit of FY '22 and kind of the backlog and how that should help you accelerate revenue going to FY '22. But you and Dave also have talked about the backlog's pretty long that the installed teams are pretty busy. Look the demand did increase, let's say, for whatever reason, banks wanted to spend more money. Could Jack Henry kind of accommodate that? Or is there maybe a level that you're stuck at, even if demand increase that you might not be able to accommodate?

Well, we could accommodate more Kartik, but it really depends on the mix of what it is, because, obviously, we've got several teams that really just focus on convert merge when M&A activity [indiscernible] our banks or acquiring banks. And so if the M&A activity doesn't pick up and banks spend more money, could we use those resources elsewhere to do installs? Absolutely. I think we're doing some of that now. So -- but remember that the challenge with putting a new team together, bringing outsiders in, is our systems are so complex that it takes 9 to 12 months to really get a person trained up to where they're effective without a whole lot of handholding. So -- I mean we can move some resources around, and we can take some -- a little more volume. But the other thing, remember, is almost everything we sell now is recurring revenue. So even if we can layer 1 or 2 more banks on, it's not going to be a huge increase in immediate revenue.

The next question will be coming from David Koning, if you can let us know which organization you're with.

Dave Koning from Baird. So a question on the outsourcing line or the public-private cloud, you call it now. I went back in almost every quarter that's grown over 10% until the last couple, and it makes a lot of sense, right? There's less conversion to outsourcing that happens probably in a time like this, but that's going to pick back up. You mentioned in a slide, it's only going to grow 9%, but we have almost every quarter, it's 10% plus, like shouldn't it get back to kind of that normal growth?

Dave, I mean, you know me a long time, and you know that I've always been a little conservative and always try to underpromise and overdeliver. So could it be 10%? Absolutely.

Yes. Okay. Okay. No, that all makes sense. And then I guess the one of the -- this is kind of technical, but in the 10-Q, there's always a line called product delivery and services. I assume that's where the travel, the term fees, the user group, the convert merge, all that stuff is. That looks like it's tracking to down $60 million this year. I know term fees are down $37 million. So is that gap kind of the amount that all those other things combined are going to be down?

Well, that and hardware and license is down a little bit, too. So yes, it's a combination of all those 5 or 6 things that you just mentioned.

Our next question will be coming from Vasu, if you can let us know which organization you're with.

This is Vasu Govil from KBW. I guess, first, a quick one on -- I think in the prior earnings calls, you guys have sometimes called out how the remote working environment is probably here to stay to a degree and how that could help cost savings over a period of time. So could you help a little bit dimensionalize what kind of cost savings you would get from that? And how to think about that dropping into the margin growth trajectory over the long-term?

Vasu, you're breaking up. Dave or I, neither one heard -- got that question. Can you repeat it?

Sorry, yes. So I was just asking about how you guys have called out that the remote working environment will be here to stay for a little while, and that could help drive some cost savings over time?

Yes. So remote work, so that's a great question. We are -- we still are on track, that we're going to start bringing some employees back July 1. But it's never going to go back to the way it was. Before the pandemic started, we were 70 -- roughly 73% of our employees were in the office and 27% were remote. We're probably still 90-plus percent remote, and I don't know that, that will ever go back above 50% in the office. There's going to be a lot of hybrid. There's going to be people hoteling. So is that going to help our margins? Yes. But I mean we're already getting the benefit this year. So on a comp basis, next year to this year, it's probably going to be much improvement to our margins.

Got it. And then just 2 quick ones on the revenue side. So the slide that lays out the long-term sort of 7% growth rate. Prior to the pandemic, you were talking about that potentially accelerating to 8% with the benefits you were seeing on the payments business. I know you called out the headwinds from the hardware sales and the convert merger. Is that kind of what's dragging that down to 7%? And should we see it accelerate over time as some of these headwinds go away?

So Vasu, if you recall, when I brought that slide up and the heading is in a typical year that we've seen historically the last few years before the pandemic. So having the payment migration done, selling new customers there, getting back to moving in our on-prem customer private cloud, could that accelerate to 8%? Yes, it could. But again, I'd rather be conservative and I'd rather hit or beat the consensus estimates than miss them.

Got it. And the last one, I don't know if I'll get a good answer for this one. But just given the importance of Banno and digital in this environment, could you help us size how big that is to your revenue pool today?

Was it Banno?

Well, so you have to remember, Vasu, I mean Banno is not a huge contributor. I mean it's growing -- it's the fastest-growing line of revenue in all of our revenue. But you have to remember, I mean 18 months ago, we were installing a couple a month. We didn't get this ramped up until 30 a month at the end of the last fiscal year. So we've still got a long runway and a lot of growth going on. As Dave pointed out on the earnings call, on the Federary call, I believe we just had over [ 300 million ] users. And on the May call, we had over 4 million -- 5 million users. So I mean there's rapid growth, and it's going to be a big contributor next year, but we've just now got a really nice base started.

And our final question asker is going to be Kenneth, if you can let us know which organization you're with.

Ken Suchoski from Autonomous Research. Kevin, I guess, just a question on the projected revenue growth slide, Slide 36. There's a 1 percentage point headwind. And I think you mentioned that's more license and hardware. And I think that's becoming a smaller percentage of revenue. But how do you expect that headwind to trend over the next few years here?

Well, I mean, I think, Ken, and again, we haven't done the budgeting for this year. But just moving our customers from in-house outsourcing, they're not -- those customers are no longer buying license for any of our products. They're not doing hardware upgrades. There's no on-prem conversion revenue in there. So that's my best guess right now that it's going to be about a 1% headwind next year, but that's going to become a smaller percentage headwind each year as we go forward.

Okay. That's really helpful. And then I guess my follow-up, just you mentioned that the stock price came down to about $150 and that the Board told you to get more aggressive on the buyback. I was wondering if you could just tell us how the Board goes about determining the intrinsic value of the business? And how do you -- how do they determine that the stock is undervalued?

Well, I would tell you that -- I have a feeling that every one of our Board members has their own strategy for evaluating the answer to that question. But it got down low enough compared to where we were and compared to what our peer group was doing that they felt compelled that then was a really good time to pull the trigger.

And it looks like we have one more individual. We have Tim Willi. On mute? There you go, Tim.

Yes. I'm sorry about that. Still trying to figure this out. Kevin, on the topic of M&A and just sort of following up on that, I mean given the capital you guys have, given the discussions that -- from Dave's conversation about the openness and the philosophy there, how do you -- how do the Board think about making investments as opposed to just acquisitions in companies that make sense to, at some point in time, make a part of the family or get to know or just want to build a tighter operational relationship with -- for those fintechs and tech companies that might be looking for some capital on strategic?

Yes, that's a good question. Obviously, we've talked to the Board a lot about joint ventures and anything like that. And actually, we've got a relationship that's disclosed in our 10-K and now with a company called Autobooks, that's tightly integrated into Banno and iPay. And so we've already got -- so we're already going down that path. So we will continue to look at other companies like that in addition to investing in our own products and services.

Thanks, Tim. Okay. With that, I'm going to now turn it over to Greg Adelson, our Chief Operating Officer, and he's going to cover basically everything operations within the company.

Good afternoon. My name is Greg Adelson. I'm the Chief Operating Officer at Jack Henry and Associates, and we welcome you to our analyst conference for 2021. I think most of you know that I was previously in the payments role. I lead the Payments Group for the last 5 years, and then I was promoted to Chief Operating Officer in 2019 and been in that role for about 18 months. Today, I want to spend some time kind of talking about some of the key initiatives that we have going on since I've been in my role, and it really focuses around driving what we're calling One Jack Henry. I'll talk a little bit more about that. And then there's a few of the initiatives that we've already completed and a few that are in progress. I'll give you some updates. I'm going to share some slides that we previously shared with you related to our core banking segments, both for the Symitar and our Banking group. And then lastly, I'm going to end with some operational metrics tied to some of our complementary products. First, I want to start off with really what drives Jack Henry and our success at Jack Henry, and it starts with our employees. Everything we do starts with our employees. And we believe that we take care of our employees and create the right work environment and training opportunities, they're going to stay here, they're going to be committed to the company, and they're going to provide excellent customer service. And I think most of you know, customer service is a big driving force for us in the marketplace and one of those things that our customers really value. And so if we take care of our customers, we believe that ultimately, they'll take care of our shareholders because they'll continue to buy more and more products from us. So one of the things that I wanted to do when I came into my role was really kind of play off of those pillars of Jack Henry's success and try to drive some that I call the pillars of focus. And so it starts in that left corner of cultivating the best places to work environment and really intentionally driving the things that would allow us to make those lists, to ensure that our employees are happy, trained, motivated and our attrition rate is very minimal. And as a result of that, we've had -- even through COVID, we've had one of the lowest years of attrition. In the right-hand corner there, it's about delivering a superior customer experience. And that really starts from the moment that our prospects are involved with our sales team and trying to drive the right intentional conversations, the simplicity of working with our company. And so we're doing a lot of activities to simplify those processes and then, ultimately, when they become a customer, making sure that we're driving the right experience from the time they get implemented with us to the time that they're serviced with our groups as well. In the bottom left-hand corner, when you're in an operational role, you're constantly looking for ways to improve efficiency, effectiveness and scale, and that's definitely a focus here. We have a full continuous improvement group that reports into my organization, that's really focused on driving the operational improvements at a very large level. So some of the large projects that we've undertaken across the organization to drive that efficiency. And then, of course, in our business, there's a lot of times where you're needing to address either a corporate or a compliance requirement. And so we make sure that we have the fungible capacity within our group to adhere to those things when necessary. And then again, ultimately, it all comes back, as a publicly traded company, to enhancing our stakeholder value and driving the right return for not only our shareholders, but also making sure that, again, our employees and customers, and stakeholders are happy as well. Another key component to what we're driving towards this One Jack Henry starts with what I call the 4 tenets. And these 4 tenets, originally, were kind of driven to improve our execution across the company. But ultimately, it also is improving our leadership traits across the company. And it starts with transparency. We've always been a very open and transparent company, but I want to make sure that it's more intentional, not only with our customers but also with our associates. And so we are really driving that transparency throughout the organization and all of our leadership traits as well as our customer communication. And then, of course, if you want to get to One Jack Henry and look like one company, you really need to build more consistency in what we do. So we're working on many initiatives to drive that consistency throughout the company in many of the activities that we undertake with our customers. And then also being a very collaborative organization, so making sure that our associates are spending time together. We're spending time learning from our customers. And again, just having more of a collaborative spirit. And then lastly, it's about communication and how we communicate, how often we communicate and changing the mediums of which we do communicate, and that's been a big focus as well. So -- again, I think these 4 tenets are improving our ability to execute as a company, but also improving our ability to have good leadership within our company. And so I talked a lot about this One Jack Henry mentality. And so again, you can see that we really have a vision here where we're going to leverage some of the characteristics that we have heard from our customers that really differentiate Jack Henry in the marketplace. Our ability to drive user centricity, our partnership approach and our openness approach. And we want to make sure that really over the next 3 years, that everybody at Jack Henry has a clear understanding of what defines exceptional customer experience, how to deliver it and why customer service is so vital to our success. And it kind of starts with this wheel. And again, when you talk about the focus on the customers and getting the voice of the customer, making sure that you get that information, you gain the feedback that you need, you do something with that feedback. We end up committing to various things in our road maps or other priorities and making sure that we do what we say we're going to do as a result of that. Obviously, we measure our success on a continual basis, either through surveys, customer feedback, road map execution, things along that line. And then, of course, it's a continuous feedback loop that will continue to operate. But this is being more intentional than we have in the past to gaining that feedback and driving the improvement that we are trying to do internally across the company. So some of the things that we've done to date that I think have really made a difference, and again, some of them are much more impactful for the customer and less for the associates, and some of them have been very impactful for our associates. So I'll talk about the first one being more impactful for our associates, which was really driving the consolidation of continuous improvement into a single group. We did have it spread out across the organization previously. And again, now it's more centralized. And as I mentioned earlier, we're really taking more time to knock out the big rocks and making a big difference for our employees and for our customers. And then consolidated the call center teams, especially our consumer-facing ones. So the JHA call center, our fraud center within our card group and then our iPay call center, we have one single leader now over those groups. We have much more consistency in how we hire. Our attrition rates are starting to go down. Our training has improved. Our ability to bring people on more quickly is improving because, again, we have more of a pool of resources, and again, more consistency on how we're driving that. But ultimately, for our customers, when they're dealing with our call centers and dealing with the leadership in those call centers, they're getting more of a singular voice than they did previously. Project and integration prioritization a big focus here, making sure that we're not only working on the right things, but we're working on the right number of things. I think one of the hardest things in leadership is making sure that you work on the right things and say no to the things that need to be put on hold, and we've had to do some of that. I mentioned earlier about the customer experience. So from the time a prospect is involved with us, until they become a customer and we're billing them. So we're working on all kinds of ways to streamline our contracts, our pricing schemes, bundling our pricing and our billing simplification on how we actually bill our customers. And then the customer experience initiative that kind of was highlighted a little bit in the slide before, but that is really around, again, improving that end-to-end feedback loop that we have with our customers and making the necessary improvements there, both operationally, in our sales group, in our products group, in our development groups. Those are all components of that. And so one of the key things I just mentioned there was around the product and software development life cycle in those groups. So again, building consistency. When you have a multitude of lines of businesses that are doing things, building out products and building software development, there's no reason why that needs to be different in each of those organizations. So really getting standards that we all can adhere to, allowing for more vertical movement within the organization because of the consistency and then making it much easier for our customers to understand how we go-to-market with things and how we develop our products. We spent a lot of time on roadmap transparency and consistency, developing a -- what we call, a 6-month roadmap. Our industry changes very fast, but we need to be able to share with our customers the things that we're going to be working on, and we actually get them done. So working in a 6-month roadmap creates less things that are changing and moving and making sure that, again, we're doing what we say we're going to do. We've gotten a lot of positive feedback from our customers on that. And of course, we still continue to do strategic roadmaps and things along that line. But I look at the 6-month roadmap as what we call an execution roadmap. Again, we share it very openly. We used to share about 15 to 17 different roadmaps from the product groups. We're now sharing over 60 that are out very open -- again, in very open space for our clients to see and utilize. And then we're also developing, based on a lot of our work that we've done with the Banno digital team, we're creating a user interface center of excellence, and we're going to drive all of our user interface development under a single leadership group, and that is actually being formed as we speak. A couple of slides here, I'm going to share on the banking side, that I think you've seen in previous presentations, but just wanted to show where we are to date in 2020 -- 2021, sorry. So we're still about 1,000 banks primarily. And as you can see, we kind of range from the community banks to the multibillion-dollar banks. And we have definitely done a much better job through the years, and I'll share some data with you on our ability to win the multibillion-dollar banks. As you can see, we're about 23% of the multibillion-dollar banks with assets up to $50 billion. So that market share has definitely increased through the years. We still support about 140 or so solutions, and we have 3 separate cores that we still operate on. We have 2 different primary delivery options, the on-prem and our private cloud offering. And again, most people are now opting for our private cloud, especially any of our new customers. And again, we're very proud of the fact that we've done competitive takeaways for basically every core system that is out there today. Everybody talks about industry consolidation, and it's definitely happening. But I think the essence of this slide is if you look at the $0 to $250 million market, that's where the consolidation is occurring. And honestly, that's not where Jack Henry really plays. We typically play in the $500 million plus market for the most part. Of course, we do have customers that fall in that $250 million to $500 million. But we have very few, if any, that are still in that -- especially the low end of that $0 to $250 million. Probably, the $200 million to $250 million is really the mark. But the bulk of where our customers are and where our growth is, is where the growth in the consolidation of customers is happening on the positive end of this, and that is that greater than $1 billion space. And as you can see, when you look that up, you got 34% -- 42% over the $1 billion mark, is happening on a positive level, and that's again where we're focusing our attention. So again, just to show this in a depiction. So kind of looking at where the competitors are, we're about 23% of the banks that are now in that $50 billion -- up to $50 billion market. That 203 number is interesting because, if you go back to 2001, we only had 26 institutions that fell into this segment, and now we have 203. So basically, in 20 years, we've grown that by about 200 to 180-ish institutions. And Stacey, in his presentation, is going to talk a lot more about what we've done over the last 20 years to make that happen. But more importantly, what we're going to continue to do to continue to drive our ability to go upmarket into the regional bank space. On the Symitar side, very similarly, we represent about 700 or so clients there, a little bit more we've had a ton of great organic growth over the years. I think the thing that's one of the differentiators for us on the credit union side is that we do have 38 of the largest 100 credit unions today part of the Symitar Episys system. We've done all kinds of work in really moving a lot of those customers to our private cloud as well. So you can see in the bottom-left corner that we now have over 60% of our clients in our private cloud, again, catching up to what we had already been doing on the banking side. We're very proud of the fact that we actually have software that can be utilized by the smallest of the small to a large credit union. So you can see there in the right-hand corner that, that software is being used by $3 million, not billion, $3 million credit unions all the way up to $23 billion credit unions which we have today. So again, the Symitar business continues to grow. We have new leadership in that group under Shanon McLachlan, who is doing a tremendous job of coming in and leading that group. So again, here, I think it's important just when you look at the data of really where Jack Henry and Symitar are performing in the actual market segment here and driving market share. So you can see at the end, at that 700 or so number, and that was as of 12/31, as I shared earlier. We're about 710-ish now. So those dates, I think when you look at the dates, there's a little bit of an overlap. But you can tell we're right and significantly ahead of our second largest competitor there in this space. And again, very similar to the banking consolidation and what's happening in the credit union consolidation, and again, even more importantly, because of our impact in that multi-billion dollar space, so once you get over $1 billion, you can see significant growth both in that $1 billion to $10 billion and the $10 billion-plus. But again, we're definitely playing in some of that sub-billion stuff as well and again not seeing that consolidation as maybe some of our competitors would. Again, just another depiction of that, seeing where Episys itself sits. So in that multibillion up to $50 billion or so, we have 172 clients. About 48% of the market today is on the Episys system. These next stats I'm really excited to share, and in some cases, they'll be the first time that many of you have seen these and that we've actually kind of went back and depicted this. But Dave and Kevin have been very adamant about -- really are very vocal about talking about our advancement in our digital space. And we're very proud of the work that we've done in that Banno team. And we made that acquisition about 7 years ago, I guess, and it's been a very, very strategic acquisition for us. And you can see back in 2018, which was still 4 years after the acquisition, we only had 60 digital employees. We only had 108 live customers, 200,000 users that were in the queue to be implemented. And we only had 425,000 or so monthly active users and that's somebody that actually had activity for that month and then we only had 147 -- I'm sorry, 475,000 total registered users. So there wasn't much difference between the total registered and the active, which was good, but the reality is we didn't have much of an ability to continue to grow. But if you look at us now in 2021, and these dates are as of the end of March, we now have over 570 employees in our digital and some of those came through acquisitions, the BOLTS acquisition, which is now called OpenAnywhere in Geezeo. But the rest of it has just been organic growth and in how we've driven because, as you know, both of those acquisitions didn't bring a lot of people. But now we have 435 customers that are live. We have 1.8 million users in our implementation queue. And as a reminder, Dave has been sharing the data. We're doing north of 30 implementations a month, and that's still on pace for the rest of this calendar year. And then we're doing about 4.1 million active users, so again, compared to that 425,000 we had just 3 years ago. And we have now 5 million total registered users versus that 475,000 registered users just 3 years ago. So significant growth in this business. We're very proud of where we're going, and we anticipate much more growth to come based on the things that we're working on. And Ben Metz will share a lot more of that detail in his presentation. I know you all are aware that we did complete our CPS platform migration, a 3.5-year project that I am extremely proud of the team. I was obviously involved as leading payments in the very beginning. And this was a very complex project when you talk about 3 different companies that were involved and hundreds of people across the organization. But just to put it in a quick depiction here. We did 879 debit migrations in 1,243 days. But on top of that, we actually added 151 new debit clients. So those were conversions that we did from competing platforms. So the 879 plus the 151, we now have over 1,000 total clients on that platform. And we have 47 clients that are currently in the queue for debit and credit, and that will continue to grow. That pipeline is really growing pretty quickly. So again, just wanted to wrap some numbers around that and the impact that, that's going to have on our company and continues to have, I'm extremely proud of at a time when we were not winning customers at anywhere near this pace prior to making this move. So again, just a quick look. And as Kevin likes to say, up into the right is always good, and that's kind of what you're going to see here in these next couple of slides just based on our card processing volume and activity there, and then the same thing in our Enterprise Payment Solutions. So as a reminder, that's mostly our remote deposit capture business. We do have some ACH origination in there as well, but the bulk of this is remote deposit capture. And again, through COVID, as you would anticipate, we've seen significant growth. But when you look at the number of merchants from basically Q3 of '20 versus Q3 of '21, significant growth there and as well as the number of transactions. And then on the PayCenter side, which is our payments hub which provides connections to both Zelle and The Clearing House, the real-time payments network, and we are also going to be a participant in the FedNow pilot. We've been working with the Fed for well over a year on getting ready for that. And of course, any other network that happens to come down the pike, we'll have the ability to connect our customers into that. But we're very pleased to say that we do have 181 Zelle contracts. This is as of April 15. We now have 73 customers that are live on the real-time payment platform with The Clearing House, which is well more than 50% of the live customers that are out there today. We have 53 Zelle customers that are live. And then again, we've received about 147 of the real-time payment contracts to go with the 181 Zelle contracts. And that's continuing to grow, and it will continue to grow in my estimation with the Fed's work as well. Some of our institutions didn't want to wait until the Fed was available, and that's understandable. But again, good news about what we've built is our customers have options. They literally have options even within that particular institution or client base. If they want some of their customers to be routed through the Fed, some of them to be routed through The Clearing House, we'll have the ability to do either. And then as you can imagine, we're starting to see some significant growth there in the number of transactions. And then really my last slide is around Jack Henry Lending, which when you look at really the 4 key components of noncore activity within our company, it is really driven by digital, payments, lending and fraud. Those are, by far, the 4 focus items, high-growth opportunities and where we're spending a lot of our dollars. And so pretty excited to share that in that Lending group, we've done a lot of work really over the last year of consolidating some of the groups and bringing them under singular leadership to get more of a vision from that group and being able to share that vision and execute better. So we've done a lot of that. We've made a lot of small acquisitions through the years that have been accumulated and now integrated into that group. But as you look at kind of what we're building, which is this single consolidated both consumer and commercial platform, we're starting to get some traction there. And we're pretty excited, we've got 22 platform contracts just in fiscal year '21. The pipeline looks really good. I will tell you that, as you can imagine, Lending was a little bit slower during COVID time, a lot of focus by the banks on PPP. By the way, that PPP, 147 is only what we did in Round 3. Our numbers were much bigger in the earlier rounds, but this is just the '21 numbers that we wanted to share. And you can see we did about $1.2 million -- I'm sorry, $1.2 billion transaction through all those institutions. And then we continue to have a nice growth rate on that enterprise single platform. So some of the acquisitions we made and the transaction volumes we're seeing, about 34%. And then, lastly, we really believe that, especially as the PPP money starts to dry up, there's going to be a rebalancing in these lending portfolios. And we believe this marketplace technology that we've recently acquired and really putting the fruition is going to provide that place for buyers and sellers to come together, and we're creating that environment for them. And we're already excited to have about $150 million of assets that are sitting there that we think will be able to be utilized by our customers and actually excited about some of the pipeline activity in there as well. So that is a brief run through kind of what's been going on, on the operational side. Again, I'm really excited about where we're going as a company driven towards this One Jack Henry mentality and taking what's been 50-plus acquisitions through the years and a lot of individual products and business units, and again, perceived or -- and/or real silos that were created and breaking those down, leveraging our 4 tenets of transparency, consistency, collaboration and communication and driving those pillars of focus that I talked about across the organization. But very excited about what we're doing and where we're going and look forward to sharing more with you in the future. So look forward to answering any questions. And again, thank you for attending our conference.

It's all you.

All me.

Yes.

So Tommy, are you going to take the questions for us?

I will be taking the questions. We have our first question coming from Kartik. If you can let us know which organization you're with.

Northcoast Research. Great. There's been a lot of talk about real-time payments, and I think all your competitors have announced some type of offering. I'm wondering how you think Jack Henry compares with your competitors' offerings, if there's any differentiation, or right now, all the products are about the same until the market kind of figures out what they want.

Yes, Kartik, great question. I think there's a few things that differentiate us. And I think most of it is just kind of how we built our network. We've been -- we were very -- I would -- maybe a close follower to some of our competitors out in the market, and that was intentional. We wanted to make sure we connected all of our cores. So now every single core that we have is connected. So that allows any customer we have to have the ability to either use Zelle or the real-time payments network through The Clearing House. We also -- because of the flexibility we built into that network, Dave already mentioned our ability to do FedNow, our ability to do other networks. We're working on a lot of the small business and other opportunities that will allow our customers to have easy access to driving use cases that will actually produce income for them. Dave mentioned Zelle being free. Well, the other use cases related to RTP and the FedNow have some opportunity or ability to earn some income. So I think some of our competitors, they have other things that they needed to do and some of them got out maybe a little ahead of us on the Zelle side. We're far and ahead in front of everybody related to, especially from a processor standpoint, related to RTP. And I think that's the work that we did to really build the infrastructure. And then, lastly, I think what we did to create a very simple way for our customers to go live with us, there's little to no work on the customer side other than communication out to their customers. All the infrastructure, all the operational pieces, all of the components that we created internally was done to simplify that process for them. And I think that's where some of the differentiation occurs based on what we know today.

Well, and Kartik, also what Greg just mentioned, that technology allows us to migrate a number of customers at a time where most of our competition are doing it one at a time.

Yes, it's a great point, Kevin. And I think one other thing I would add, Kartik, is we have all started to utilize a toolkit that will allow non-Jack Henry digital customers, so those that are not on Banno or goDough or NetTeller. And so some of our competitors that are in the digital space are actually coming to us to connect their customers to the real-time payments networks using some of the technology we created in Banno. So we now have 2 customers that are live that are on non-Jack Henry digital products.

Okay. Tommy, is there another question on for Greg?

Yes. So Kartik, if you would take a second and ask that question one more time, that way we can get that answer to you.

Yes. No problem. Greg, my second question was just on the credit card/debit card migration platform. I know you've focused on your core customers. I know you've migrated all of your noncore customers. I'm wondering, are you now selling to your noncore customers? And if so, what type of success you've had so far?

Yes. Another good question. So the short answer is we will be starting to sell to the noncore customers this fiscal year. So we're putting together our marketing and communications. We're going to be focused on a few select cores that actually we've already migrated off. So we're not going to open the kimono to every core available. We're trying to be very specific. We want to make sure that we stay focused in where we know we have some great success. So the short answer is we will be doing that in fiscal year '22 and starting that part of the pipeline as we speak.

The next question we have is coming from Tim Willi. If you can let us know which organization you're with.

Yes. Tim Willi with Wells Fargo. Question for you, I guess, one and then, I think, a quick follow-up. So obviously, culture at Jack Henry has always been a huge part of the story. You've talked about the One Jack Henry strategy. In light of what we continue to hear about the race for technology, talent and just the rapid evolution of technology, could you talk a little bit about not only how you're sort of thinking through recruiting and sort of making sure that you're staffed up the way you want around technology and development, but also internally, training and sort of retraining skill sets of employees to help them advance through the organization and possibly help alleviate some of the pressures from sort of the external tightness in the labor market?

Yes. Another great question. We have definitely been focused on that. Our HR team, really over the last several years, led by Tiffany Haynes, has created a lot of internal development programs, things that we focus on high potential folks. We focus on people that are at certain levels that we know have opportunities to continue to drive their skill sets. We've done some specific things just in the development side of our business, where we've taken some opportunities and time in their busy schedules to schedule trainings and things along that line. So very intentional to try to make sure that we develop and retain our associates. As you can imagine, and to your point, there is a lot of competition especially in some of our groups for the talent that we have. But the flip side is also true, where people are hearing what we're doing. Dave spoke about our work -- Best Place to Work, especially in the fintech, that top 50. Those type of things attract folks that want to come to work for us. So though we may lose some, we definitely have opportunities to bring new people on because of the things that we're doing and really the type of talent we have in our leadership as well. So we are -- it's a constant kind of shift of opportunities to drive the right balance between the development and the training and execution. But that is very intentional about what we're doing right now is finding the time to allow that to happen.

Tim, before you go on, let me just add one other thing to that comment. So pretty much anybody who's looking for a job these days goes out to Glassdoor in the process of looking for a job. Jack Henry enjoys on Glassdoor very high ratings. So that's usually people -- maybe employees that are still here, but it's oftentimes people who leave the company for one reason or another, they evaluate the company. And our ratings on Glassdoor are very high, and I think that's a reflection of culture. And so I think that helps with what Greg is talking about when it comes to attracting people to our company. So just wanted to throw that point in there as well.

Yes, that's a great point, Dave. I appreciate that. And Greg, my follow-up and then I'll just mute myself. You've got a lot going on in the payments world. A lot of your banks focus intently on small to midsized businesses, I think, would be a fair representation. And it feels like the merchant processing world, which I know Jack Henry is really, I guess, maybe not felt like it was like a major product line for them. But it just feels like merchant processing and small business banking and the POS systems and everything is coming a little bit tighter together. And I guess I'm just sort of curious how you think about merchant processing and the products and services around small business banking you're providing your customers with, if you think the merchant is something you need to be closer to or still sort of approach it the way you have.

Yes. Another good question. I think there's a couple of things to emphasize here, and then Dave can add any comments if he likes. But I think the first thing is that we are focused on that segment today. We do have products that absolutely touch those customers through both our EPS business and other parts of our business. Obviously, we're doing some things within our digital world as well. Specific to merchant acquiring, we actually have created some solutions that allow us, instead of having a singular solution that goes out to our customers and says, hey, we either have this partnership that you can use this X company, we've created a relationship that allows us to bring several different acquirers to our customers and they have a choice to be able to pick ones that end up working the best with them. We do some consulting services on behalf of our customers to help them select the right customer. But it gives them options, and that's really what Jack Henry has always been about, is giving our customers options and not necessarily pigeonholing them into one partnership or one relationship. And so we started to see some success, to your point, on that. And not anything big and it's not necessarily something that I think is going to truly turn the corner for us to -- that we're going to go out and change our overall mindset. But in our customer base, where those that have interest in doing merchant acquiring and maybe need some help, we now have solutions in place to make that happen.

I think the only thing I would add to that comment, Tim, is if you look at the bank's relationship with an SMB, that relationship is pretty broad. So it includes lending. So there's small business lending, we have those solutions. Kevin mentioned the investment that we have in Autobooks. So Autobooks is an accounting platform essentially for SMB. So a tight integration with Banno. We have Banno business coming out later this year, all directed toward SMBs. Our treasury solution was really designed to serve larger businesses, but the Banno business solution that we're rolling out later this year is an SMB-focused solution. So pretty much all the things that a bank or credit union needs from a technology point of view to facilitate that relationship with the SMB, including accounts receivable finance, by the way, all of those things are there. We don't directly do merchant acquiring. We still don't feel like that's a key component for Jack Henry to be providing to those small businesses. But for those customers of ours who choose to be in the merchant acquiring or want to be in the merchant acquiring space, what Greg just outlined is a wonderful answer to that question.

The next one up is Peter Heckmann. If you can let us know which organization you're with.

Yes. It's Pete Heckmann with D.A. Davidson. I had a couple of questions. The first, on Lending, seems like Jack Henry has done a really nice job there with over 600 unique clients. But for the enterprise lending platform, what's the average size of an FI that is going for the full offering?

Greg, do you want to take that or you want me to take it?

You can go ahead and take that.

I'd say they tend to be larger institutions. So generally, over $500 million in assets, probably closer to $1 billion in assets usually are the institutions that are adopting that technology up to some very large mid-tier institutions. So smaller banks can certainly use that technology and credit unions can use that technology, but I'd say it tends to be on the larger side that see the need for the online option, the digital option -- a complete digital option for their commercial customers.

Okay. Great. And then just moving back to Banno, could you give us an estimate of the number of registered users on the legacy NetTeller and goDough platforms? And just what would be your expectation as -- I assume that those FIs can stay on those platforms for as long as they'd like. But to the extent that in the past -- or in the future, as they migrate and upgrade to a new solution, what percentage would you expect to capture on Banno?

I'll let Greg take that one.

Yes, sure. So I'm not exactly 100% sure on the number of registered users, but I think it's around -- and Ben will be able to actually qualify that or maybe Ben can shoot me an IM. But I think it's around 3 million-ish is what I'm thinking. And -- but to answer -- to your point, yes, I mean we actually see in this -- Ben just told me it's closer to 5 million on NetTeller. So pretty equal to what we have today on Banno. But to answer your question, yes, so we absolutely are continuing to support those platforms. We're making investments in those platforms. There is some differentiation and things that some customers don't necessarily want all the bells and whistles that Banno has. And there is a price difference as well. So we'll continue to support those. But there are plenty of customers and specifically our new customers that come to us are absolutely wanting to get on the latest and greatest when they make that move. And I think the things that Dave just outlined and what we're doing in Banno and what Ben will emphasize in his presentation related to Banno business and the conversations component of that and the ad components of that, there's far differentiation in the products. So I do believe -- and we have seen some of that migration occur. And so some of those numbers that you're seeing and the growth are actually coming from NetTeller. But again, as Dave emphasized earlier, the bulk of it is coming from our competitive takeaways as well. So a lot of runway there for both, but we'll continue to operate both as we do multiple cores, as we do other multiple products that we have at Jack Henry today.

And one thing to add there, Pete, to your question that I think has been interesting is, so if you have a bank with 50,000 users, for example, on NetTeller, what we witnessed is when they move over to Banno it's not 50,000 that end up being active on Banno, it tends to be a real step-up in active users because of all the additional feature function on the platform. So we see this organic growth within the institution in adoption just because they moved to the state-of-the-art new platform when they make that move to Banno. So it's been interesting phenomenon. One, frankly, I didn't anticipate, but it's been pretty interesting for us to observe.

And one other thing, Dave, we also manage our resources. So as we're moving these customers from NetTeller to Banno, obviously, we're managing our resources because I will tell you that NetTeller and goDough are still very high-margin pieces of our business.

Yes. And one other thing I want to emphasize, to Dave's point, is that we're also getting the pull-through effect in some of our other products like payments. So absolutely, when we move somebody from NetTeller to Banno, we not only get the lift in the Banno side, we get a lift in the iPay or EPS components as well.

That's helpful. I appreciate it.

You're welcome.

Next up to the plate is Dominick Gabriele. If you can let us know which organization you're with.

This is Dominick Gabriele from Oppenheimer. I just -- I think sometimes larger institutions need to see execution of onboarding and performance and the institutions that are of similar size to theirs. And the significant change in the 172 credit union clients, which signifies obviously market share wins since the last Investor Day and on the banking side might add maybe 3% to 4% share gains in the $1 billion-plus client list. Can you just talk about what products you may have launched or what the customer base is seeing on both sides that would -- that kind of tick them over the edge in this category?

Dave, maybe you want to take that or me?

I'll take it. So I think -- so just to be clear, you're talking -- we're not talking about Banno now. You're talking about the core side, Dominick?

Yes. It sounded like it was core.

Yes. Okay. So just to be clear, so on the credit union side of the business, I mean I don't know that there has been any significant new product launch, but you -- for those who have followed the company for a while, we did a pretty significant rewrite on our Episys core regarding database functionality and expanding the database offering. And that has been received extremely well among customers and prospects, the fact that we did this major rewrite as far as the underlying database, moving from purely proprietary database to supporting off-the-shelf SQL, for example, as database option. So that, I think, has helped. Additionally, beyond that, there are a number of credit unions out there running old core technology with other providers. And I think there is this real groundswell of customers who feel like they're not getting the upgrade to their technology and the ongoing support that they want. And of course, they see Jack Henry. We have a single flagship core on the credit union side with Episys. There is no doubt about what our strategy is, what our direction is, which product we're supporting going into the future, right? So it's a very well-defined strategy. And so a lot of people, I think, have been attracted by that. On the banking side, I think we've done similar things as far as the banking cores, but we do have some new product launches like treasury management. So a brand-new, ground-up, digital-first treasury management solution to serve larger commercial customers. All the work we've done around online digital lending really primarily targeted that larger commercial banks who are looking to service larger customers. So there have been things like that, that we've been rolling out here in the recent past that are specifically designed to serve customers on the larger end of the banking space, not to mention initiatives Stacey will touch on regarding our regional banking, really becoming a player in the regional banking space where we haven't been perceived as being a major force in the past, and regional above $10 billion in assets. So a lot of those things, I think, have driven to that tremendous success that you're seeing.

And Dominick, you're also comparing this to the last Investor Day, which was 2 years ago. I mean our average banking credit union has grown tremendously in the last 2 years through M&A and just organic growth, especially on the credit union side. So a lot of these banks and credit unions that 2 years ago were at a lower tier level, just through organic and acquired growth, has grown up into those higher levels.

The next question will be coming from Steven Comery. If you can let us know what organization you're with.

Yes. I'm from G. Research. Just wanted to ask a question on Jack Henry Lending. I appreciate this slide with all the numbers. Maybe just any kind of commentary on the feature history there and sort of what the road map is going forward. Like what types of lending are the current focus, what's forthcoming in the pipeline and then just sort of any thoughts on retail versus commercial functionality in Jack Henry Lending in the future.

Greg?

Yes. You go ahead and take that one.

Okay. So the business really started with accounts receivable finance. So when we first really started to roll out the lending platform, accounts receivable finance was the beginning of this platform. And over the years, we've acquired a number of things and developed a number of pieces internally. So you saw us do the LoanVantage acquisition 2, 3 years ago, maybe something like that, that was a key component of the strategy. We acquired a product called FactorSoft, which has been rolled into the strategy. And so over the years, it's been a combination of putting these acquisitions together that were strategic acquisitions to build out a functional platform, putting those things together and then adding on a functionality that we're developing in-house. And so today, we have -- we've been primarily focused on the commercial side. So today, we have this very broad suite of commercial offerings all integrated together, all with this digital-first approach to facilitate complex commercial loans and SMB loans. And then what we've been working on more recently is on the consumer side to deliver the same type of technology and the same type of platform but around the consumer lending side, and you'll hear more about that in the future. But all of that with an idea that lending growth is going to come back again particularly around commercial loan growth. And digital first is what everybody is expecting. They want to be able to apply for a loan and get approved for a loan and finish the entire loan process online. And then the banker wants to be able to manage the life of the loan using a digital platform instead of 3 different platforms. So all of that is available today from Jack Henry on the commercial side.

Next question will be coming from David Koning. If you can let us know which organization you're with.

Yes. From Baird. And I just had a pretty quick follow-up. I was going to ask some of the same questions on Lending. But maybe just a couple on that 626 lending clients. How much of those are core clients? How much are noncore clients? And why wouldn't all of your core clients just have the service so they could integrate it with the normal account platform?

Yes. Interestingly, Dave, I would say the majority of those -- probably the great majority of those are non-Jack Henry core customers. They are ProfitStars, non-Jack Henry core customers. The Jack Henry cores have very robust functionality in the core. And so what we found as we were building these solutions and rolling them out was it was easier pickings, I guess, I'll put it that way, outside the Jack Henry core base because there was so much need for more robust functionality. But we certainly have inside-the-base customers who've adopted the technology. A number of those 600-and-something are running the technology inside the base, but it really has been an initiative that's been on the ProfitStars side and has been focused on filling a need that we saw outside the Jack Henry core base.

And our last hand is coming from Ken. If you can let us know what organization you're with.

Ken Suchoski from Autonomous Research. Thanks, Greg, for the presentation. I was just wondering if you could remind us what the revenue model is for solutions you're selling in regards to Zelle and RTP. And then maybe if you can comment on the revenue model on the Loan Marketplace. I think that's pretty interesting.

Yes. Thank you, Ken. Yes. So on the Zelle model, it's pretty simple and it's pretty standard to what most of our competitors are doing. There's typically an implementation fee, very nominal. There's fees that we are actually having to pass through from Zelle in the case of a Zelle transaction. Sometimes there's slight mark-up, sometimes there's not. But the reality is there's a transaction-based fee to go with an implementation fee in both of those cases. And then when you look at RTP, there's opportunities, as I mentioned before, with various use cases to take those to -- instead of pennies or cents to potentially the dollars. And so that's where a lot of the focus will be related to both for our customers and for ourselves to be able to drive additional revenue opportunities in those businesses. And on the Loan Marketplace, Dave, I don't know if you have any details on that, but I don't have the specifics on those.

Yes. So as we -- as our customers offer those loans -- and just to be clear, so you've got a bank or a credit union that wants to book a credit, but they can't -- they don't have the wherewithal within their balance sheet to service that credit. So they want to sell the loan up. They can put it in the marketplace. They participate in the -- they get paid a fee from whoever is buying that loan. They participate in the life of that loan. So it's a good option for those customers who can't book the loan and service the loan themselves.

And they don't have to sell the loan. They can actually participate with multiple institutions to get a bigger loan.

And then I guess just maybe one more question for Greg. I believe you said customers might be able to make some income off of FedNow and RTP. I guess since you guys sit in the middle of a lot of these conversations, can you talk about the economics for RTP? I guess who's paying fees to use the rails? Is it a fixed fee or is it variable? And I guess who's paying and who's receiving those fees? Any commentary you could provide would be really helpful.

Sure. Yes. So some of the fees are fixed and some of them are variable. So there are certain fees that are direct from The Clearing House to us that, again, that are being passed on. There's other fees that could be based on a use case, disbursement of some kind, insurance disbursement, let's use that as an example, where the particular -- we may charge the institution a set amount the institution who charge their customer a set amount. And theoretically, in all those cases, there would be margin made on both sides of that. And again, when you think about just the processing of B2B payments and the opportunity there where still 50% of the payments are going out by check, so some of the vendor opportunities are also to be able to process those payments electronically. We're working on some things within our bill pay network to facilitate that both within our faster payments hub as well as some partnerships to take that 50% check market to something more electronic. So there's opportunities up and down the chain where we see, again, that's a differentiator in the Zelle market because, as Dave alluded to, P2P you typically can't charge for where these -- more of these B2B transactions you have the ability to do so.

Right. That makes a lot of sense. And if I could just sneak one last one in here. Could you talk about how your TAM, I guess, on the card processing side will evolve as you open it up to more cores. I think you mentioned you're just starting with a few at this point. But any detail you can provide on kind of the number of FIs in terms of how that TAM changes as you open it up would be really helpful.

Yes. I appreciate the question. I don't think we can give you anything specifically. I can tell you that from what we did on the migration, we ended up moving about 8 or 9 different cores customers that we had, specifically on the credit union side of our business, where we had opportunities to build deeper integrations with those particular cores. Some of them are smaller. Some of them are competitive cores that you would know. But the opportunity would be, again, from a focal point, especially out of the gate, will be on those finite number of cores. And so I don't actually have it at my fingertips how many clients would potentially be part of that. But I can tell you that from the success that we had in -- so far in just getting people to convert over, we think there's opportunities there within conversations with those customers to take this to outside the base. In another question, because this will probably come up and I want to go ahead and try to address it, in Ben's presentation, we'll talk a little bit about what we're doing to go outside the base over the next 18 months or so. And I think there'll be some great correlation to what we will be able to bring to market between both the digital and the card platforms and attacking those outside the core -- or outside the Jack Henry core base with both of those products at the same time. There's a lot of correlation there and a lot of opportunity. And that will continue to happen as we get outside the base with Banno as well.

Yes. Really exciting. Look forward to following. Really appreciate it.

Yes. Thank you. Appreciate it.

Okay. A lot of great questions, but we really need moving or we're going to be here till midnight. So we're going to get one more presentation before we take a real quick break, and I may actually take even a shorter break. So next up is Tede Forman, Head of Consumer and Commercial Payments, which he's going to talk about a lot of things that your question has just addressed on the payment side. So take it away, Tede.

Hello there. Hi. I'm Tede Forman, Head of Consumer and Commercial Payments for Jack Henry. Really appreciate the opportunity to kind of share with you our payment focus coming up for fiscal year '21. My agenda really will be around sharing an update on our Card Processing Solutions; EPS, which is our Enterprise Payment Solutions; iPay Solutions, which is our bill pay platform; and then really excited to share with you JHA PayCenter, which is our faster or real-time payment hub. First, I'd like to start off with really sharing with you kind of our overall payment vision. And this is really around delivering superior customer experiences, and customer experience being both our customers but our customers' customers, and then simplifying the complexity of payments. Payments today are very complex, and being able to provide services around simplification to our customers is really a key tenet for us at Jack Henry. So really, there are 4 key products that fall into our payment family at Jack Henry. Card Processing Solutions, so this is basically ATM, debit and credit card transaction processing. We've got some fraud mitigation, some award platform and optimization programs in support of our CPS platform. We service just north of 1,000 financial institutions. EPS or Enterprise Payment Solutions. This is really a complete payments platform. It includes remote deposit capture, ACH origination and it's sold through different channels and different sales teams, both to financial institutions and what we call value-added resellers. And we service just right around 3,300 financial institutions with our EPS suite of products. iPay Solutions is our bill pay platform. This is consumer and small business. It includes P2P transactions, account-to-account transfer. And we also have Tier 1 call center services in support of the bill pay platform. We also service about 3,300 financial institutions. And then really excited to share with you updates on what we call JHA PayCenter. So this is our faster payment hub. This connects our core platforms with Zelle, RTP and eventually other real-time payment networks. It also connects into our Banno digital platform at Jack Henry. And we're servicing right around 120 financial institutions today. So kind of jumping into some key metrics for our payment products. Across all 4 payment solutions, we service around 6,400 financial institution clients. So this would be credit unions and community banks. We're processing around $169 billion a month that represents about 924 million transactions. We're seeing 11% annual same-FI transaction growth, so pretty strong growth there. Our payment products this past Q2 here at Jack Henry represented 37% of our Jack Henry revenue, and we've got about 18% of the employee base fall in our payment solutions today. So now moving into updates around those 4 product verticals, and I'll start off with CPS, our card processing solutions. Our key focus areas, I'll cover really just 6 key -- or 5 key focus areas for CPS today, really looking at -- we launched contactless cards. So the majority of our community FI client base today, they haven't deployed contactless cards. So this implementation project will really be around focusing on launching the contactless card process over the next few years. Issuance and provisioning of digital cards to mobile wallets, this is a big -- we partnered with Banno, basically our internal platform, to offer digital card issuance and provisioning into cardholder wallets whether it's Apple Pay, Google Pay, et cetera. So really, this is the next logical step in our digital first set of initiatives. We've got several key enhancements around fraud and security to support cardholder shopping trends. With the increased e-commerce that we've seen through the pandemic, this is pretty critical. Things like curbside pickup, buy now, pay later are really part of the program. And then really expanding the sales opportunities outside of the non-Jack Henry core base for both debit and credit. So now moving into iPay and our EPS solutions base. A couple of key items here for our iPay product is really the bill pay modernization. So there's been a lot of changes in browser integration today. We've got a big initiative around creating basically an agnostic browser solution, really creates more ease of integration for our digital platforms and our customers. We're really excited about a partnership with Mastercard, and this is really around creating a more seamless user-friendly e-mail experience. Mastercard has built a bill pay exchange program where certain billers will be providing request for payments. And then this will also enable real-time or near-real-time payment confirmation, and this is really the first step that we'll see around creating real-time bill payments. On the EPS front, really expanding our mobile capabilities. So we're going to be adding in card and other payment options for our remote deposit capture tools. Some other key areas for iPay and EPS is enhancing our fraud mitigation solutions in our remote deposit capture products. We'll be including both internal and external data sources. Enhancing our -- enhancing and improving our integration opportunities both for those products, so creating basically a self-service developer experience for customers to create. It will log in a sandbox kind of model for developers to integrate with our solutions, our APIs and then really creating more flexible APIs that allow multiple integration points, moving away -- or adding more of a REST-based API and feature modals will be also included in that improvement on our integration options. And then really, the last piece here is on the bill pay front is we continue to enhance and have multiple options for bill payment funding. We support good funds, a managed risk program and then what we call funds verification. And this is where we integrate directly with our core platforms at Jack Henry. So now moving into Pay Center, which is our third product pillar. I really like this slide as kind of an overall representation of kind of what Pay Center does. It is a single integration point for multiple real-time networks. Today, we have Zelle and RTP. We're part of the pilot program with the Fed, so the FedNow rail will be integrated also into this network. But this connects our core platforms and our core customers into these real-time networks so that we can offer those services out to our community financial institutions. It's also a centralized process for managing costs, so if financial institutions were to have to connect into these different rails independently, we actually have a cost model that allows us to allow one integration point and then having access to all these rails. It's a streamlined integration or implementation process for our financial institutions. Basically one-stop shop, they can integrate, and then they have access to all these rails and don't have to do multiple implementations. And then again, it's a turnkey solutions -- it's a turnkey solution. It's one digital experience. We do all the fraud management for them and then also have back-end automation and self-service tools to manage all those configurations. So again, it's a payment hub that's a turnkey single integration point for our customers. So really, our focus areas for Pay Center is really streamlining the onboarding process as we continue to enhance the solution, add new features and then add new payment rails. It's a streamlining onboarding process for us to do that. We're creating an administrative portal that allow our financial institution to self-service some of their functionality. And then we've got a strong focus right now on enhancing our toolkit. So we have built a toolkit that allows financial institutions that have a Jack Henry core but aren't using our digital platform is -- to launch these payment networks that we've got. So it's a toolkit that, basically, a non-Jack Henry digital platform can use and drop into their solution, and then they would have access to all of these faster payment rails. So we're really excited about that. And then 2 really last other things are really around, as we continue to enhance the RTP framework, we're implementing send and request for payment. So these are really going to create additional use cases for our Jack Henry complementary solutions. So if you think in terms of real-time account-to-account transfers, if you think about real-time bill payments, if you think about business-to-business real-time disbursements, this functionality will allow us to drive those use cases into those complementary products. And then really, the last item I mentioned briefly is that we are part of the pilot program with the Fed around launching FedNow. We've been working with them for a couple of years, and we literally have signed some agreements that we would be part of a pilot program with them, and then we'll be connecting that FedNow rail into our faster payments network. So that really wraps up my update from our Jack Henry payments perspective. Really appreciate your time and looking forward to further discussions. Thank you.

[Operator Instructions] Our first question is coming to us from David Togut. If you can let us know what organization you're with.

David Togut with Evercore ISI. Question, Tede, for you on the go-to-market in payments versus Fiserv since Jack Henry now does its debit card processing on a joint venture with the Fiserv First Data platform. How do you establish your payment offering as having a competitive advantage when you're in the market versus, let's say, Fiserv First Data and there's a core deal involved?

So let me jump in before Tede answers that, just to make sure we're clear about terminology here. So this is not a joint venture, right? So we are essentially a customer of Fiserv leveraging that platform. We're just processing on their platform. Everything else is Jack Henry. All the services that we offer, the front-end platform, the front-end usability, is Jack Henry. We do the install, we do the support, so I get a little nervous when we talk about a joint venture because that is not what this is. So I just want to be clear on that language. And then I'll let Tede answer the rest of the question.

Yes. Sure. I'm going to actually tee this one over to Greg and let him answer the core question.

Yes. It's probably easier, so -- yes. So to answer your question, I mean, from a differentiation, there -- from a -- as Dave just mentioned, I mean, Fiserv is truly just the back end. So they're just processing those transactions. We've built our own tools. We've created -- with the work that we've done with PSU as well as part of those components. We do all of the -- our own implementation and sales. And really from a differentiation, it's the integration component. So we have much tighter integration with our own products. So again, as I was talking earlier about combining what we're doing with Banno and our card platform, it stands out and which is why we've been successful with winning a lot of the Jack Henry clients that were on other processors, either for debit or credit because of the integration components and all the tools and things that we've built on top of the platform.

Understood. Appreciate that. And just as a quick follow-up, what trends are you seeing among your FIs under $10 billion in assets, which I think is the cap for retaining the higher pre-Durbin debit card interchange? Do you see a clear preference among the under-$10 billion asset customers to continue to issue debit cards? Or now that you have this broader capability with credit card issuer processing as a customer of Fiserv First Data, are you able to market more of the credit card offering into that sub-$10 billion asset customer base?

Yes. Excellent question. And I think several years ago, there was a lot of somewhat hesitance when folks started to cross over in trying to figure that out. But I think now that things have been in place for a while, there's less hesitance. But to answer your question directly about credit, absolutely, I mean that was one of the big drivers of us being able to do this kind of relationship with Fiserv and on the platform, was not only to be able to offer credit but to be able to offer credit on the exact same platform as debit. And so our customers are absolutely taking to that. We're seeing more success in the marketplace with winning credit deals. We've actually had several very large debit customers that have recently converted their credit portfolio over to us. And again, I think as we're building more integration in with our digital platform over the next 12 months, you're going to see more and more of that as well. But we're absolutely seeing that as an opportunity for us and one that's got a lot of runway.

And David, one other thing I'd point out is the reason we went down this path 3.5 years ago is because we were losing customers. And we are where we are today probably 6 years quicker than we could have gotten there if we tried to build it ourselves.

Our last hand is from John Davis. If you can let us know what organization you're with.

It's John Davis from Raymond James. I just wanted to talk a little bit about bill pay. I think, Dave, you called out that, that had been an area of slower growth more recently. It's a relatively mature market. So maybe just talk about what you're doing there. Are you seeing any shift from consumers initiating bill pay through their bank relative to the merchant itself? Just kind of want to get some thoughts on the bill pay environment today and then what the growth outlook looks like for that part of your business.

And I'll leave that for Greg or Tede.

Yes. Sure. So appreciate the question and good question. So absolutely, our -- I think the bill pay organic growth has slowed. It's probably a number of items, one being industry consolidation. If you think about 3 or 4 years ago, you paid probably 3 or 4 telecommunication bills. You might be paying 1 today. Card on file with some of the streaming services and then real-time payment capabilities that we are seeing a lot right now with people using Biller Direct sites. So there has been somewhat a shift back to Biller Direct sites. So some of the things that we have on our road map that are going to be really nice and complementary to like the real-time payment network. So ability to facilitate a real-time bill payment. And then I also mentioned our partnership with Mastercard and the bill pay exchange program, where we'll actually be getting electronic e-bills which will create a real-time notification, payment scheduling and also payment confirmation. So we see a lot of that automation and some of that real-time payment connectivity potentially changing some of the direction with the bill payment growth.

Okay. Thanks, Tede. So we're going to take a quick -- we're going do a 5-minute break because we're a little behind. And obviously, I know everybody wants to hear the rest of the presenters. So we'll be back at 3:48 Central Time, 4:48 East Coast time. [Break]

Welcome back to the Jack Henry & Associates 2021 Virtual Analyst Conference. Let's keep the show going. Back to you, Kevin.

Welcome back, everybody. We're going to get right into it. The next presenter is Stacey Zengel, Senior Vice President and President of Jack Henry Banking, to talk about our core and openness of the core and where we're going with regional banks. Take it away, Stacey.

All right. Hello. My name is Stacey Zengel, and I'm a Senior Vice President in Jack Henry & Associates and also the President of Banking. It's a pleasure to be with you here at the 2021 Analyst Day to present you a presentation on everything core and open. And I'm going to have 3 different topics that I'll hit today. I'm going to focus on initially Jack Henry BankAnywhere, which is a solution set that we put together prior to PPP. They really help our customers stand up digital banks but also during PPP when everything was digital for that capability to be there to serve customers when they couldn't come into the bank. And then also regional banking, this is a walk that we've had as we've grown as a banking company. And I want to talk a little bit about our movement into a new sector as far as the banking industry goes. And then lastly, something we talked a lot about and something I'm very passionate about, what open really means to Jack Henry and to the industry as well and how we help our customers. So sit back and relax, and I'm going to take you through about 20 slides of these 3 topics that hopefully will help you understand Jack Henry better. So first of all, Jack Henry BankAnywhere. And this is what the solution set is, and I mentioned really helped our customers during the pandemic. But it includes really several different solutions: our digital solutions, which you'll hear us talk about as Banno as Ben gets into the -- his presentation; Branch Anywhere, which is a back-office tablet- and phone-based system that helps the back-office staff at the bank do work; and then also Jack Henry OpenAnywhere, which helps our customers gather accounts outside of the bank. So you can actually open an account without actually going with the bank, which is a very powerful thing, especially when we were in an environment where a customer couldn't come into the bank. Also core, obviously, core is a system of record and has to be in the equation. And then we wrap all of this with our own consulting services to help customers really understand how to get off the ground and be effective in this environment. And so why are we doing this? And why is it important to our customers and our company to do this? Provides a different channel, a dedicated channel for them to digitally support their customers, and it also provides a way that they can differentiate the bank. Many banks have had a lot of products that have grown through time. And this is a way for them to create a digital product set that really helps them serve their customers. It also significantly reduces infrastructure costs. There's not as much infrastructure with the digital environment that we're setting up, and it also provides a quick and constant innovation tool for our customers as well to follow. And again, gains a lot of invaluable opportunities for them to experiment. They can stand up brands, and I'm going to show you a slide here in a minute of Banno that is branded. So if you visualize a bank that could have one brand, which is the brick-and-mortar bank. They could also have a brand that maybe is meant for a local college, could be meant for treating a wealth management customer differently as well, just all kinds of things that they can do with the solution set. So this is a Branch Anywhere application, and you can see that -- a lot of big buttons here, a lot of different capabilities. And this is really how our customers can serve their customers. So if you visualize, during the PPP crisis, we had a lot of banks that did things like curbside banking, where their customers would come by the bank and stand -- and pull up to the curb, and they would actually serve their customers, not asking them to come into the bank. So this is a great way for the banks to be mobile. And as I mentioned, they can also brand their application differently as well. So this is a way that even the same application that they're using, which is Banno, could look differently depending upon the brand the customer is a party to. So certainly a different way for them to serve the customers and certainly a way for them to differentiate themselves as well. And now I'd like to walk into the regional banking section of my presentation, and this is a slide I'm sure many of you have seen. Now this is the Jack Henry history in banking, and we always like to talk about, in 2001, we had a couple dozen banks that were $1 billion-plus in assets. We currently have 203, and that's about 22%, 23% of the market share in the mid-tier banking, the larger FI market that we serve. So what I'd like to walk you through now is really what happened. And so what did happen in 2001? Well, we realized the banking market was consolidating, so we started to focus. We had great commitments. We actually created more features and functionality that were being used by our larger customers at the time. We did some operational enhancements as well to help serve that customer base. And all of this was really focused on growing that segment. So now since 2001, we are where we're at with 203 customers. Our customers have grown organically and through acquisition. We've won many other multibillion-dollar bank deals as well. In fact, since 2010, we've won 30. So if you look at the market there, a lot of the numbers of 203, a lot of our customers have actually grown into that segment with us, but we've also won several from a sales viewpoint as well. We continued to enhance our products. And obviously, as you know, Jack Henry has been acquisitive. We've developed things as well. So our product portfolio has gotten larger to serve those banks. And we've continued to enhance our operational capabilities, listening to our customers, and we continue to do an absolute good job in doing that as well. And now it's time for our next step and next segment in growth in Jack Henry Banking. So this is regional banking. When we initially did our homework, we would define a regional bank as $30 billion and larger in asset size. And the research we did, we had a lot of direct discussions not only with our larger customers but also a lot of our competitions, larger customers as well, and we received a lot of wonderful feedback. They were willing to talk about what they were looking for in growing their bank. And they really wanted a business partner that would help them more logistically be more of a consultative approach within the bank than they've had in the past. And so we identified a next step in our growth is to support this regional bank, and that's what we're going to focus on now. And initially, it will be about helping our customers grow, the larger customers that we have, so protecting our revenue but eventually competing in this space as well as our company grows. And so our plan, again, is once again to do -- and again, I always like to say that history is a great predictor of the future. Our plan is again to invest and focus on the tailoring of our services and our products to ensure that we really have the right fit for the regional bank. And this is achieved through more of an outcome-based and -driven approach that's focused on the right priorities and not just a series of individual tactical projects. So we have a really good strategy where we're focusing on the regional bank. And the objective really is to become that trusted business partner that they can trust, that they want to grow with and that helps us grow with them in the future as well. So why is this program important to our customers and our company? Well, first of all, and I think you probably see this, enhancing our customer retention as our larger customers grow, and we have a lot that have grown with -- through time with us, and that is a pretty good predictor of the future as well. And in general, the larger the customer and the more success they have, of course, the more revenue to Jack Henry as well. So the more successful they are, the more successful we are as a company, too. And again, set up for future growth and also positioning in the regional banking space. As our customers are successful, we can attract new opportunities as well. So this will be a good space for us to play in, and I'm sure you'll hear more about it in the future as well. So let's move into open banking, and what is open banking? And first of all, I'd like to say that it's the capability and the flexibility for our customers really to freely select the solutions that they'd like to use and deliver to their unique customers to set their customer experience for their bank. And while we always love our customers to select our products and services that we use, we also realize that they do might -- they might want to have a best fit for some independent features that they want to serve to a customer, and that may be the selection of a third party. And so our simple philosophy has always been really that if our customers are successful, we'll be successful as a company, too, and that's really how we've approached the open market. And so our approach to open banking, again, we feel that technology providers should offer freedom, flexibility and choice to customers. Open APIs create and enhance partnership opportunities to quickly bring integrated solutions to market to help our customers be more successful, and they also help in meeting and managing demands for services quicker and better for our customers as well. And at Jack Henry, the key thing for all of you to know really since our founding in 1976 is that our philosophy has always been open. And it started a long time ago, and I remember the days we'd create simple interfaces for our customers to third-party solutions to help our customers. And that was back in the day when we didn't have so many solutions. And then almost 15 years ago, we developed our middleware technology, which is jXchange, which -- probably, the best analogy for you would be that it created a common language to develop online interfaces for our customers and third parties. And I'll talk a little bit in a minute about how many third parties actually have integrated to our technology middleware. And then of course, as we've grown and continued to evolve, we also have advanced our story around open as well. And so let me talk a little bit about our solutions that we have that are open as well, and I'll start with our PowerOn solution. And our PowerOn solution allows our customers to integrate information from disparate systems into Xperience so that they can visualize the entire customer relationship. And a good example of that for our customers would be if they have a third-party card solution, a credit card solution, they may want to bring that card data into Xperience so they can actually see the entire customer relationship in Xperience. So there's a lot of flexibility, a lot of power in PowerOn. Our jhaEnterprise Workflow solution is probably one of our most innovative inventions that we've ever developed. It allows the bank to automate their procedures and software. And most banks have a hard copy procedures manual, as you probably can imagine, and our workflow solution allows them not only to create workflows which are built around those procedures, but then they can be audited. So this helps the bank gain efficiencies as they onboard new employees, make acquisitions and even helps them eliminate [ Mack truck ] issues at the bank where they only have one employee that can do something as well. So a great solution in enterprise workflow. Our Enterprise Event System allows our applications as well as third parties and third-party applications to listen for events and then react to them. And a good event that could be passed via enterprise eventing is a low balance alert. For example, if a bank -- if your customer had a low balance, then EES could pass out that alert, and then the application could do something with it. And then several years ago, when faster payments was becoming a reality, we took a step back, and we decided not to try to develop point-to-point solutions to payment rails like Zelle and The Clearing House. And many of our competitors did that. And while at the time, it was a little faster to market for them, what we did was we developed a payments hub, a payments hub in PayCenter that allows these different interfaces, being Zelle and The Clearing House, eventually, FedNow as well, to be integrated into a central hub that allows us to do features for our customers like lease cost routing and those kind of things. Again, a good way to integrate technology more gracefully and makes it easier for our customers. And then lastly, as our banks have moved to an increasingly digital environment, a lot of that really happened during PPP. And before, we created a Banno Digital API as well that allows our customers and third parties to integrate into Banno. So if they want then to integrate a trust system or a small business system into their version of Banno, they can readily do that with our solution set and our digital API as well. So we are proponents of coopetition. And this is a key thing that I mentioned a few minutes ago: we routinely invite direct competitors to our solutions and not our core solutions but to all of our other solutions to our annual conference every year. We have over 250 that are integrated into our middleware solutions at all the different things that we do. We have a lot of third parties that do that. And what does that mean for our customers? It means better integration, better choice, more success for them as a bank as well. And these integrated vendors, just for you to know, they range from account opening, card solutions, digital solutions, document imaging solutions, fraud, voice call center and customer relationship management solutions as well, many other solutions in there as well. But a lot of different types of third parties have integrated with us. And with that, I'll pause in a minute. I'm going to turn it over to Ben Metz, who leads our digital area for the company. But certainly, we'll entertain any questions from you at this time.

Tommy, are there any questions out there?

We do have a question. We've got David on the line.

David Togut with Evercore ISI. Stacey, just looking at your Slide 91, which shows the 203 banks in the $1 billion to $50 billion asset range that you have, can you give us a sense of how that breaks down between the under $10 billion and the over $10 billion? And more specifically, I'm interested -- as you go up against the competitors that typically concentrate on the large asset bank market, what's the key competitive advantage you have as you go after that over-$10 billion space? I know David has talked about the treasury management system as being kind of the tip of the spear. What do you wrap around that as you go after that bigger bank space?

I'm happy to answer that question. The way that I would look at that space is that the $10 billion space, we have a couple dozen banks on it at this time. And how we go to market really is based upon the things we've talked about throughout the presentation: our culture, relationships. And the thing that I mentioned in my presentation, too, is we're tweaking our processes in the future to be more of a relationship for the bank as well. That's what those larger banks want. They want a business partner, really, that's going to help them be successful. And as you look at a larger bank, they typically are more best-of-breed, if you like. They're wanting to integrate into things. So our play with Banno, which is up next with Ben, is extremely important because they can actually integrate whatever they would like to in Banno to make their presence different to the bank down the street. So that's how we tend to approach that market. But they -- you also don't see as many divorces in the larger banks as well. Making core change is a very significant change. And usually, it tends to be if the relationship is totally broken with those larger banks if that occurs.

Just as a follow-up, Stacey, among those couple dozen banks that you have with over $10 billion in assets, what percentage of that have you sold a core into versus treasury management system?

I don't have those numbers at my fingertips. I will tell you that a lot of our larger banks, as I mentioned in my presentation, have grown with us organically and through acquisition. Kevin mentioned that in his presentation as well. So a lot of growth has really happened with that customer base. Like I said, we could certainly look at the numbers as well. Treasury Management is really geared for our larger banks, more or less. And Ben will talk a bit about it in his presentation, too, as well, I would imagine. But most of them are moving to those types of solutions to find innovative ways to gather revenue from their customers. So I actually don't have the number. I can catch up with Kevin on that later, and we can certainly get back with you accordingly.

And it doesn't look like we have any more hands raised at this point in time.

Okay. Thanks, Stacey. So now we'll move on to Ben Metz, everything digital. And take it away, Ben.

Hello. Welcome to the Jack Henry digital portion of our program. I am going to walk through a very quick agenda. I'm going to give you just a bit of a background on myself and an introduction. We'll talk about what makes up Jack Henry Digital and the parts in our company that I lead. And then we're going to talk about Banking as a Service and what that means in our context for our customers. And then we're going to talk about our strategy and execution towards compounding innovation with allowing fintechs to play in our ecosystem, and then open banking partnerships and our wallet strategy, some final notes on Banno business and our commercial platform, and then our basic strategy of just really making sure that our community of financial institutions stay at the center of their relationship with their customers. So first, a little background on me. I was the founding engineer for Banno in 2010. I actually personally wrote a large portion of the Banno platform in the early days as we were building a -- what would have been an early version of a Plaid-type platform. We built an open banking system that connected to all the large banks. And then we started building products on top of that. And then I started hiring the engineering team. And then over time, we built Banno. Sometime in around -- sometime around 2012, I met Greg Adelson, and we pitched our platform to him. That led us to building software for iPay and building out a mobile wallet experience for them. And then that led to an acquisition in 2014. I was the Chief Technology Officer when we were acquired. And now I currently lead digital at Jack Henry. When we talk about what makes up digital at Jack Henry, of course, it is Banno and that team. And I think if you saw Greg's presentation, you can see how much we've grown that team. It also includes our website products. We have our content management system and an ad engine, a very sophisticated system that we built from the ground up so that we can completely cohere an omnichannel experience for our customers from website all the way through to mobile and online banking. Almost 2 years ago, coming up on 2 years, a little less than that, we acquired Geezeo, which is a PFM solution. Our strategy there is really twofold: One is to fold PFM completely into our Banno solution so that becomes a permanent part of our go-to-market wallet strategy, which I'll talk to you about in just a minute. In addition, they brought a large data set. That's part of why we acquired them, because we are building out a machine learning-based targeted advertising feeds coming off of their data system and the Banno data system so we can help our community of financial institutions sell their products among other things like fraud detection, et cetera. We also acquired a company called BOLTS. They also live in our digital platform. We have completely integrated them into our Banno platform as well, and we now have a fantastic deposit account opening system that's completely bundled in our platform. We also have invested heavily in our treasury products and our commercial products, and I'll talk to you more about that towards the end of our conversation. And then I also lead and provide management oversight for our legacy products, NetTeller and GoDough. The important thing to understand is that we're building a single digital platform with a single API that's completely open and available and documented in public. So these are not sort of bolt-on systems or what's traditionally done in banking. We completely API integrated this entire platform. So everything is available via API, and then we're building a wallet experience on top of that. So that's just in a nutshell what we mean when we say Jack Henry Digital. It's this entire sort of product set. The next thing that I want to talk about is just what we mean when we say Banking as a Service. It's an overused name and term that does drive me a little bit crazy because it's just -- it's starting to lose meaning. So I want to be very specific about what it means for us in the Jack Henry context and then what it means for our customers. It is my belief that the best platforms in the future win, and I think that's almost true in any domain. And what we want to make sure of is that our community of financial institutions have a Banking as a Service platform that they can run and are responsible for themselves. The primary reason why is -- at a very high level, is so that they have optionality to compete in the future. We see a lot of asymmetric competition in their arena, and what we think is that they can absolutely compete and win for that if they have Banking as a Service infrastructure in a completely open system. So you heard what Stacey was talking about in terms of the tradition of Jack Henry being the open platform. I can vouch for that. Having been a fintech and then being acquired into Jack Henry, Jack Henry was the best system to work with by far, not just by a little bit but by far. And so what we've done in the digital ecosystem is we've basically built out a modern technology stack using all of the current modern open standards, and that's now fully deployed in Azure with 5 million users. By the way, our Banking as a Service platform, we use ourselves. So our wallet, our mobile banking apps and our online banking apps all use this Banking as a Service platform. So when we say we're building it, we really mean we built it, and we use it today. It's generally termed eating your own dog food. So we have eaten our own dog food. 100%, there's no back doors. What makes up this Banking as a Service platform? Consumer and back-office APIs. So we don't just offer consumer APIs. We also allow for a complete back office integration. That means things like our ad engine, our help desk software, Banno Conversations, all that is open and can be programmed and innovated upon by our community financial institutions or a fintech working with them. We have a plug-in framework, which I'll talk about here in a minute. Our authentication framework uses out-of-the-box web standards, Oauth 2, OpenID Connect. What this means is that one of our customers literally, during COVID, was able to take our platform and connect it to sales force in less than 2 hours. And that's why open standards are really important, and we'll talk about that in a minute or 2. We also have a full material design language available on the Internet. You can go see these things, by the way. I'm going to quickly jump out this presentation to show you where you can go see them. This is jackhenry.dev, so this is where all of our API experiences are, our authentication framework, consumer API, our plug-in framework. You can read more about them. These are our works in progress in terms of the documentation. But they're all very real because we use some of them ourselves. And then we also have a design language, a material design language that we have developed and made available. So we think this is unique in the market. There's nobody else that's really doing -- making sure that they cover the design side because we believe our customers also have to be able to compete on UX. So back to banking as a service, that's our design guidelines. And so what we've done over the last, really, 18 months is because we have this platform and it works and runs and we use it ourselves, we approach into it first. And then very, very soon after that, we approached Plaid, and we said, "Hey, we have this banking as a service, fully API platform, Oauth 2, OpenID-enabled, and we'd like to get a deal done." So we've done a deal with Plaid and a deal with Intuit. What that means is that these products will have API access to the Jack Henry platforms via our banking as a service stack. And that means, for example, in the Plaid case, Venmo users using Plaid coming through or somebody like Square can come through Plaid, and instead of screen scraping, they now can directly API Connect. This is now completed and available for all of our customers. We also did, both of these projects, at 0 lift and 0 cost to our customers, just included in our banking as a service platform. So if you buy Banno, if you buy our digital platform, you just get this out of the box. Of course, in Intuit's case, I think you know the products, things like QuickBooks. And what we say is that once a user is using QuickBooks, they're never going to leave QuickBooks likely. So what we need to do is enable that ecosystem and make it a cleaner and better experience with a customer, right? So that they want to bank with our community financial institutions, right, because they get a better experience in their QuickBooks or Quicken applications. We didn't stop there. We continue with Akoya and Finicity. We now have deals signed with Akoya and Finicity. And we've made the leap. We're going to be the first core processor to be FDX-compliant on our banking as a service platform. It's really important in financial data exchange. I'm sure you're familiar with it. If you're not, you can go check it out. Finicity was a lead -- leader and really co-founder in that -- in those efforts. We think that it's the premier standard data platform. And we are going to be the first of our -- of the core processors to have this fully completely enabled in our platform and available to customers. And you'll hear us announce that as well with Akoya. We didn't stop there. We kept going. We are doing additional projects with a lot of wonderful fintech companies, wherein which we think that we can help our customers compete by going and, for example, doing a deal with Alloy. Alloy offers wonderful aggregation services for fraud and account openings. So they're integrated with our JHA OpenAnywhere product, also integrating them post-pan in Banno. And then we really love what Autobooks is doing. And so we brought them in, and we made them a permanent part of our platform. So they now live in Banno as a permanent feature. And we're going to continue to do that. So I'm just giving you sort of 6 examples of what we have today, and we have a line out the door of maybe 70 or 80 fintechs. And again, the idea is that we go bring these into our open platform. We have very easy-to-use tooling that allows Alloy and Autobooks to integrate. By the way, Autobooks did the integration, I think, in less than 3 weeks, so super simple, super straightforward. And we're using some technology, what would be sort of a legacy [ speak ], would be known as an SDK. We've kind of just built that into our software where you can extend our software to make fintech integrations extremely easy, both from the API side and from the UI/UX. So this is just a quick visualization of what we're capable of doing. So you can just plug Autobooks, for example, right into this experience. And they can do that in a very short amount of time. The critical thing to understand is that we're doing this with Autobooks and we're bringing that to market for our customers, so that our customers can have an out-of-the-box, say, Autobooks experience. But our customers can take this banking as a service platform and go to market and go find a fintech that they really love and would love to use to compete in their marketplace, and then they can go do that themselves at 0 cost, 0 lift. So it costs them nothing, no lift, if they want to do that themselves, or they can go work directly with that fintech because we now have scale. We now have 5 million users, 450 roughly financial institutions. So it's become -- we have now become a magnet in an attractive platform. From an application experience, we are 100% native on both Android and iOS. That's really important from a user experience standpoint for a lot of reasons. And then we're also fully progressive app-enabled on the browser. So that has then led us our [ shy ] concentration on UX, UI and design as well as engineering on the UI side of things, as well as making things fast all the way back through the Jack Henry stack. We have the highest-rated apps on the store and by an outside firm that does all this work. So this is not us saying that we do. This is an outside source thing that we have the highest-rated apps on the store up against all of our competitors with 5 million users on our platform. So that gets me to the next leg, which is we really believe that as the competitive landscape develops for our customers, they're going to be competing against wallet experiences. Wallet experiences like Novi recently announced by Facebook, wallet experiences like Square and PayPal. Now we're not going to try to be Square, PayPal or Novi. That's not what we're trying to do. What we want to do is say, you know what, we're going to build a, what we call, first wallet or a first-app experience. We want our customers to be able to be the first wallet that their customer reaches for on this device or any other device when they go to access their financial world, okay? And the way we're doing that, hopefully, you can intuit where I'm going at this point, is allowing fintech integrations to be very easy in this experience. And so we can have this sort of manifold wallet experience where things are plugged in and playing, right, and removing what we hate, single sign-on, which is a tradition in banking services. We want this to be completely API-integrated, seamless. And it doesn't really matter if, say, Autobooks built part of this experiences being plugged in. We believe we can create this wonderful wallet experience that can allow the community financial institution to compete. We don't think that -- as a quick example, you're never going to get somebody to stop using Venmo, and you're never going to get somebody to stop using Square. But we want to make those experiences easier on our platform, i.e., our integration Plaid. But then what we want to do is say, we want to be first wallet for our customers. So then using Banno Conversations, our conversations platform, which is a really wonderful built-in help desk in our app, they can now build a digital relationship. Our friends at Mastercard, our Chief Product Officer at Mastercard calls this digital intimacy, and we think that's where our community financial institutions can't compete with a first-class wallet experience that is the highest-rated app on the store. A couple of final things here. We're in the process of building out our commercial platform. We've been working on it for 2 years, really close to -- we have early-stage releases this summer and then finishing up our commercial platform from banks by the end of the year. And that will include everything from small and micro businesses with our work with Autobooks, all the way through to sophisticated treasury services for large businesses. The critical thing to understand about this is this also is getting completely built into our banking as a service stack. There will be key innovations that we're introducing. These are already built, wherein which we will have technology that allow for a large commercial entities to send large payments securely. We're taking Banno Conversations, and we're making or we're turning it into conversation just for business so the businesses can have private chat capabilities. Having run companies for a long time in my past, I've had a lot of experience with large payments. And large payments require a lot of communication. Generally, that communication happens over e-mail, and that is a big broad vector for what's called e-mail phishing fraud. And we're going to completely eliminate that with our commercial platform, with our wallet experience in our UX for commercial. We think that we can actually do something very innovative here, wherein which we allow businesses to have a very private experience. If I'm the CFO and we're working with the CEO to make a large transaction, we can communicate securely using hard token authentication on these applications. And we can actually initiate payments, talk about them, view them and approve them and send them in a conversational way using our Banno Conversations technology stack. Last but not least, we really believe that our customers can compete on service. And so that's just built into everything we're doing. We want the community financial institution to be at the center of the financial ecosystem. We know that the rest of the ecosystem is expanding and compounding broadly. We just think we can be at the center, and we're doing that with a focused banking-as-a-service, open platform, along with a beautiful extendable wallet experience that will be world-class. And with that, I think that's it. So I'll turn it back over.

Thanks, Ben. Tommy, is there any questions out there for Ben?

We sure do. We've got Kartik, if you want to let us know.

You might think this is a very simple question, considering all the detail you gave. But just to understand, when you go to a customer, they say, what's the top 3 things that differentiate Banno from your competitors, either because you have them or your competitors don't or you do better, what would those be?

Over to you, Ben.

Okay. Yes. Great, great question. First thing is Banno Conversations is [indiscernible] and really allows our customer [indiscernible]. That's really built into the app. And we want to do that...

Ben, I'm going to stop you. Your microphone quality is really not good. And we're -- have been assured that it's not here. So I think it's something on your end. We got to make sure your microphone is working better. [Technical Difficulty]

Okay. We'll give that a shot. How does that sound?

That sounds better.

Much better.

Okay. I sincerely apologize about that. I'll recap. Effectively, Banno Conversations, our UI/UX and then our open integration and extendable platform would be the very fast answer to that, and Banno Conversations being the key feature and platform that our customers are making that decision on. I would say those are the 3 things.

Ben, you might just remind all listeners what Conversations is and what ability that gives the bank customer.

Yes. Very quickly, we believe that before the Internet really happened, say, in the 1980s, the way our customers really competed against the large banks and their competitive landscape was on service relationship and trust. And we think what -- that they can compete on that still today, they just need the technology to do so. So we really just took that branch experience, and we just put it in software. The way to think of it is we built a digital counter into the software. It's not -- people think, well, is it chat? It's not really chat. It allows the customer to very quickly and easily attach every now and in the software, so if they made a mistake with the bill payment, they can quickly attach the bill payment that the bank then or credit union can ask them about that specific bill payment. Or say, they have fraud on their accounts. They see 4 transactions, and they don't think they made them. They can attach those 4 transactions. And then the bank can move that case around in the back office very quickly and easily and communicate with that customer. And so it's a really powerful service platform. And I would say it's our key differentiator.

And one more thing I'd add that Ben didn't hit is it's encrypted. So the bank and customer can actually share personal identifiable information and bank accounts and numbers, which we are the seamless solution out there that has that ability.

That's correct.

Okay. Next up, we have Steven Comery.

Yes, with G. Research. Ben, I wanted to ask about Banno commercial versus Banno consumer. Sort of what are the challenges as far as development and features that you're trying to roll out to compete with other people? And on the marketing front, where do you expect to start with that product with existing Banno users? Or do you think it's more applicable to those outside the platform?

Good question, Steven. So first of all, the way we think about commercial is, we're going to cover that spectrum between where somebody's running a business on a retail account, which I think happens at every financial institution in the country with almost no exception, all the way through to where that treasury line is. The way we think about that treasury spectrum is when a business really needs a CFO or they need a serious finance team, and they just have more sort of high-level requirements for things like positive pay, sweeps and other things. We're going to cover that entire spectrum with Banno commercial. And what we'll allow for -- one of the things that often people forget is that, by definition, a commercial bank that's working with a lot of business customers is that they also have high-net worth customers that are retail customers. By definition, they have high-net worth customers, and high-net worth customer often operate a bit like a small business. So they might need access to wires, et cetera. So we have an entitlements engine that runs across that entire spectrum that allows for a retail user to use, say, wires, all the way through to more sophisticated things like positive pay, et cetera. This will get rolled out to all of our customers. To your second question, it will get rolled out to all of our customers, both on the banking and credit union side. And then the entire platform moves outside the base in 2022, so 2022. So obviously, first, it will be just fantastic for our existing Jack Henry customers, and then we think it will be really powerful outside the base as well.

And our last hand raised is from Michael Del Grosso.

I appreciate all the information on this section of the presentation. I think there's a lot of really exciting shifts occurring in this particular market. We hear a lot about fast and large uptake from fintechs and their desire to connect to FIs and whatnot. But kind of a macro question, can you help quantify that demand? Just kind of ballpark, what uptake are you seeing as far as API polls? Or is there another way to quantify the overall business growth here?

Yes. It's a really good question. I would say that out of our 430-some customers, almost nobody is not using our API platform for something. The other way to say it is, almost everybody is using it for something. I have yet to see a new customer go live without an external integration. And the inquisitive nature of our customers in terms of fintech, I would say, is orders of magnitude higher, especially over the last 18 to 24 months. So it's hard to gauge the total demand, but I would say that this is going to become table stakes for our customers for nearly everything they're doing. They're going to need it to compete. And I'm not involved in a single situation with either our customers or potential customer, wherein which this is one of the primary topics.

Okay, that's helpful. And then you mentioned this in the past. I just want to make sure I didn't miss anything. You threw out Novi as a wallet. Could you explain if you're integrated with them currently? Or can you comment a bit high level on that partnership, if there is one?

I did not mean to lead you into thinking we have a partnership with Novi. What I was really trying to explain is that we believe that we're going to see a wallet landscape as a competitive landscape to our customers, right? So that would include Square, PayPal and Novi. Novi is new, a lot yet to develop there, but it is Facebook, and they do have one of the largest, if not the largest, user base in the world. So we see that as a competitive -- as really kind of where the market is going from a consumer's perspective. So what we're saying is we want to be -- we want to create a level playing field with those wallet experiences.

That looks like that was our last hand that was raised.

Okay. Thanks, Tommy. Thanks, Ben. And we'll just move right along. Next up is Mr. Scott Spain talking about our private cloud and all of our banking credit union hosting services we do.

Hello, everyone, and I hope you're all doing well. I appreciate the opportunity to discuss our Jack Henry private cloud with you today. Let me do a quick introduction. My name is Scott Spain, I'm the Vice President of Outlink Processing Services, also known as our private cloud. A little background on me. I live in Monett, Missouri. I've celebrated my 30th year at Jack Henry this past year, primarily have been in the operations area, also worked very closely with sales, have been a part of the corporate leadership team since 2004. So here's a quick look at what I'll be covering today in regard to the private cloud. We'll do a brief overview. We'll get into the banking and credit union sectors and as well talk about our data centers. So before we get started with all that, I feel it's important to understand our mission and vision and, if you will, our overall purpose. Our mission is to deliver industry-leading outsourced financial services to our clients by empowering our associates to provide exceptional customer service, reliability, security and efficiency, with our vision being to be recognized by the financial industry as the foremost service provider and trusted partner, enabling our clients to achieve their goals. I feel like that's extremely important because the banks and credit unions are such an integral part of our financial services world,and impacts consumers tremendously. We want to be able to provide the technology and infrastructure to enable our clients to achieve their goals, which will allow for excellence and consumer experiences. So why do financial institutions move to the Jack Henry private cloud? We'll spend a little time talking through each of these. First, it helps us do a better job of managing compliance. And these are quotes from our clients after they have moved to our private cloud. So with managing compliance, what happens is we take a lot of responsibility for the regulatory activity. This greatly reduces the burden upon our clients. You think of things like technology exams, regulatory agencies. With Jack Henry running the private cloud, most of those technology exams fall to us, as well as the amount of interaction we have with regulatory agencies is very, very high. We likely have someone from one of the agencies in our data centers almost on a daily basis. Another large one is helps us manage costs and avoid surprises. We are constantly monitoring our clients' growth. We can adjust the necessary infrastructure requirements to scale. So our clients don't have to invest in expensive hardware as they grow. And if you think about today's merger and acquisition business, with a lot of activity likely upcoming, it slowed a little bit with the pandemic, but our clients don't have to worry about doing an M&A and then having to invest in expensive hardware. As they grow, we scale with them. And if you think about hardware failures that could be a surprise and something that they're not expecting or, if you will, budgeted for, we take care of that scalability and any type of hardware that's necessary. One of the largest ones is we no longer have to worry about providing our own core disaster recovery. So I'm going to talk about that more towards the end of the presentation. But this is very top of mind with financial institution executives, especially if you think about the impacts of COVID-19, various weather-related disasters, hurricanes, record freezing temperatures causing wide power outages, tornadoes, a lot of things that are -- that have been going on. We have the redundancy and the people and the technology to keep our financial institutions and their customers and members operational with minimal to no impact. An example of that would be the latest winter storm we had several months ago. Record freezing temperatures caused a lot of issues across a lot of the United States. We had several clients that contacted us asking more or less how are you still up and functioning. We've had no issues, there's been no downtime. They were extremely complementary and thanked us, if you will, for the service that we were able to provide. So very proud of that. But we do a tremendous job with disaster recovery and something, again, and a little bit, I want to talk about actually disaster avoidance. Another is we now have much more time to focus on building our business. These people are in the business for banking and credit union, financial transactions. They're not in the business to handle technology and infrastructure. We take that on for them. Replacing IT staff. That is another huge component. It's very difficult to find a lot of these technical people in this world. And so from our perspective, we have those. They really don't have to worry about it anymore and makes that a non-event. So lastly is enhances our cybersecurity posture. We have an extensive network of experts and government agencies that are constantly monitoring our systems so that we can proactively recognize and eliminate threats. We have a tremendous relationship with government agencies. Again, this is something that clients that are on-premise, they just don't have the type of capabilities to have that type of monitoring. So a little overview of what our business looks like today. So it's proven to be very successful. It continues to grow nicely. This chart is reflective of both banks and credit unions that are utilizing our Jack Henry private cloud. As of February, we have crossed a milestone of processing for over 900 financial institutions at 903, representing $687 billion in assets. So again, very nice growth. Going a little deeper into the banking segment, which shows, again, this steady growth. I'm excited to share that we reached a major milestone by exceeding the $500 billion in assets processed this past fiscal year, and again, as of February, we're at $554 billion and continuing to grow. And as Greg and Stacey talked earlier about our multibillion asset and regional bank markets, our private cloud has been highly successful in this growth area as well. As you can see, our largest banking client is $22.3 billion in assets. This helps demonstrate our scalability. However, we've also very successfully performed benchmark testing at much higher levels of banks. We remain extremely excited about the future of this segment of the banking market. As you can tell, with the continued growth in over $1 billion, this has become the solution of choice for almost all multi-billion new client footprints. And with this success as well as on-premise to private cloud migrations, which I'll touch on a little bit more as well, we are now processing for 127 clients over $1 billion, and we have 3 additional contracted. So I'm going to move into the credit union segment, and you will see aggressive growth over the past several years, as our credit unions are more widely adopting cloud technology services. We have accomplished tremendous growth from $31 billion in assets in FY '17 to nearly $133 billion as of February. So very good growth with both assets and members of these credit unions. And as well on the multibillion side as banking, you will see excellent growth in the credit union market. Our largest client today is $4.4 billion. We have a very highly scalable solution, which is capable of processing a much larger credit union as well. And as you can see, over the past 3 or 4 years, the growth in the credit unions has been quite explosive, going from 5 clients to 36. And I'll point out, we have an additional 15 more that's contracted. So the continued growth from both new footprints as well as on-premise to private cloud migrations of our larger credit unions is a very key focus for us. So let's take a look at how our existing client base is stratified between private cloud and on-premise, and again, we define on-premise as our customers that have their own computer systems in their facilities. Banking is currently at 65% private cloud, leaving 35% of our client base as migration opportunities. The credit union base is at 60% private cloud. It's been a little slower in adoption, but as we reviewed just a few minutes ago, it's aggressively progressed over the past several years. With the current rate of new footprint sales deals consistently ranging over 90% choosing our Jack Henry private cloud, combined with the opportunity to migrate existing clients, I expect the percentage of private cloud clients to continue to trend up for years to come. So I talked quite a bit about on-premise to private cloud. Here's a little deeper dive into the longer-term trending. So this would be our existing clients that have migrated from on-premise to private cloud. So as you can tell, it's been fairly steady over the past several years, again, with the credit union on the bottom growing more heavily over the past few years. So let's transition into a very high overview of our private cloud data centers. These are located, as you can tell, in Branson, Missouri and Allen, Texas, with the mountain in Branson and our Tier 3 facility in Allen, Texas. So this is a view of the Allen, Texas facility, and then what you'll see is the things that -- part of the things that make up a Tier 3 data center. So this was a purpose-built facility. It has extensive levels of security, resiliency and redundancy. The Dallas area provides major Internet backbone, power and carrier options and capabilities. So we won't go through each one of these, but as you can see, part of what makes up a Tier 3, the 99.982% uptime; the ability to withstand 150-mile an hour winds, which in that area with the tornadic potential activity is critical; staffed 24/7, 365 days a year; we talked about the security, and as well, 16,000 square foot of data floor space, which gives us plenty of room for growth. All of this is designed to provide our clients a very high level of uptime with tremendous security and confidence. Looking at the Mountain in Branson, Missouri. This is a very special location, being 170 feet below ground, but yet 150 feet over the nearest dam or water. So due to the natural barrier, for example, this is uniquely capable of being able to withstand an F5 tornado and is highly impervious to any natural disasters. So again, I talk about how unique this is. This state-of-the-art data center, our clients love to visit. When they visit, it provides them a tremendous amount of confidence in our ability to not only recover but also avoid disaster situations. So earlier, I talked a little bit about disaster avoidance. We'll finish up with a look into the disaster avoidance posture. I talked about our high disaster tolerant data center and technology. In addition, we also provide near time replication between both the Allen and the Branson Mountain centers. So you will see we use the terminology on the second bullet as primary and alternate production because we actually process production at both locations. This is not a disaster recovery posture where one would transition only when a disaster occurs or simply do an annual DR test. As I stated, we like to refer to this as disaster avoidance. So dependent upon the solution we're hosting, many of them will run 6 months production at each location. This provides us, as well as our clients, the utmost confidence that as required, both facilities are capable of running full production for long periods of time. To summarize, we feel like this combination of private cloud facilities, technology, scalability and business processes provides for an exceptional service offering that gives the peace of mind our financial institutions are looking for and continues to be a highly successful solution for Jack Henry. So I thank you for your time and attention, and we'll now open it up for questions.

Thanks, Scott. So Tommy, are there any questions out there?

We do not have any hands raised, so we are good to go.

Well, apparently, nice job, Scott. I appreciate it. So we'll move right along and try to get wrapped up. The next one up is Jeff VanDeVelde. He is Senior Director of Marketing here at Jack Henry, and I thought this might be a nice little twist from what we've historically done. So take it away, Jeff.

Good afternoon. My name is Jeff VanDeVelde, and I have the privilege of leading the marketing department here at Jack Henry. I've been here about 3 years after spending 20 years in marketing leadership positions at some of the best brands in the financial services industry, including Deluxe Corporation and Wells Fargo and Wachovia and SunTrust Bank, which you guys know is now Truist. I've been asked to talk a little bit about marketing here at Jack Henry, specifically the markets and the marketing that we do, and you're probably wondering why. Well, the why is because many organizations, like Jack Henry, understand that marketing is a key function in identifying and driving growth for the company. In fact, 68% of CEOs see their CMOs and their marketing departments as playing the key roles of customer champion and growth driver and innovation catalyst and chief storytellers for the company. So that, today, is what I'll be showing you and talking about. I'm not going to try to make you marketers. I'm just going to try to share some simple truths about the marketing that we do. So you can break down what we do into really 2 things, but they're critical and they're both related. So build brands and nurture demand. So under the build brands, the main goal is to build trust, credibility and relatability with the brand, building relationships with our target audience, in essence creating the desire for a prospect to want to be part of our brand story and for our existing clients to want to do more business with us. In most companies, the brand side of this equation has become even more vital during the pandemic. Buyers and consumers are choosing companies who are -- have shown the ability to understand the unique needs of their communities and provide help and support during these trying times. Jack Henry did this through our involvement in the PPP and through the way that we took measures to protect our own associates. So this is just some of the marketing that we have done and some of the stories that we tell. Let me tell you kind of the rest of the story. So I'll talk a little bit about the markets, who they are, where do we find them, how do we reach them, how do we go to market, and I'll end up with how we position ourselves. So let's talk about markets, who they are. In essence, we see the markets as people. In fact, it's always been that case here at Jack Henry. There's a famous quote by Jack and Jerry, you probably heard Steve or Dave or Kevin talk about this. But business is about people, and it's good to remember that and treat people you deal with as individuals because relationships keep us together, and together, we do great things. So we see people, and these people have things they are trying to achieve, objectives, let's say; needs that they need to get met and values that they bring to those decisions. We have 2 distinct groups. We see them as buyers of the solutions and users of the solutions, buyers like CTOs and CIOs and ops managers. And on average, there's about 9 to 12 people involved in influencing the buying decision of many of our solutions. The users are a key audience, of course, because they adopt and use the solution, which, in some cases, drives the revenue of it, but also they can influence the buyers of these solutions by the way they feel about the user experience of it. So being able to understand them and meet their needs is incredibly important. So you can see how both play a role in helping the company grow and why understanding them and their motivations and values are critical. We do this through research, through data, through analytics, through those insights that we glean from, from when we interact with them. And just as a point of reference, we have about 240,000 buyers in our database. So that's a lot of people to talk to and a lot of people to understand. Let's talk about marketing and where we find them. Well, we find these people working in credit unions and banks and non-chartered financial service providers. Because those markets are quite large, I think there's like 7,000 credit unions alone, we tend to break them down into what we call these smaller segments. Because we find by looking at the people who work in these smaller segments help us better understand them and what they're trying to accomplish and what their unique challenges ought to be. Let me give you an example. So think of the CTO of a start-up of a de novo placing importance on different things than the CTO who have a larger multibillion-dollar regional bank. So we consider those things as we create specific content designed to start conversations with those people through our digital channels, things like the new bank start-up kit that we built and the blog articles that address like the top 10 pitfalls when we start a new bank. So people -- so these people, we find them in these markets. And then we break those markets into smaller segments. So once we know them, once we know where they work, now we know how to reach them, then we'd look at how to reach them. And because we're all online 24/7, we tend to use digital channels as our primary method to reach them. Things like email, web, social, blog, video channels like YouTube, and we worked really hard to engage people in these digital channels and have seen the results with 16 -- or 22% increase in people engaging across those channels. And the great part about using digital channels is that people leave a digital footprint when they interact with us on those channels. We can track this footprint, which helps us better understand who we're talking to. And often, what's most important to them based on how they interact with our content on those digital channels. It helps us be more targeted with our message and the message that we sent, and thus, wasting less of their time by sending messages to borrowers and users that they don't really care about. But we also do some traditional off-line channels like events. In fact, each year, our user conference called JAC and SEC draw thousands of people that come together to learn the network. Last year, because of the pandemic, we saw the events come online back to a digital channel. We had over 5,000 people attend the events for credit unions and banks. Because we did these virtually, we were able to attract people that have never experienced the Jack Henry culture and content before. Over 1/3 of the attendings last year were new contacts to Jack Henry. We had no relationship with them and the financial institutions. And this is where things get really smart. We were able to look at those 5,000 people and know what sessions they attended, know what booths they visited, know what conversations they had, know the ratings they gave each session that they attended, and all because it was digital. We then can compare that back to what else we know about them outside of the event, like how many times they visit our website, how long they spend on each page, what articles they read in our blog, what they liked and shared on our social media sites. This is the digital footprint and helps us be smarter about our marketing, helps us generate more qualified leads for our sales force that they can then follow-up on and close those deals. Honestly, when done well, we are seeing a 20% to 35% e-mail open rates and 40% to 50% conversion rates of marketing qualified leads or interested people to sales qualified leads. And we've seen a significant increase in sales win-loss rates when done well. What is not -- this isn't always the case, I'll admit it, but it is becoming more often now that we're using data, digital data more effectively and partnering with our sales leadership team to better move the leads through the sales pipeline under the leadership of Steve Tomson. So let's talk about how we go to market. Yes, it's a bit complicated to understand, I know, we hear that, but there is a major initiative underway to simplify this. Because we don't think our buyers, our users or even our prospective associates should have to work so hard to understand us. So many of you have seen this. And the new pieces that you may not have seen is these things we call categories. We introduced these things about a year ago because our research showed that people were not necessarily associating Jack Henry with having capabilities outside our core. So now we connect capabilities that we have to the category. So moving from right to left, we have capabilities. Remember, capabilities are things that solve your problems. Connected to categories, categories have points of view. And connect that to the name Jack Henry. It's pretty new go-to-market for us, to be honest with you, so we're still testing phase. We're still measuring the results. We're still seeing how people relate to it. But all indications suggest we're moving in the right direction. If you haven't been out to these sites, there's links out there on the final page of this presentation that you can go to. So finally, like how do we position ourselves? We position ourselves as a well-rounded financial technology company. Not a core company just, not a payments company just, not just a digital company. Instead, we are a well-rounded financial technology company. Well, being well-rounded means we consistently evolve and build on the heritage with innovation and a renewed purpose. Being well-rounded means that we promote integrations and form partnerships to serve our client needs. Being well-rounded also means that we champion cultural diversity and diversity of thought, skill and experience. And being well-rounded means we understand our obligation as a business as a force for good and embrace sustainability. Being a financial technology company means we focus on financial institutions and the way they meet the needs of their customers and employees. Being a financial technology company means that we are constantly innovating new ways to improve financial health of our people and our communities. And being a financial technology company,means we are committed to developing technologies that improve the lives of the people that use it. So to sum it up with one final note. Hopefully, in this brief time together, you can see that Jack Henry has a clear strategy for how we're going to find, entice, engage, reach our audiences in ways that compel them to want to do business with this brand. And then go about nurturing demand for the solutions that really need that solve their business problems. As analysts and investors, we know that you are a key audience. Many of you can learn -- tend to learn a lot from the way a company is looking at growing by paying attention to how they go to market. My team and I are keenly aware that you are watching us. And rest assured, we are watching you, too. Thank you.

Okay. Thanks, Jeff, appreciate it. So are there any questions out there for Jeff or for anybody else? All the presenters that were here today are still on the line. So if there's any follow-up questions or anything that pop to your head after one of the presenters got done, now would be a really good time to ask it.

Doesn't look like we have any hand. We've got a hand coming up. We've got Ken.

Ken Suchoski from Autonomous Research. I guess, this question is for Scott or maybe even Kevin or David. I just wanted to ask about the unit economics when a customer converts from an on-premise solution to the private cloud. And I know some software companies are out there talking about getting 2 or 3x lift to revenue when a customer makes that transition to the cloud. I guess, can you just talk about how the revenue per customer differs between on-prem versus private cloud? And I guess how does the profitability differ as well?

Yes. So actually, I mean, if there is a nice uplift in revenue, but that's just one of the benefits. So if you think about what a typical on-prem customers paying us for in-house maintenance and disaster recovery services and different things like that, it is typically about double what they were paying us because now we're doing all the back-office processing. But the other key things it does for us is when they're on-prem, they're typically on a 1-year maintenance contract. So they can get acquired anytime, and we get nothing. Where when they go into our private cloud, it's typically a 7-year or longer contract, which makes a lot tighter relationship a lot stickier. So if they have to get acquired, that's what the deconversion fees are that's down so much this year. The other thing I would tell you about private cloud customers, it is so much easier to sell them additional products. Because we're an on-prem customer, it's a CapEx item. So they have to go to the Board, get approval to write a check for the CapEx item, where when they're in a private cloud, they can just add a product. It's an operating expense. They can make it coterminous with their existing contract. It's just much easier to do business with our customers that way.

We've got another hand. We've got Steven Comery.

Maybe I just want to ask a big picture question about the complementary business. Obviously, a lot of areas like lending solution and maybe even digital banking to some extent are still reasonably underpenetrated across the banking space. Maybe just some general thoughts as penetration grows there over the next, say, 5 or 10 years, sort of how you see the landscape evolving? Presumably, there won't be as many players as we have now. But sort of how you see you got yourselves staying relevant and continuing to compete in that as that evolves and becomes more consolidated?

Yes, it's an interesting topic. You've highlighted the 2 solutions there, but this -- for us, this is kind of more of the same. This is what we've been doing for many years. You come out with some new innovative technology. You roll it out. You get to some higher level of penetration among your customer base along the way. You both rolled other things out. Those start to grow in penetration. And so we're going to see the 2 that you mentioned, the lending suite and the digital banking suite, the penetration is going to grow. Our presence in the market is going to grow on those. But along the way here, we're going to be rolling out new solutions that we haven't even talked about yet today that will kind of be the engine for new growth that will set us up for years in the future. And that's the model at Jack Henry. It's what we've done for many years when you look at the complementary suite. So we have some in the complementary suite that are highly penetrated and many that are kind of in the middle and then some that are at the low end of the scale as far as just beginning their penetration, whether it's into our core customer base or through the ProfitStars initiative into the non-core base, which is why I highlighted the 3.95 products per customer -- for the ProfitStars customers because that's, that continuing penetration into all of those customers.

And every new product that we are developing today is a ProfitStars product that starts out going into our base, but then every one of those products that they just mentioned will eventually go outside the base.

Yes. That's it.

No more? Okay. So that's it, wrap it up. I appreciate it, everybody. I hope we've got a lot of good information out of this. Hopefully, next year, we can do this live because it's a whole lot more fun to do it live and have the interaction than it is this way. So with that, thank you all, and have a good evening.

Thanks, everybody.