In Q1 2024, NEACH sat down with several major third-party providers to gain insights into what’s happening with payments. Tede Forman, President of Payment Solutions at Jack Henry, shared his thoughts on how payments are shifting and what to expect in the coming months. What follows is a summary of our conversation.
NEACH: What do you see as the next big shift in payments that banks and credit unions need to consider? Why?
Forman: An industry-wide movement to improve payments has led to the emergence of new instant payment rails—FedNow® and The Clearing House’s RTP® network, as well as offerings like Zelle and our Payrailz platform. These developments are transforming the payments landscape. FIs need to be ready to offer their account holders benefits like speed, finality, and security as part of a modern digital payments experience.
NEACH: With so much talk about data and AI, are/how these technologies playing into your plans for supporting banks and credit unions? Why?
Forman: There has never been a more exciting time at Jack Henry. Our technology modernization strategy changes how we use data and how our clients interact with it. AI is an essential part of that strategy that will enable us to continue to enhance internal operations and servicing and deliver innovative, cutting-edge solutions for our clients. There are many developing use cases for AI, including fraud detection and prevention, advanced reporting and analytics, and digital customer service.
NEACH: FI’s customers/members have increasing expectations in today’s evolving industry. How are these expectations driving FI strategies?
Forman: We’re seeing a shift in how FIs approach payments. They acknowledge that a payments strategy is needed and have focused on developing it. Often, their strategies are driven by the goal of simplifying payments for their customers/members and their own teams. This includes how they can be efficient internally and externally in meeting account holders' evolving expectations.
NEACH: As a core provider, how are you responding to those demands? How are your products and services changing to help FIs remain competitive?
Forman: Jack Henry is responding to these demands by developing a single, modern, open-banking platform that enables easy access to a broad ecosystem of Jack Henry solutions and high-grade, third-party FinTechs. This initiative builds on Jack Henry's industry-leading, open-API digital banking platform.
Our open architecture allows FIs to customize their core with the needed features. We’re creating components or modules instead of a monolithic core so FIs can choose solutions that support their strategy. Jack Henry’s core strategy is critical to helping customers stay relevant and up to speed with the technology and competition they face.
Our technology modernization strategy is not just for our core but also our solutions. For instance, Jack Henry’s payments solutions are expanding into the public cloud and using cloud technology to innovate and deliver faster. We’re focused on simplifying the integration of our payment solutions with multiple integration points and options. We’re essentially unbundling our payment services to allow our FIs to choose which use cases they want to support.
NEACH: FedNow and RTP are both live. How are you helping your customers become receiving institutions? Sending?
Forman: Jack Henry is helping FIs become receiving and sending institutions by doing the heavy lifting and certifications on their behalf. We provide a complete service with tools to manage these payments, mitigate fraud, and reconcile settlement. As a result, we have a high concentration of financial institutions on FedNow and RTP networks. Of the institutions that live on the FedNow network, 190 are our clients, and we have 275 institutions on the RTP network. And we continue to enable new functionality, such as bringing send applications to market in the first half of this year.
We also support and educate our financial institutions on the latest trends, developments, and strategies through our faster payments webinars, white papers, speaking engagements, and blogs. On our last webinar, two financial institutions shared how faster payments networks support their payments strategy. We use these webinars to get a pulse on adoption and understand potential educational gaps, helping us provide the most relevant information to our customers.
NEACH: To that point, what is the FedNow and RTP onboarding experience like for FIs? What are you hearing from your early adopters?
Forman: Our FIs have shared that the implementation process is simple, without a heavy lift. We’ve built a repeatable process that allows us to bring 20 institutions live daily.
The largest step in supporting instant payments rails is operationalization, not implementation. We’ve found that institutions are looking for operational guidance and considerations and appreciate the work being done by the Faster Payments Council. We believe more content like this will continue to be a valuable resource for institutions.
NEACH: What use cases are you seeing for instant and faster payments today?
Forman: We believe use cases for instant and faster payments will start to include Me-to-Me and P2P transactions and a focus on earned wage access. However, it will take more time to fully realize Request for Payment and Send use cases as the industry works through various stakeholders’ requirements.
NEACH: FI/FinTech partnerships are becoming table stakes. How do you support your banks and credit unions in engaging with FinTechs?
Forman: We leverage our openness to support third-party FinTech integrations. We make integrating FinTechs into our ecosystem easier, helping banks and credit unions find relationships that support their specific needs. Both parties can focus on innovation and deliver superior services, essential to remaining competitive and meeting accountholders’ needs in today’s evolving landscape.
NEACH: What innovations should FIs expect from their core, and what innovations do you think your customers would be surprised by?
Forman: We’re modernizing our technology and services to rebuild traditional core functions into flexible, cloud-native services that can be combined with one another and third-party FinTechs in one unified platform. There will be no need to rip and replace an entire core system. FIs can pick and choose which modules to add or replace.
Jack Henry's open platform and philosophy provide optionality for our FIs. Many of our solutions are modular, so FIs can choose what they want to use from us or the FinTechs within our ecosystem. FIs should expect their core providers to act as enablers, providing the tools and resources they need to achieve long-term growth and viability.
NEACH: What recent or forthcoming product rollouts do you have that FIs should be exploring?
Forman: We’ve seen a big tick in financial institutions implementing FedNow via our faster payments hub and look forward to increased adoption levels. We’ve also launched cloud-native, AI-based, real-time fraud prevention offerings, such as Financial Crimes Defender and Payrailz Fraud Monitor. And they can take advantage of our cloud-native, API-enabled wires solution.
In the future, we plan to launch an enterprise loyalty and rewards solution, as well as digital provisioning and digital issuance capabilities.
NEACH: What else would you like to add?
Jack Henry helps financial institutions remain at the forefront of the changes in the payments landscape. Instant payments rails will be the foundation for future product innovations, and FIs must start their journey now to compete and stay relevant. To stay on top of these changes, they must also prioritize education around new payment developments, including technology and use cases.
Tede Forman, President of Payment Solutions at Jack Henry
Tede Forman is President of Payment Solutions at Jack Henry. He leads the company’s strategy and solutions for payments. Forman joined Jack Henry in 2011 and has more than 35 years of financial services and technology experience.