Conference, we've over the last two years to have expanded it to represent really the ecosystem that we're working very hard at KBW to support. Our view is that technology has been a collision with financial services, and that we now live in an ecosystem with many different providers coming together to grow their businesses, serve their FIs and serve their clients. So I think you see that at play today, and you're gonna see it over the course of this conference. We have some of the most outstanding legacy players in payments with us today. We have one kicking it off with us today. We've got Mastercard and Visa. We're delighted to have the CEO of Capital One with us today to talk about his recently announced $35 billion merger of last week.
So we've got, and we've also got, some of the most exciting startups in the business with us here as well. I think this now represents what the ecosystem of KBW is working on, as well as our parent companies, Stifel Financial and Stifel Bank. So we're delighted to have everybody here. Just to give you some statistics, we have over 1,000 registered participants in the conference.
That in our 63-year history, we've never had over 1,000 registered attendees before a conference has begun. We've already organized 1,800 meetings over the course of three days. We have over 135 companies here with us today. Then also we have another tradition with this conference. We're getting closer to opening day. And as everybody knows, in New York City, when someone throws out the first pitch, it doesn't go well if it bounces before it gets to the catcher. We like a first pitch in New York that's a fastball right down the middle. So we think long and hard for who's throwing out the opening pitch at our conference.
What a setup this is. This is a setup right here.
We couldn't be more delighted to have David with us this morning and Jack Henry kick this off. David's had tremendous experience being in the middle, in the epicenter of financial services. Vasu, our colleague, is going to host the fireside chat with him. So we're delighted to kick this off with this crew. So with that, I'd like to turn it over to Vasu.
Thank you, Dom.
Thank you, Dom.
Good morning, Dom.
Hello, Vasu. I will point out, last year when we did this, it was standing room only in here. 8:00 A.M. maybe is not the, boy, but more quality than quantity in this room.
Everyone's sort of still listening in on the webcast game. So thank you, everyone. Good morning. I'm Vasu Govil. I'm one of the analysts on KBW's FinTech Research team. Very pleased here to kick off the session with Jack Henry CEO David Foss. Dave, it's always a pleasure to have you, and thank you for joining us.
Thank you.
So maybe I'll start with a couple of high-level macro questions. I know you guys just reported your second quarter results, and you tightened the revenue range just a little bit around the midpoint. How are you feeling about the macro backdrop? You know, how is it playing out relative to where you thought it would be at the beginning of the year?
Yeah. So we're feeling very good about what's happening in our space today. And I think the tightening, as you mentioned, around the midpoint was because we had, you know, we thought we felt like we had clarity at the beginning of the FY. And by the way, just to everybody's on the same page here, we're in our third fiscal quarter right now. We're at June 30 FY-end. So at the beginning of the FY, you know, we thought we had a lot of clarity around the year. But then as the year has progressed, we felt like we could tighten that guide and make sure that we zeroed in on the range. But the spending environment is terrific. And you know that on the last earnings call, I shared a number of notable wins that we've had.
We signed 14 core deals in the quarter, which is a really strong quarter, plus all the other, significant, signings that we saw. So today, bankers are spending money, and all the surveys that I'm seeing are indicating that is not slowing down. So for calendar 2024, you know, the indicators are that we should see a nice continued increase in technology spending in our space. So that feels pretty good for the rest of the calendar year.
We'll dig into some of that in just a minute.
Sure.
But I also wanna address another question. You know, the banking industry seems to be having a bit of a moment again with the credit, real estate, Commercial Real Estate losses. And just curious if you guys have any exposure on that front and the conversations that you're having with your bank clients, if anything makes you take a pause on how they might be thinking about it.
Sure. So most of our banking clients and of course, we're well-distributed in both bank and credit union. Not many credit unions doing commercial, you know, commercial paper for large, office buildings. But most of our banking, clients are into CRE, but they're not into commercial real estate like, you know, a Manhattan office building. So when you think about the, the headlines that have been out there around CRE exposure and where those losses are coming, most of them are centered around office buildings because people aren't coming back into the office.
And so when the lease renews, you know, what happens to that lease? Most of our customers are not in that business. Most of our customers are commercial lenders, so they're commercial banks, but they're really not centered in that business. And so there's some exposure there, but nothing that's really of note. I talk to our CEOs very regularly. Nobody wringing their hands right now about any, you know, tremendous exposure that they see in that space. Certainly, there is exposure in the overall industry, but among our customer base, not a real concentration.
That's helpful. As you alluded a little earlier, the demand environment has been pretty healthy based on the wins that you announced in this last quarter. I, I recall in the last year, you've called that you've used the word "record" several times with the new sales environment that you've seen.
Yeah. Don't worry that I'm using "record" too often, but it's true. So I gotta share it.
Yeah. So, so maybe you can talk to us about the drivers of that strength that you were seeing in the sustainability of it?
Yeah. So I, I think there are several things. First off, Jack Henry has recognized and has been for a long time as the most focused in our space. Our space, you know, we are I, I'm very clear, all the time to make sure that we are not described as a payments company. We do a lot in payments, but we are a well-rounded financial technology company. So it's a broad suite of technology for financial institutions. Payments happens to be one of those things that we do, but we're a broad suite provider. And so in our space, we've been recognized as a premier provider because we offer that broad suite. Our two largest competitors, of course, made these big shifts to be payments companies. Now, of course, one of them has spun off that acquiring business.
But I think when you look at the landscape, customers view us as focused on serving them. We're focused on serving community regional financial institutions in the United States. That's all by strategy. We have this broad suite of solutions where we don't have overlap hardly at all with any of our products, so they know which solutions we're gonna support and which ones we're gonna go forward with. We're known as the best customer service provider in our space, which does make a difference. And we haven't had this disruption that especially our major competitors have experienced in the past couple of years. And so I think all of those things come together as Jack Henry's a really good provider. Okay, now let's look at the technology Jack Henry's delivering.
And you know well that two years ago, I announced a technology modernization for our company, and lots of customers, lots of prospects now are really starting to understand, "What does that mean? Where are they going at Jack Henry?" That's created opportunity for us because we have such a well-defined long-term strategy as far as technology and public cloud and how we're getting into the public cloud. That's, that's, receiving a lot of positive press. And then just the solutions that we're already delivering. So you know well, Banno, digital banking, leading our industry right now as far as new customer growth. We have our Financial Crimes Defender solution, brand new, developed by Jack Henry. We're, you know, we're developing and rolling out all these new solutions ourselves. We're not depending on acquisition.
That is also receiving a lot of positive feedback from customers and prospects in the space. So you put all those things together, Jack Henry's a pretty good choice. And so, to the end of your question there was, "Is that sustainable?" I think it is sustainable because that story isn't changing. We're still innovating new things. We're rolling out new solutions. None of the rest of that story has changed. And it's a good time for us right now.
Are you seeing a notable difference in what your banks are consuming versus credit unions? And where are you seeing most of the demand outside of Banno? And I know you called out a few others.
Yeah. So, banks and credit unions today mostly consume very similar, similar solutions. So, you know, if you'd asked me this question 10 or 15 years ago, I would have given you a very different answer. Banks, what banks are focused on, what credit unions are focused on, were very different. But today, the types of solutions they're looking for generally are very much, very much the same. So digital banking, a digital banking experience that isn't just, "Hey, I wanna look up the balance in my account, but I wanna be able to originate loans with a really user-friendly experience." So the entire suite of digital banking experiences. Commercial loan origination. So 10 years ago, I would have said no credit union is really focused on commercial loan origination. Today, lots of credit unions are trying to figure out how to get into that space.
Commercial loan origination, digital commercial loan origination is a more prevalent topic now among credit unions than it used to be. When I look across the landscape, I think most of the things that we offer, certainly whether you're running a bank or credit union, you're dealing with all kinds of different fraud opportunities, challenges. So, you know, that certainly is of interest for across both bank and credit union. The unique thing for us maybe is that on the credit union side and I think you know this, Vasu, we are the dominant player among large credit unions. So almost 50% of the credit unions over $1 billion use Jack Henry as their primary technology provider. So we have a real dominant position among large credit unions.
And again, many of them are starting to think and act more like banks. And so that's, I think, part of the reason why most of the things we offer, we're getting similar levels of interest across both bank and credit union.
Super helpful. I think another area of success you've had of late is signing banks with multi-billion dollars in assets. You've called out several wins over the last few quarters. What's enabling that? Is there a more concerted effort to go upmarket? Is it the go-to-market strategy? Is it the product suite that you now have that's enabling that?
Yeah, there is a more concerted effort to go up market. So that is absolutely true. You know, we have, historically owned, I think it's, 26% or so of the banks over $1 billion, roughly 26%, use Jack Henry as their primary technology provider. But we see opportunity in that space, above $1 billion, because, A, somewhat the failings of our competitors, and B, because we have created this suite of solutions now that are really interesting to larger banks. One of the things that is creating opportunity for us is the technology modernization strategy that I started talking about a couple of years ago. Lots of larger regional banks are trying to figure out, "How do we get from our old technology stack to something that's new?" And for them, new is often centered around public cloud.
How do we figure out how to take advantage of the public cloud offerings? How do we move from whatever we've been running for 30 years over to something brand new, public cloud? But we wanna do it with a technology provider that is proven, that actually knows how to deliver to commercial banks in the United States, understands the regulatory environment, you know, all those types of things. And so with this technology modernization strategy that we've been talking about and working toward and delivering, you know, we're delivering this piece, pieces along the way. It's not a big bang delivery at the end. We're building a lot of credibility among those banks.
We've had a number of them now come and take a look under the covers and really try and figure out, "What are we doing?" I know that some of the banks we've signed recently have signed because they see that future with Jack Henry. And they wanna get on the train now, even though they can't fully deploy public cloud now. They wanna get on that train now so that they can, kind of evolve with us to the public cloud. And then put that together with our SilverLake, our flagship commercial banking solution, well recognized in the industry. And it was called out a couple of years ago by one of the analysts in the space as the best commercial banking system available today.
So when you've got the best commercial banking system, you got this leading digital banking solution with Banno, we have brand new treasury solution, brand new fraud solution, you know, all these things that we've been rolling out. And we're being recognized on the payments side as supporting the majority of the live customers on the Clearing House and real-time payments Clearing House with real-time payments. Okay, that's a lot of positives for Jack Henry that's causing these larger institutions to look at us and say, "Okay, maybe we need to be talking to Jack Henry.
That makes a lot of sense. How has the competitive backdrop evolved over the last few years? Because, you know, we know that there are a lot of different fintechs that have point solutions that are competing with select products that you have. There are also a lot of fintechs that are trying to build more modular cloud-native cores and sort of going after the core tech business. So just curious and many of them from, you know, the numbers we see are seeing good growth.
Yeah.
Just curious if you are seeing any discernible shifts in the competitive backdrop and also the willingness of banks to maybe engage with these modern tech players?
So we're not seeing a notable shift. I'm very well aware. I can talk all day about a lot of the different players that are in the space. You know, it's interesting because a lot of folks get into our space thinking, "Oh, this would be cool. You know, this is where the money is. Let's go, let's go work with these bankers." And then they get into it and realize the regulatory environment is really difficult. And they say, "You know, this isn't that cool. Maybe we'll do something that's a little bit more of a sliver of what we were originally planning to do." So we've seen that happen over and over and over again. And, you know, we've seen upstart fintechs that we've been competing against for years.
As some of you know, we were what was called a serial acquirer back in the 2000s. We acquired 28, I think it was, fintechs during that period, and kind of folded them together under a single brand to Jack Henry. So we're very well aware of the fintechs that are out there and what they're doing and who wants to kind of get into the space. And there are a few that have seen a little bit of success, not so much on the core side. You know, they make big headlines when they sign somebody, but it's the delivery part that you really gotta, you know, really gotta do. So it's fun to say, "Hey, we signed a bank. Okay, now let's talk about how many of you actually delivered and what has been the experience for those customers that you've delivered?
And are you really doing core? Are you just doing deposits?" Because, oh, by the way, deposits is easy. Loans and all the rest of the stuff is where processing payments is really difficult. Delivering deposits and saying, "We've got a deposit-only core out there," you know, that's an easy thing to do. So I think it's, you know, reality sets in for a lot of these folks as they get deeper into delivering whatever solution it is that they have. We don't take any of them lightly. We follow them closely. You know, we've seen a few flame out on the core side. We've seen a couple that have actually signed some customers. And we're watching what they're doing. But on the core side, you know, especially with our tech modernization strategy and what we're doing there, I feel very confident.
We can compete with anybody. And I'm not worried about our ability to sustain our company on the core side. When it comes to all these complementaries, there are some really good solutions out there. And again, we acquired a lot of them back a few years ago. Some really good solutions out there. We are very well prepared to compete with anybody who wants to, you know, come and play in our sandbox. And we're delivering this really wonderful technology today, Financial Crimes Defender, brand new, state-of-the-art, AI-enabled, public cloud-native, fraud solution that we've just rolled out here a couple of months ago, getting great recognition in the industry. Why? Because it's the first brand new fraud solution that's been delivered in 20 years, you know. So it's really, really positioned us well on the fraud side.
Banno, Banno Business, really positioned us well for digital banking. We have online commercial loan origination, a very deep solution, a complete brand new ground-up treasury solution. We have thousands of commercial customers now through their banking relationship who are using our treasury management solution. So we're well positioned to compete with any of them. But the thing that I'll point out is, we don't try to be all things to all people, right? So we know there are some things we're not gonna be experts in. That's okay. Our philosophy, as you know, has been, we're very open. If you're, you know, if you're a bank and you decide to choose something over here that you wanna integrate into the Jack Henry tech stack, we try to make that really easy. We always have.
Try to make it inexpensive because our job is to help our bankers be successful. And so if we're, you know, if there are slivers of the market that we don't serve, that's fine. You know, we don't have to win everything. We like to win more than our share, but we don't have to win everything. And, and so we'll create those integration opportunities for those solutions that we don't have.
So I think Banno is one where we get a lot of questions. And I think a lot of people trying to understand the contribution of Banno to the overall business, which I know you don't disclose. So maybe, but you can help us think through how fast it's growing and how should we think about the growth drivers there? Is it pretty much going in line with the registered users that you call out every quarter? Or are there other products that you sell into it where the growth algo could look different than just the growth in users? And maybe pricing is a lever as well.
Yeah. So for those of you who don't follow us closely, Banno is the name of our digital banking suite. It's a public cloud-native digital banking solution that offers, you know, all the stuff that you do as far as if you think about mobile banking and internet banking put together. One of the unique things about Banno is most banks and credit unions have a mobile banking solution and an internet banking solution. And they're two different experiences, right? So you can do things when you're on your PC that you can't do on your phone. And there are some things that you can do on your phone that you can't do on your PC. And the user experience is totally different. They look and feel different, frustrating for people. Banno has solved that problem. It's a single platform, public cloud-native.
I don't care if you're on your phone, your tablet, or your PC. The user experience is the same. The functionality is the same. It all looks the same. Very appealing. Almost any bank or credit union in the U.S. needs to get to a solution like that where you have a single experience. And this is true for commercial customers and retail customers, where it's the experience is the same. So that's gotten us a lot of attention. We have signed a lot of customers here in the past couple of years with that solution. It is not a segment for Jack Henry, though. So that has rolled into our complementary segment. We have three segments: core, payments, and complementary solutions. Complementary solutions has a variety of products in it, well over 100 different products.
So, Vasu, this is one of our regular debates. Vasu pushes me all the time, "Hey, you gotta give us the breakout on that individual solution." We just don't do that in that segment. But it is certainly a notable, growth driver for us in the complementary area. So what I have said on the analyst calls and in sessions like this is, we share with you the registered user accounts every quarter. And I've been loyal to that every quarter. I share with you the user accounts so that you can kind of project, if you look at pure play competitors that we have that are in the digital banking space and only in the digital banking space, you can kind of compare that and kind of model based on our growth.
Registered users is the primary driver for growth for the business, even as we roll out Banno Business now. So registered users will be the primary reflection of the growth of the business and kind of what we're doing in that line of business. The thing that is a little that's gonna be a little bit wonky here for the next couple of quarters is, we rolled out Banno Retail, you know, a couple of years ago, and I started sharing all that information with you. Well, now many of the Banno Business customers that we've just announced and that are where we're implementing are already existing Banno Retail customers, right? So they're adding business because we just rolled it out. They'll become Banno Retail customers. It'll throw the numbers off just a little bit.
But I'll do my best on the calls while Greg will, starting after July 1st, to share on the calls kind of what's happening as far as the growth of that business. The really exciting thing for us is, the growth drivers are all still there. We are continuing to see a tremendous amount of interest in that platform.
We have, as you know, Vasu, not been selling it outside our core base. We will start selling it outside the core base later this year. That creates a whole new opportunity for us again, because most banks and credit unions have an internet banking experience and a mobile banking experience. And they need to fix that. They need to bring that together to a single platform. Jack Henry has that. That problem is solved. We've been in production for three years with that solution. So we just need to now start selling it outside our core base.
So a couple of questions on that. I guess one in the most recent quarter, you did see a spike in new signings in Banno, and you'd called out pent-up demand for Banno Business.
Right.
So should we expect that to remain elevated here for a period of time as demand for Banno Business blows in?
Yeah, that's a good question. I don't know that I can answer accurately because I haven't seen the exact sales numbers on that. I think it's logical to expect that would happen. And so just to make the point, we have a whole bunch of customers that had signed up for Banno Retail, and they were running something else for, usually internet banking for their business customers. So they had Banno Retail and then something else. And then when Banno Business came rolling out, they signed up for Banno Business and moved over. But as Vasu alludes to, a number of customers said, "I wanna do everything all at once. I'm not gonna go retail now and have my commercial customers running something different.
I'm gonna wait until you roll out Banno Business, and then we'll sign up for the whole thing and do both retail and business at the same time." And so that's the elevated point that you remark about. I think it's logical to say this quarter would probably be like that. But I honestly have not looked at the numbers. I can't say that with any degree of accuracy. But I think that's logical. But that'll kind of settle down again. And I think you'll see our normal growth rates after that.
And then Banno regular versus Banno Business, as we think about the number of registered users that typically get out in the bank, is it sort of similar? Or is it smaller?
It'll be small. Well, so the number of additional registered users will be smaller, but the price that we charge per registered user will be greater. Yeah. So the pricing goes up when they add Banno Business per registered user. So that will increase revenue flow regardless of whether or not the number of registered users on the banking side, I mean, on the commercial, the business side is anywhere in the same range as the consumer side.
And then just going back to your point about starting to sell outside of your core base, that was a decision you sort of stopped. You took a step back and sort of selling outside of your base because of competitive reasons. Sort of what has been the thought process to get back to a point where we're willing to sell again outside the base?
Yeah. So the story Vasu knows that some of you may not know, and I was pretty transparent about this on the call. We were about a year and a half ago or so, we were fully prepared to start selling Banno outside the base. And what we learned was, particularly one of our competitors, a couple of our competitors, but particularly one of our competitors, their sales reps were going around to their customers saying, "Hey, we know you don't like your technology from us, but you'll be able to get Banno Business now. And so, you know, you can kind of just you can kind of live with what you got, because or you'll be able to get Banno. You can kind of live with what you got.
You won't need to upgrade your core system because you'll have a really great digital banking experience." And so our thought was, "Okay, we had not expected this, that our competitors would use this against us on the core side of the business, where they'd convince their customers, 'Hey, just sit tight on your core. You don't need to change core because you're gonna get this great solution from Jack Henry to address your digital concerns.'" And so we had to kind of put a stop to that and say, "Let's make sure we're being very strategic about which bases we will sell into." So what we've done now is we've defined three different core customer bases. And no, I'm not gonna tell you which three they are that we are going to sell into.
And because we know that regardless of our selling Banno into that customer base, we know there is a great opportunity for us still to displace their core, regardless of what happens with them acquiring Banno and their sales rep trying to convince them to stay on an old core. So we've been very strategic about this. We have our pricing set, have our strategy set, have most of the integration ready to go. So later this year, that's when we'll start to roll this out.
Great. Maybe shifting gears back to tech modernization strategy that you talked about earlier. It's now been a couple of years since you rolled that out. Maybe sort of give us an update on what all you've accomplished to date and sort of what's on the roadmap for the next year or two.
Yeah. So we, so again, just to make sure everybody's on the same page. So about two years ago on the earnings call, February, I announced that Jack Henry was embarking on what we refer to as technology modernization. So it was taking our core system and entirely replatforming that core. So rewriting core functionality onto the public cloud. And we've been very public about our partnership with Google. So we announced partnership with Google. We're writing a whole new technology stack, brand new. So we did not do a lift and shift. We didn't take some old stuff and make it work on the public cloud. We're rewriting ground up to create a brand new technology stack. And so my point in announcing that was to make sure that customers and prospects knew, "This is the road forward with Jack Henry.
We are not gonna do some, you know, some lift and shift, take some old stuff, and try to create an APIL ayer and, you know, kind of just piecemeal it together. We are committed to being in this business for many years to come." And that required a full replatform. And so, since we shared that, and now we've had two years of lots of people looking under the covers and bringing in consultants and trying to figure out, "Are we doing the right thing?" We have a tremendous amount of interest now in what Jack Henry is doing, and people kind of waiting to see, "When do you actually get a full bank into production?" I said at the time, by the way, two years ago, that it would be at least five years before we'd have a full bank in production.
It's been two, so we still have a ways to go. But as I also alluded to earlier, we're rolling out pieces along the way. So, for example, Wires is now in production. So Wire Origination is in production. We have just about to release what we call a Data Broker. So Data Broker, the idea there is using the power of Google, so think about this for a moment. We're in the Google Cloud environment. Using the power of Google, we're consolidating all the data for the bank into a single environment and using the Google toolset to interrogate that data and create reporting, create dashboards, you know, all that stuff that's inherent in the Google environment. We're able to use that as core functionality, but it's, you know, using the power of the Google environment. And so slowly but surely, we're rolling out these pieces.
And so what we'll end up with in the end is, as opposed to a core solution, which-and I've been in this business almost 39 years now. I know I don't look like it, but 39 years I've been doing this. Not at Jack Henry the whole time. Technology I started out as a technology developer and, been at four different companies. But my whole career has been around delivering technology to banks and credit unions. And when we, you know, when we get done with this, instead of a core, which has been what we've been doing for almost 40 years, you buy a thing. It's a core. It has loans, deposits, and general ledger and all this other functionality.
We've done away with that model, and we've kind of unbundled the core to create all these discrete components that sit on this public cloud platform that we've created. As you buy those components, they become enabled for the bank or credit union. By the way, Banno Business sits on that same platform. Financial Crimes Defender sits on that same platform. Payrailz, our newest payments platform, sits on that same platform. So the idea is now all these technologies you get from Jack Henry sit on a single platform that is all API enabled to connect other solutions in. And it's all supported by the power of the Google Cloud with all the functionality that Google provides. That's the new deliverable.
So as we've been rolling out pieces, and people can see them and touch them and kind of see where we're going, that's what's created a lot of this, a lot of this excitement. But again, I continue to be transparent. You're not gonna see us announce a full bank in production for a few more years. But the model is proving itself out, and we're seeing great great interest and great success in that in that regard.
The modules that you rolled out to date, are you focusing only on going after new clients, or is there an element of converting the backbook as well?
Definitely, working on converting customers who are already running a Jack Henry core system. So, today I don't think we have-I may be wrong. I don't think we have any brand new customers who have signed for any of those modules yet. It's been existing customers that are signing for the modules because they like the new functionality.
We from day one, we created all these modules to easily integrate into our existing cores because we knew some people would want to consume them along the way. And so it's just like them buying a, you know, a complementary solution from some fintech. It's just integrated in through the same APIL ayer. It just happens to be a Jack Henry module integrated into our existing core system. I think that every one of those customers that has deployed one of those modules so far is an existing Jack Henry core customer.
Does the revenue potential change a whole lot if they move from whatever they were using with Jack Henry to this modern tech platform?
It changes because on the modern tech platform, there are new solutions that were never a thing before, right? So Data Broker, for example, you know, there's data warehousing technology, but Data Broker is a whole different experience. That's never been available from anybody, not just Jack Henry, from anybody as far as a complete solution like we have, where it's consolidating all the data, allowing reporting on all the data, and doing dashboarding from that same data set. You know, that's a new new opportunity in the space, not just for Jack Henry. And so we've expanded the TAM essentially because we're creating new solutions that were never there before in any core system.
I guess one of the areas of focus for you with the tech modernization strategy was that you can start to do things for larger banks, regional banks even. So how have the conversations gone on that front? When might we hear, when might we see a press release that you've signed someone?
Yeah. Well, conversations are going great. I'm not. I can't predict for you when you'll see a press release. But, we, I think I mentioned it on the last earnings call. We host a big annual client conference every year. This past year in October, we were in Indianapolis. We've never in the history of the company had a bank over $20 billion show up as a prospect at our client conference to say, "Hey, we want to spend time with you." At this year's conference, we had three. Three banks over $20 billion in assets who came. Our sales teams were working with them, of course. They came. They wanted to, you know, sit in on sessions, meet the people, meet me, you know, start to understand what it is that we're doing at Jack Henry.
I think that's a really good indicator that we're on the right track as far as interest and kind of the perception of what it is that we're doing. Now, of course, we have to prove ourselves. You know, nobody's gonna switch their entire core platform just because it sounds good. They want to be able to see what we're doing and actually see us deliver. But again, I would contrast what we're doing to some of the upstarts out there. You know, it's fun to talk about some of these upstarts, but if they've never delivered a bank before, never.
Okay, you know, if you're a bank CEO, that sends a shiver up your spine to say, "I'm gonna go and put the crown jewels of my institution in the hands of somebody who's never delivered a financial institution." And here you have Jack Henry, who has a 47-year history now of successfully delivering complete functionality for a bank or credit union. I think we're in a different league along those lines.
Great. I know you mentioned the payment segment before, so I wanted to chat about that quickly. Historically, that's been pretty acquainted to total company revenue growth, but we've seen some slowdown there. It's still pretty healthy growth, but some moderation. Is that related to the debit slowdown we've seen from the networks, or is that the business just becoming more mature? And so we're seeing some leveling off on growth.
I think it's more related to the comps from so a couple of years ago, we saw. Let me back up a second. Just make sure everybody's on the same page here. Our payment segment is composed of three different pieces. We have our debit business, which also we offer credit, but we're a minor player in the credit business. It's primarily a debit business. We have what we refer to as Enterprise Payment Solutions, which is a remote deposit capture, ACH origination business, which, by the way, is still very strong. And I know you say, "Okay, checks, really?" But it is a very strong business. And then the third piece is, historically, what we've referred to as our bill pay business. We've expanded quite a bit beyond bill pay now in that space, but it's all on that same type of platform.
So in that second segment, Enterprise Payment Solutions, coming out of the pandemic during the pandemic, but really coming out of the pandemic, we saw tremendous growth in that leg of that three-legged stool in the payments area. That growth has really spiked. I mean, it's still a very successful business for us, but it's but growth has slowed. So what you when you look at the payment segment overall, what's kind of changing as far as the the growth as compared to our our prior year comps is primarily because of the slowdown in enterprise payments. It's not because of any major shift on the card, processing side of our business.
And speaking of cards, so if you look at the debit business, you know, you follow, what the the public reporting that Visa and Mastercard does, you know, that's our business flows right along with their numbers. And so any reporting that they do almost every single time, you can predict what Jack Henry is going to do in the card business because we flow right along with them.
And then maybe you can also give us a quick update on Payrailz. I know when you acquired that, I think the expectation was that you would double revenue and EBITDA from that business that year. Is that on track?
Very small. Yeah. Very small business. So, you know, it's easy to say that. So Payrailz, again, just to get everybody on the same page, we acquired Payrailz now a year or a year and a half ago or something like that. The reason we acquired Payrailz, back to my point earlier about we're trying to do everything public cloud-native in the future. So we're moving everything to public cloud. We had this very successful bill pay business. We had a lot of demand for P2B payments and B2B functionality that we didn't really offer on our iPay platform, which is our bill pay platform. We could do those things, but it wasn't a very elegant delivery. And we weren't public cloud-native.
And so we were facing this rewrite of our bill pay platform and a demand for additional functionality. And, the option we chose rather than go through all that was to acquire this company called Payrailz. We've been following them for quite some time. They had a very nice platform, very small company, but a very nice platform. And we saw them as that company that strategically fit into what we're doing from a business point of view, but also from a technology point of view. So we slide them in. We knew we had some work to do around integration and kind of kind of propping them up for prime time. But it was a really nice opportunity for us to get some technology that we could now lean on for the future to fit with our overall strategy. So we rolled them in.
We, at the time, we knew that that business was very dependent on one reseller. They had a sales force, and they were performing well. But they had one pretty significant reseller relationship. The reseller fell down on the job, I'll just put it that way. And so, no, we did not hit the revenue target that we had hoped for originally. We have definitely hit the operating income target and the overall bottom line financial performance of that business. But we did not hit the top line performance primarily because of one reseller partner. We fixed all that now, and so we're on the right track. The other thing we had said was that we would be EBITDA positive in that business by the end of the FY. We've actually achieved that already.
So not June, but we're in there now as far as being EBITDA positive. But again, a little short on the revenue side. But the business is performing well. Customers are happy. And so we're gonna move our existing customers over time onto that platform. But then we're also signing new customers onto that platform with a broader offering that we can obviously, you can charge more because you have more functionality.
I have to ask generative AI. it's a very hot topic these days, and I think the initial focus of many companies has been on the operating cost side. For Jack Henry, I think it could also be a revenue opportunity. And I think you mentioned on the last call that at your client conference, you have rolled out a few offerings. Maybe help us think through the use cases, both on the cost and revenue side.
Yeah. So this is about a three hour conversation right here, but I'll try and distill it down to a few minutes. You're right. Lots of opportunities for us as a large public company. Also, of course, lots of opportunities for our customers. So our banks and credit unions, they're all trying to figure out, where do they use AI? What do they use it for? You know, the thing to distinguish here is, so there's traditional AI, machine learning. We've been in that business for many years. We've had solutions that have traditional AI built into them and have done that for quite some generative AI is the, you know, is the new hot topic.
And so when I think about those opportunities, first off, for our customers, just to point out what you alluded to as far as our client conference, what we demonstrated on stage at our client conference here a couple of three months ago was, we had used AI through Banno, so our digital banking application. We had used AI to learn. And what we did on stage was, we had our CTO, we had the woman who heads up AI for Google, and we had the CEO of one of our banks.
And the CEO said, "I want to come and be there in person on stage to tell all these bankers how great this is and what it's done for us," which, by the way, is pretty cool when you have a customer who insists on coming and getting on stage to say, "I want to tell you all how great this has been for my bank." And so what they talked about was how we generative AI to learn the entire employee manual of this bank, right? They have this playbook, essentially, about how you deliver service, how do you treat customers, the vernacular that they use within the bank. We also learned their website, learned everything about the bank, their documentation, everything that they have using AI, and then created, using that, this add-on to our already digital experience for customer service.
So when a customer service agent or when a customer of the bank contacts the customer through the Banno application on a normal workday, they can have a conversation through the application with somebody in the call center. And that's that's technology nobody else has in our space, but we have that, and it's been in production for quite some time. But after hours, when there's nobody in the call center, the Gen AI offering from Jack Henry steps in, and they have those conversations using the vernacular of the bank. They know the policies of the bank. They know how to answer questions because they've learned it using the same tools that an employee would learn. But now we're using technology to deliver that experience to their customers. And so again, the CEO is on stage kind of crowing about how great this has been for their institution.
So that's just one experience that we can and have already delivered. And then you look at Jack Henry as a company running our company. We actually have a meeting coming up next month, or maybe it's a month and a half from now. And it's all for the senior leadership of the company. And all the speakers are senior leaders. And we're all laying out for each other. Here's where we're using AI in our business. So our Chief People Officer, for example, here's where AI is going to be used in my line of business. Our General Counsel, here's where AI is going to be used in the legal part of Jack Henry. Our CTO, of course, here's where it's going to be used for developing code, but also things we're going to deliver to customers.
So we have all these different folks lined up to share at the senior management level. Here are my plans. And of course, they all roll together under a single master plan for Jack Henry. But it is amazing how many opportunities are there. And of course, you'd, you know, you pick up any paper or look at anything online. Everybody's talking about how amazing it is, but it's just been really interesting and exciting. And I was talking to Tom before we got up here. You know, I've been doing this for a long time. And the opportunities now in technology are so much more exciting than any other time in my career. It's it's really, really interesting. Now, with all that opportunity comes a lot of risk, right? So we have to be really careful about managing the risk side of this.
We house a lot of customer data. We can't do anything that would possibly expose customer data, you know, our bankers' customers, to the public environment. And we can't create. We have to be ensured that we're not creating any code because IP is our life. We can't be creating any code that would now become part of the public domain. And so making sure we have all the guardrails in place around all the things that we do is paramount. So I want to move fast, but not that fast, right? I want to make sure that we're really managing the risk on all these things before we just try to do things that look fun and and kind of get ahead of ourselves. But lots of lots of fun to talk about. I'll say that.
In terms of a timeframe, would you say we'll start to see some things that move the needle in the next 12 months, or is it more of a 2 to 5 year timeframe?
Well, I think it'll depend on which needle you're talking about. So on the revenue side, I think I would think within the next 12 months, you'll start to see things that are directly impacted by Gen AI that are creating opportunity on the revenue side. On the cost side, it'll be sooner than that, you know, internally. How big that will be, I can't predict that at this point. But just lots of interesting opportunities. The governor, again, is risk. You gotta, you know, we've already come across a bunch of really good ideas that look really good on the surface, and then you start getting into them, and you think, "Okay, but what about this?" And so we really have to be careful about the risk side. But I think we're gonna find some really great opportunities.
Couple last ones. I know you mentioned before you've been a very acquisitive company historically, and it was interesting that you noted on the last call that you have no deals in the line.
And that's still true, by the way.
Still true?
Nothing.
Just curious why that's the case? Is it mostly valuations?
It's so I had dinner last night with an investment banker I've been friends with for years here, and he said he thinks that things are going to start to show up on our desk. It's not been around valuation. Well, maybe some of it has been, but we haven't even had bad deals to look at, you know, deals where I would go, "Oh, we're not going to pass on this." There's just been such limited deal flow in our space. And I know that, you know, investment bankers in our space know our profile, how we look at deals. So I'm sure there are some deals that have been going on out there that they say, "Well, we're not going to pass this by Jack Henry," because we know that they wouldn't take a run at this. But it's just been incredibly slow.
As I talk to investment bankers in the space, you know, just not much going on. But I've been assured now by several in the space that, you know, it's kind of one of those, "Just wait till next month." So I'm waiting till next month. We'll see if things start to open up a little bit. The good news for us is we don't need to find a deal right now. We don't have a problem that we have to solve with a deal. What we've done historically is, you know, we've done a lot of deals over the years, and they have been opportunities for us to find something that positions us better for the future. We don't do deals. Never have we done a deal on cost synergies.
Never once have we done a deal where we say, "We're going to take out a whole bunch of cost, and that's going to make this thing work." It's always been around technology that's innovative, a team that we believe in, something that we think customers are really going to grab onto and say, "We want more of that." Every deal that we've done has been along that along that line. And I think we'll find some more of those in the future. But the good news is we don't try to, you know, we don't need them to juice top line growth in the next six months or something like that. You know, we're always taking a long-term view as we do these acquisitions, like Payrailz. You know, that was a long-term view.
We're going to do this deal now because we see two, three, five years down the road, this is going to totally change what we can offer to customers. That's the way we view deals, and that's the way we kind of evaluate deals. And so we just haven't had any of those to look at, and literally zero on my desk as I sit here right now, which is still shocking to me.
Maybe we'll take a couple of audience questions, if anyone has any. Tom?
So I have two quick ones, because I know we don't have a lot of time left. Number one is, there's a lot of talk about scale in the banking industry. From your seat, do you have an observation about how you see banks using technology based on size, or is it more consistent than we would think? So that would be my first question.
Okay. So I think I don't know that it's so much based on size. The really interesting thing for me right now, when it comes to banks' use of technology, is those who find niches that they can serve. So think about most banks have thought in terms of serving a geography historically, right? My bank, we serve this city or this county or this state or whatever it is. Okay. With all the digital things that we're doing today, if you find a niche that you can serve better than anybody else, geography doesn't have to matter anymore, right? I can serve customers nationwide out of my town using technology. That's the really exciting opportunity that I've been witness to many times over now. Bankers that or banks that you would think, "Well, that's, you know, it's a billion-dollar bank.
How are they doing this nationwide?" Oh, they're doing it using technology. Lots more opportunity to do more of that. So I don't as much think about it as the size of the bank, how much technology they're using, as I think about more the creativity, maybe, of a leadership team.
Thank you. And then number two is, we are going to have FedNow as part of this conference over the next couple of days. But what do you see developing in real-time payments? And can you give us any update on the uptake in terms of the acceptance of real-time payments?
Yeah. So for RTP with The Clearing House, I think we're still over 60% of the banks live with RTP in the country today are using Jack Henry to facilitate that. So we're very much into the real-time payment space, very much a provider in that space. When it comes to FedNow, FedNow is continuing to grow slowly. Most every bank out there is doing receive-only today, right? They're receiving payments, but they're not sure they want to be originating payments today. They're all taking it slow. I think much of that is around their experiences with Zelle. A lot of them feel like they got burned with the experience with Zelle. And so they're kind of taking it slow on FedNow. I think the really interesting thing.
So I was in D.C. right before FedNow went live last year. I was in D.C. meeting with some of the Fed presidents and the leadership team for the FedNow offering at the time. We got into a conversation about Jack Henry. We were, we'd been working with him for 3 years. We'd been at the table with the Fed for three years. We were about to go live, and we were talking about what the future looks like. When the Fed president said their goal was to push the Treasury to make almost all government payments flow through FedNow, I was like, "Okay, that is going to be a game changer." So you want your VA benefit payment? FedNow. You want your IRS tax refund? FedNow. You want your Medicare reimbursement payment? FedNow, right?
If that really happens, and of course, the Fed can't mandate this. They have to negotiate with the Treasury for that to happen. But if that happens, if that day comes, then you're going to see an explosion of FedNow growth. And of course, every banker is going to want to be on that platform. So today it's continuing to be slow growth. We're very much at the table. We have many banks live today on that platform. But I think if that comes, that's going to be a game changer for FedNow.
We have time for maybe one last question, if anyone has any.
Hi. Good morning. Thank you for your time today. How do you view build versus partner versus acquisition? Do you consider partnerships as like, "Let me try before I buy," or is it, "No, we're going to like, we love this. We're just going to acquire"? Is it binary? We either build or we acquire?
Yeah, it's a great question. So build, buy, partner has been a topic that we have changed our thinking on a lot in the past few years. We used to be very much heavy toward the buy, almost never partnered. We would build things, but we were very much heavy on the buy side. And I ran the practice at that time, by the way. So I was the culprit in all that. And in the last few years, we've shifted, I think, very appropriately to where we evaluate build, buy, partner very evenly on every opportunity. You will still find it's rare that we partner. And the reason is we hold dear our customer service reputation.
If you partner and you put the customer experience in the hands of a partner, now you risk damaging your reputation for service, and we're not willing to do that. So we only partner very selectively. But I would say we're really good now at the build or buy.