Why don't we kick it off, guys? Good morning, everybody, and thank you so much for joining us. Welcome to the 2024 Wolfe FinTech Forum. Again, I want to thank you all for being here, investors and corporates alike. I think it's going to be a great two-day event. I want to give a special shout-out to my team, as well as the corporate access team and sales, and everyone here at Wolfe that's put this effort together. You know, we're proud to have around 70 public and private companies participating in 30 fireside chats and panels and one-on-one meetings over the next couple of days.
We do expect to come away with incremental takes on a number of high-level themes, including how companies are thinking about the current macro environment, balancing the need for growth while expanding profitability, which we've heard a lot more about the last year, competitive dynamics across this space, which, again, has also heated up across different parts of the ecosystem. We're going to have panels today, including the venture capital and private equity panel, which we really hope to hear more about where the private side is investing in, in the key themes they're seeing that's attracting new capital, evolution of issuer processing, macro from our macro specialists and economists, software and payments converging at the point of sale, B2B payments, obviously continues to be a hot theme we're going to talk about, e-commerce, gaming and payments, and more. We'll have Global Payments, Fiserv, FIS.
We have Jack Henry with us this morning. We have Visa and Mastercard. There's a lot of talk over incremental mergers and the recent headlines, whether it's Capital One and Discover or it's others. But I'll stop there going through overall. But look, I think the key themes to keep in mind across our space is generally, as our space, FinTech in general, more or less underperformed the last couple of years. Really, it was in line and then it underperformed in 2022. This year it's off to an okay start, more or less in line with the market. But there's been some very strong capital flowing back in again, and we've seen that across the networks, across some of the core processors, and even names that the market had perceived as somewhat legacy before. We've seen money moving back in now.
And I think you're seeing the focus on profitability drive a lot more attraction—a lot more attraction—from investors, focus on structural strength. And obviously the M&A headlines doesn't hurt either. So we're now trading at around 100% of the market multiple on an equal-weighted market basis. Okay? That compares to a 30% premium to the market that this space historically traded at. And what you would see is the companies with profitability are obviously trading at a much better growth-adjusted multiple than those without. And the consistency, recurring revenue nature drives the most attraction by investors. I think that's a perfect segue to Jack Henry, given it's clearly a name that has among the most recurring, sustainable, low beta, you know, strong capital return story. And so it fits that profile well for investors.
You do see it reflected in a very attractive, in a relatively better-than-average multiple in our coverage, which shows you how much investors think about it. So with that said, I'd love to invite both Dave and Greg up to the stage to join me. Okay, guys, thanks again for joining. You know, look, I mean, Jack Henry, a name we just picked up, actually, after having known it for many, many years, as you know, Dave, is clearly a name that, as I mentioned, has been very attractive to investors as a very consistent performer. $15 billion company, very core, sitting in the middle of FinTech, providing banks with pretty much their lifeline of what they need to survive and live every day. 7,500 regional community banks and credit unions, high single-digit top-line growth, roughly double the typical, across the core processing space.
So obviously you've been doing something right for a number of years. But I think before we get into the weeds on this story, I'd love to just hear is that obviously a big transition going on right now first. And Dave, maybe just kick us off with why now? Why, you know, in term what I mean by that for everyone here is there's a shift going on where Greg's taking over the role as CEO shortly, and Dave is, just basically moving well, you already are on the board, but moving into the executive chairman.
Executive chair. Yeah, that's exactly right. So first off, great to be with you, Darrin. I'm not sure how many times we've done this together, but it's great to have you covering us now. Ironically for me, this is this is the first time I've been on stage with you as a covered company. This is also the last investor conference I will do because I'm in the process of phasing out. So it's great to be here. So the question of why now and and just to be clear, so I'm, been, CEO for eight years, been at Jack Henry about 25 years. And we announced on January 22nd that I'm going to leave the CEO role. Greg's going to become the, CEO effective July 1st, and then I'll move into the executive chair role for, for a period of time.
I'm already Board Chair, but I'll take on the Executive Chair role at Jack Henry. So why now? First off, I'll be 63 this year. And so, you know, you can't do this forever. But I think the bigger thing is when I first took this role, I had identified about five big rocks, really big things that I wanted to do as the CEO, ranging from, when I became CEO, about two-thirds of our senior leadership team and these are not all, you know, officers as far as 8-K filing, but our leadership team, they indicated to me they were thinking about retirement. So when you got two-thirds of your senior team all talking about retiring, and it was, you know, great for them. They'd served Jack Henry for many years.
That's a lot of transition that I knew I was going to have to work through as CEO. So planning all that out, I had five of them who wanted to retire in 2020. You don't have five of your senior leaders all retiring in one year. So working with them, kind of timing that all out, working through a leadership transition, that was one of them. Dealing with our debit platform. So you followed us at the time. You know, we had a real issue at the time with our debit processing platform, trying to decide what's the strategy, actually executing on that strategy. Greg owned the actual execution part, but it was a huge project for us at Jack Henry, our tech modernization story, trying to figure out what does the technology landscape look like for the future.
So as I sit here today, all of those rocks have been moved. The one that's still in flight is tech modernization, and I'm sure you'll want to talk more about that here today. But that's the one that's in flight. But we're now, two years since public announcement, about 3.5 years since we started on that project. And it is now just, you know, the ball is rolling. And so now, having kind of accomplished all those big things that I really wanted to accomplish and the fact that I'm getting older, you know, it's a nice time to to step aside. And Greg is well positioned to take on the role.
Greg, I mean, you've been here for some time now, obviously, for some years, in the COO role. But if you could just help us understand a little more about your intentions and how you plan to put your stamp on the CEO shop.
Yeah, thanks. So I've been at Jack Henry 13 years. So as Dave said, and fortunately I've worked for Dave my entire career. So we have a lot of similarities in our philosophical approach. But I've been involved in all of the strategic decisions and in some cases, the execution of those decisions, as Dave alluded to. So I think from a standpoint of where we're going and what we have and Dave just talked about our tech modernization strategy, we have some things that we still need to go execute on. So we have a strategy laid out, that I am very passionate about making sure that we execute on, ensuring that we keep the mindset and the culture that we have at our company and our customer service excellence that we've maintained for 47 years.
So those will be very, you know, near and dear to my heart. But I will tell you, a couple of things that we'll look at doing maybe, as a as an adjunct to what, we've started is a little more focus on an SMB and a B2B type strategy that you mentioned earlier. We have some things that we're in the in the works now. This would all be through our financial institutions, not around our financial institutions. So that's very important to know. But we're working on some things that we'll be talking more about over the next few months, that, I think will be exciting for for our institutions and for the, for the economy.
Maybe just as a team, help us understand. I mean, it touches a little bit, Greg, on what you were just saying, where you're spending most of your time. What do you consider the top three or four priorities for you guys right now?
Yeah, so tech modernization is number one. So I'm working a lot with the team on execution. I'm proud to say that we have executed to the point where Dave announced this February of 2022. We have a roadmap that we share with all of our clients. We don't share it publicly outside of that. But we have executed on every single date the last two years on all of the core modules and some non-core modules that we're building in the public cloud, as well as a One Jack Henry initiative that I've talked a lot about the last four years when I became COO. I wanted Jack Henry to be the easiest company to work with in the industry, not only with our clients, but with FinTechs, everybody else.
So we've done a lot to continue to open up our core and our digital platforms, which have always been the most open. But we've made things a lot easier. In fact, I'm proud to say that we issued 1.7 million tokens last year, to FinTechs to allow to play in our sandbox, in a very easy, easy way. So you'll see press releases all the time of FinTechs announcing things that they've done with Jack Henry that Jack Henry had nothing to do with. They did it all on their own in their sandbox.
For me, yes. Well, I think, you know, it's natural when you've been the CEO for a while and in the company for a long time. A lot of what I've been working on lately is helping Greg, of course, get to do these things and, you know, do those types of things. But for me, I've been meeting with investors really starting in December before the announcement, but all of our key investors, making sure that I'm in front of them, help them understand, you know, why am I leaving, make sure they understand where we are as far as progress on key initiatives and so on. So a lot of investor outreach and a lot of customer outreach. I've been doing this a long time. I know a lot of customers really well.
Talking to customers, making sure they're comfortable with where we're going and what we're doing, those have really been focuses for me. Then I think the last thing would be this technology modernization project. I mean, this that's my baby, you know, as far as when we launched. So just continuing to stay involved to make sure that we're on the right path with that one, as Greg has taken the reins with that. I would say those are the key things I've been focused on here lately.
Could we take it a step back now and just maybe recap a little bit on the quarter? You obviously have strong bookings, and there's been a consistently strong recurring pipeline for you guys for some time now. Any big highlights from the last quarter that's worth sharing for you guys?
Yeah, I think the notable thing, the most notable thing is we so, you know, we're known as a core provider, but we provide a broad suite of technology solutions. So I always say we're a well-rounded financial technology company. We're not a payments company. We do a lot in payments. But we are a well-rounded financial technology company because we have all these different solutions. On the core side of our business, which a lot of people focus on, our track record here recently has been just astounding. You know, we announced these 14 core deals in the quarter, four of them over $1 billion in assets. So getting that many large deals in a quarter, I think, is significant. The most significant piece of that story is our Q2, which is the December quarter. We're at June 30 year-end.
Our Q2 was the strongest Q2 in the history of the company and the second strongest sales quarter in the history of the company. And by the time I got to the earnings call in February, our sales pipeline was larger than it had ever been in the history of the company. So you think about that. You just booked a whole bunch of business, second largest quarter in the history of the company. And within five weeks, we have a sales pipeline that is larger than it's ever been in the history of the company. I mean, that's really significant. That shows you the interest in what Jack Henry is doing. There's a lot of excitement about this technology modernization initiative. And I know we've referred to it several times, and we'll describe it here in just a little bit, I'm sure.
But a lot of interest in that. That's particularly driving interest among larger institutions. And then but then the broad suite of solutions, we have some, you know, many notable successes there as far as sales that have actually been booked here recently. So it's a very exciting time for Jack Henry. And, you know, if you follow the industry at all, you know, there's been a good bit of disruption with several of our competitors. And Jack Henry has just been, you know, steady Eddie. And I think people recognize that.
It's usually a slow-moving industry, to be honest with you, in terms of customers switching or taking on new large projects, given the banks are just pretty reluctant to honestly make big moves, right?
Well, and there's a reason for that, though, right? So if you change out your core processing system, you know, it's it's heart and lung surgery for the the banker. The thing I say all the time is, if you're the CEO of a banker credit union, the hardest decision you will make ever when it comes to technology is to trade out your core system because everything you do at your banker credit union is impacted by that. Every customer is impacted by that change. And so it's a really big deal. So they have to their level of pain has to be really high for them to say, hey, we want to we want to go through this change. Now, with that said, there are about 100 changes a year in the industry. Jack Henry tends to win right around 50-55 of those.
By the way, there are 30 competitors in the space. Everybody thinks there's three. There's about 30 competitors in the space. So Jack Henry is winning 50-55 of those 100 that are the decisions that are made each year. And it's because of the reputation we have for great technology, great service, and being a great partner.
Following on from the quarter itself, it sounds like demand continues to be strong, as you just said. Nothing has changed in the last couple of months, right? When I think about the type and the composition of that demand, you were just touching on it a little bit, but a little bit more color on, you know, what you're seeing. What is it? What is it that your customers really are asking for?
Yeah, so it's interesting. And it's so first off, we've rolled out several new solutions. We are a technology company, after all. And so, you know, we've been really focused on the last several years on rolling out brand new technology solutions. People are recognizing that. If you look at our primary competitors, other than merchant acquiring, name me anything that any of them have originated and rolled out in the last five years. You know, they're not doing anything as far as new technology. We've rolled out a brand new treasury solution. We have Banno, our retail digital banking solution, and now Banno Business is in market. We have a new brand new financial crime solution. We've rolled out a number of different things here in the past few years.
That has created excitement in the industry because everything we're doing is digital first, public cloud native, you know, in the new look and feel. And then they're comparing that to our competitors who, again, are rolling out nothing as far as new technology in this space. And so that, I think, is driving much of this interest in Jack Henry. The other thing that's notable is the larger banks that are starting to look to us. So I said in the earnings call in February, at our client conference, we host a great big client conference every year, like most companies do. In October, our client conference, we were rolling out or announcing a number of new things.
We have never in the history of Jack Henry had a bank over $20 billion come as a prospect to our client conference, you know, come and say, hey, I'm working with your sales guys. We want to look at Jack Henry. Never has happened in the history. We have customers that are over $20 billion, but we've never had a new prospect come to our client conference. This year, we had three. Wow! It's because of all this new innovation that's happening. We have a lot of larger institutions, regional banks that are looking at what Jack Henry is doing. A lot of them have been kicking the tires to see if what we're talking about with this modernization effort is real. CIO says, yep, it's real. So then now you get the business line owners coming to investigate Jack Henry further. That's pretty exciting for us.
So, is demand—it sounds like what you're everything you're saying is demand is strong. I mean, what's interesting is that we hear we cover IT services companies that also deal with FIs. They're not doing so great right now. They're not seeing that much in the way of like green shoots on picked up demand. But is what you're saying a Jack Henry specific thing, or is it a market thing? I mean.
It's mostly a Jack Henry specific thing.
I don't know. Well, I mean, I think a couple of things. We do surveys. You know, we obviously, you know, there's various surveys that come out in this industry. There's four in particular. We do our own and three others that we follow. And all three all four of the surveys are averaging 5%-10% for technology spend in 2024.
All right. So there is a.
I think the most relevant survey is the Jack Henry survey because it's our customers, and it was closer to 10%. So, we're seeing that play out in our pipeline and, you know, in the wins that we're having.
Right. So there is, I mean, an overall market growth we're seeing. But you guys are obviously seeing some outsized element. Maybe just touch on Banno for a minute. I mean, it had very strong numbers. I think it was 135 new Banno digital suite customers. I know Banno Business also did well, over 50, right? And so can we just touch on what's going so well there, maybe help the audience understand what that is, then how it's resonating?
Sure. So Banno, we rolled out about five years ago. At this point, it's the fastest growing digital platform. So we in five years now have over 11 million registered users on the platform in that period. So as Dave mentioned earlier, it started out as really just a retail platform. So we, you know, we sold it, again, got a ton of retail experience and kind of accolades too, because of some of the features I'll talk about in a second that are different. But Banno Business was something that we've rolled out over the last seven or eight months. And what we end up doing is adding the business to the institution, whether they have business users or not, it ends up going into the registered user pricing point. So whatever the price point is.
The reason why we're able to go back and kind of take another bite at the apple is because we didn't have it to start with, and our competitors originally started with both retail and business. So they were able to sell it as a single solution. So we're able to go in, provide the small business applications for that. And we have various parts of our product that I think are huge differentiators. So one, I talked about the 1.7 million tokens. Well, we have a lot of FinTechs that are integrated into our platform, well over 50 that today provide products and services to the Banno customers through some FinTech related. So I'll use one Array is one that's in there that we use. And there's a whole bunch of those examples.
And then we have a product called Banno Conversations, which is truly one of a kind. It's the only one in the industry that's a full authenticated chat that allows the contact center or the service organization of the institution to directly communicate with their member or their account holder through an authentic chat, so authenticated chat. So if you had a transaction that you said was fraud and the customer service person wanted to see it, you could actually attach the transaction directly to the log and have them look at it. So it's a really, really cool solution. And we're actually building some AI components to it and all that right now. But also, we're the first digital platform to go fully without allowing screen scraping into our platform.
So if you know what kind of the regulatory push is right now is to eliminate screen scraping over time. So we now have direct integrations into Plaid, Finicity, MX, Intuit, Akoya, that allow only an API access into the digital platform, which allows us not to share credentials. We own the credentials. They're not shared anywhere else. And it cuts down on, you know, kind of credential stuffing and things along that line because of that. So we are the only platform that that doesn't allow screen scraping into the digital platform.
Let me take one thing on Banno just to make sure everybody in the audience here kind of understands. So Greg says the fastest growing digital banking platform in the industry. Let me tell you why. So we'll use this group right here as our little focus group. And you can be included if you want to, Darren. So I don't know. I don't know any of you. I don't know who you bank with. I don't care who you bank with. But I would bet whoever you bank with, when you're on a PC and you're interacting with your bank, the experience is totally different from when you're on your phone, right? I'll bet you can do things on your PC that you can't do on your phone. You can add a biller here. You can't add a biller. You can do whatever.
Most banks and credit unions in the U.S., that's the experience. Banno has solved that problem. It's a single platform, public cloud native. I don't care if you're on a PC, a tablet, a phone. The user experience is the same regardless of form factor. And you can do all the same things regardless of form factors. That's why I say we have solved that problem that most banks and credit unions are trying to solve. And we've been in market with that solution for five years now with more than 11 million registered users. That's why it's the fastest growing platform in the industry.
What kind of percentages do you know of, at least, that the so-called community banks or, you know, anything below the regional bank category actually have a mobile app at this point? I mean, I know it's better than it was, but it's still pretty far from.
Well, as far as a mobile app, I think everybody has something these days. Most everybody has something. A lot of them are very rudimentary, you know, so just not a very good experience. But they have something so that you can access banking information. But again, the significant thing for us is we have this single platform now that is in market fully, and it is a consistent delivery regardless.
Closing the gap between desktop and mobiles.
Well, one thing on that. So I think to Dave's point and maybe where you were going, there are a lot of institutions that have two different providers because the one provider doesn't offer a mobile solution. So that's another thing which really disjoints the experience for the customer because of that. So obviously, we have both. And that also helps.
I mean, I'm bringing it up because I have seen plenty of banks. And I actually saw a survey that showed a pretty decent percentage. They'll have an ability on mobile, but it's not an app form. It's not. It's actually you have to go on to the browser. Yeah. Or if you are going on the app, it's pretty basic, to your point. When we put all of this together and we think about your targets, guys, before we go to the tech modernization strategy for a moment, just how does this all play in? I mean, maybe remind the audience of your forecasts, your targets in terms of guidance for a moment.
Go ahead.
Oh, as far as financial guidance. Yeah. Yeah. So, as Darren alluded to in the introductory comments here today, Jack Henry growing at about 8% top line, so about double anybody else in our space. And, you know, it's gotten to be a little bit difficult, more difficult than it used to be to compare us because the former true comparisons that we have have really gone down the merchant acquiring path. And now, you know, what's happening with one of our major competitors trying to get out of merchant acquiring and kind of get back to normal numbers. But as far as the financial technology space that we're in, we're growing top line about double as compared to as compared to anybody else.
And that obviously is driven, you know, driven by a lot of these initiatives we just talked about. Maybe we just touch on the tech modernization strategy now. I mean, assisting in it's really been assisting in serving a lot of larger FIs. Maybe just touch on, you know, what that is and why it's going well for you guys and what the latest signs you're seeing of how the trends are.
Yeah. So I'll start. You want to pick it up? So really, the origination of this many several years ago. So as I said, this was one of the big rocks that I really wanted to move when I became CEO. You know, we've been in this industry now for 47 years. Pretty much anybody in the U.S. who's in the core industry was focused on kind of traditional technology. And we were trying to figure out, is there an opportunity for us to go full public cloud? So AWS, Azure, Google, go full public cloud for those those services. We determined a few years ago, not only is there the ability to do that, but there will be demand. There isn't demand today. So you're not going to talk to bankers. We're going to say, oh, yeah, I want to go full public cloud right now.
The reason they don't want to do it right now is because the regulators aren't ready to kind of regulate in that environment. But they're all talking about it. They're all trying to figure out how and when do I get to public cloud for everything that I do for my institution. And so we saw that demand coming. So we decided, OK, there's a few approaches you can take. You can do what's called the lift and shift, take some old stuff and make it work in the public cloud. Well, when you do that, you don't really take advantage of all the public cloud native stuff that's available to you. So we considered that. We considered some pieces putting on the public cloud, others sticking with traditional programming methodologies and systems. But we decided to go all in. We're doing everything on the public cloud.
And so, what that requires then is a rewrite. So we're essentially, we have four core processing systems today. We're rewriting to one. So we're taking all the best of the four, rewriting onto the public cloud. So it's a brand new solution, taking advantage of the public cloud technology stack and all the tools that are there underneath that stack, including security, by the way, rewriting everything. And we're putting it on this platform. So we actually refer to it as Jack Henry Platform. So it's this platform. We've settled on Google as our primary partner today, although we have loads running in AWS. And I'm told we're the largest financial technology provider in the Azure environment today. But Google is our primary partner for this platform. So we created this platform. All these core functions are going to sit on that platform.
But then all the new technology we just alluded to earlier, Banno, Financial Crimes Defender, our Payrailz payment platform, those all sit on that same platform so they can take advantage of the underlying database functionality and reporting functionality that you get with Google.
Right. You can turn it on.
On this platform. Yeah. You have the development tools now. So everything looks and feels like, you know, things you're used to in mobile. It's a major initiative. We're doing it inside of our committed R&D spend. And by the way, we're 14% of revenue per year. We're able to do all this inside of that rate that we've been running at for several years. But it's a complete modernization of the technology platform. And I suppose I talked too long. I didn't give you anything to add. But go ahead.
No. I'll just add a couple of things. So one thing that you didn't say is that we're actually breaking up the key components of the core. So there's roughly about 30 components that we're building out. So we're decoupling it, creating it in a singular, you know, public cloud native environment and allowing that. So back to your point about larger institutions, some of the larger institutions, especially the super regionals who may have a homegrown core that they built or they're using, you know, somebody else's that they're not happy with, there may be portions of that that they want to replace, General Ledger, things along that line. So we're actually creating bundles of core components. So we do think that everybody's going to end up buying the full core eventually.
But if they want to kind of dip their toe and only do a migration of a certain piece like the General Ledger, that's a lot less intrusive than it would be to do the full core. So that's a big piece of this. But as Dave said, all of our other products lay on top of that platform too. So it allows them to get bites of all of our public cloud offerings even before they buy some of the core stuff.
Where are we on your customers actually transitioning this to this?
So as Dave mentioned, you know, so Banno, PayCenter, the Financial Crimes Defender, all in the public cloud. We just moved Banno to Google over this past weekend, which was almost next to flawless. So that was awesome. And so we're now up there operating. So we're in the process of moving all the things into Google and kind of rewriting. But from a roadmap perspective and a customer perspective, as I mentioned earlier, we're hitting on the dates. I mentioned on the last earnings call that this calendar year we will be rolling out our General Ledger component. We've already rolled out our wires, both domestic and international.
We've come up with a new data solution called Data Broker, which is utilizing all of the BigQuery stuff that's in Google Cloud today, allows us to have a central repository of all core payments, digital fraud data, all in a single repository, allowing our institutions to have access to that using generative AI as a way to access it, and then also building an executive dashboard for the C-level folks to truly, on every morning, do push button type stuff to access their information and even verbally ask questions.
Let me emphasize something Greg said there. So Greg talked about the components that are coming out in core. So he said wires. He talked about Data Broker. He talked about GL. So the good news for investors in Jack Henry then is this isn't some big bang release in, you know, five years. We're releasing these components along the way. So you can see success. We'll talk about customer signing. It won't have a huge revenue impact. But that was important to us so that investors and our own customers could kind of track, OK, is this real? And you're actually rolling out customers. And you have stories that you can tell about people using these components along the way rather than saying, OK, this is going to take us five years. And we'll tell you how it goes five years from now.
Yeah
this was an incremental release of components of this solution. And then when we get to the five-year mark, then we have a, you know, a bank fully running.
You know, you said it may not have a huge revenue impact. But I mean, you mean now, I think, because we've had clients, investors telling us this could be a very meaningful driver and materially higher than what we've seen today.
It resets. So the way I phrased it internally to our employees, because, you know, it's probably logical for you to understand, you've got a whole bunch of employees who've worked at Jack Henry for a long time who now look at us making this major shift to this brand new technology stack. And people are like, oh, you know, is my job in jeopardy? All that kind of stuff. So we have a lot of conversations about the fact that this is this initiative right here resets the bar for Jack Henry for the next 47 years. So this is what sets us up for many more years of success and totally differentiates us against any of our our domestic competitors, but even some of the international competitors who are trying to establish a foothold in the U.S.
You know, most of them, what they talk about is public cloud, haven't really delivered anything. But they talk about.
I was going to ask you that. When we hear from your competitors that they say they're also offering cloud-based solutions, how does that compare to what you guys are doing today?
Yeah. So there is a and I'm not going to name names here. But you've got to be really careful to understand, OK, did they do a lift and shift? Because that's been going on out there. And people say, oh, we're running in the public cloud. It's true. But when you do a lift and shift, you're not taking advantage of all the things that are there in the public cloud, for example. So if you hear somebody say, well, we've, you know, we're public cloud native. And oh, by the way, you need DB2 as your as your underlying database, that is not public cloud native. DB2 is not a thing when you're public cloud native. Right. So there's those things. There's a lot of a lot of mixed messaging that's been going on as far as just trying to say we have things in the public cloud.
This is truly a public cloud native ground up strategy.
I guess in terms of the percentage of your customers that have already shown that they're going to adopt some of this and taking it on versus what's the common then maybe what kind of revenue uplift per customer you could generate more revenue and margin once you transition the customer over?
For sure. Do you want to.
Well, I think it depends on what it is. Right. So each of the each of the modules we've created, as well as each of the products that we've been rolling out, Defender and Banno and all that, all have upcharge from what the old products that they're replacing. This part of that. So there's there's that. But I think the bigger thing is is that what it's doing is creating that lift of of the pipeline that we've talked about. So some of that lift is just going to come from more customers. Some of it's going to be, you know, there's a transition for early adopters to take some pricing and kind of how we do that. So there's some time for that all to kind of take place. What it ends up meaning ultimately, hard to still tell.
But I do believe that when you see the interest in the customers and the larger customers, you know, just so you know, an average core so we talked about 14 core wins that we had, by the way, all 100% competitive core wins. When we win a core on a bank, typically they come with 50 complementary products that come with that. If we win a credit union, it comes with 35. So as we go up in some of these larger institutions, you know, that may not be 50 just because of the process. So this gives us opportunities to sell a multitude of our high performing products into these larger institutions to get them excited about Jack Henry because they weren't used to seeing us in the space. And I think that's.
The other thing that's important to note in this whole strategy is we're expanding the TAM. So we're doing things now with Jack Henry's new core solution, which we're not really referring to as core, but we're doing things that nobody has ever done in core. So Data Broker, that Greg alluded to earlier, that isn't a thing in the core industry today. But we can do it because if we have all these things sitting on the same Google Cloud environment and using this, you know, gigantic database that's inherent in the Google Cloud environment, we can do all kinds of reporting and dashboarding and so on. So we're creating solutions now because we're public cloud native that nobody could do before as a core provider. But they're just inherent in the option.
Have you given anyone a sense of if a customer shifts, it's going to be this X% uplift in revenue?
Not publicly. Obviously, we talk about that a lot internally. But we have not.
But you do think it obviously there is a decent or notable. I think you've mentioned to us before.
Yep.
All right. Maybe we'll, so we talked about core. We talked about the tech modernization in Banno. Maybe we shift to the payments for a minute. I mean, and Greg, I know you have a fair amount of experience on this side. Just touch first on FedNow, what you're seeing on instant payments and, you know, what kind of uptake it's having from your customers.
Yeah. So a couple of things. So just so you all know, so I've got 25+ years in payments, mostly in prepaid, bill pay, other things like that. So and I led our payments business for about eight years. So on FedNow, we have right about 170 live today, which is about 35%-36% of the live institutions. Almost the entire entirety of all of our institutions and in general are in a receive only environment. So some of the larger institutions are doing some send. The bulk of the of the transactions are really like account to account, moving Grubhub driver or Grubhub or Uber drivers or things like that, moving money in and out and some transfers from bank to bank. But really, you're not seeing the bulk of those transactions.
So I think the real meat and what still is yet to come is around B2B, which you mentioned earlier, bill pay, request for pay, things along that line, treasury opportunities that we think there's some opportunities if the treasury really gets significant. And those become dollars instead of cents for the institution and honestly for Jack Henry. The problem is and it's really what's kind of, I think, been the limiting factor in everything with faster payments is fraud. And so this, you know, everybody is kind of scared to really, you know, release the hounds kind of thing with faster payments because they're scared of fraud. Even Zelle h as taken some of a hit. So one of the things that we're excited about to help our institutions and honestly the entire ecosystem is our Financial Crimes Defender product.
It's a real-time product that allows us to actually combat fraud. So we've built modules that we're rolling out for both for Zelle, RTP, and FedNow that will allow, I think, more people to get comfortable with the send transactions component of this. So we're continuing to work on that and rolling that out to our customers. So right now in our 160th or so pipeline or backlog for Financial Crimes Defender, about 60 of those are truly only buying the faster payments modules. So I think that's it. So FedNow, I think when I did a comparison just to put a couple of things in perspective, I did a comparison. We had 100, but at 150 institutions, it took us right about seven months for FedNow to roll out.
Took us almost 30 months to get to 150 institutions for RTP because I think it's way more of a comparison between RTP and FedNow than Zelle and all that. So and you look at the average transaction, the average RTP transaction is double what a FedNow transaction is today. Can't tell you why, but it is because it's basically a lot of the same things. There's a different settlement, as you know. So one is still ACH on RTP and one is truly more real time or near real time on the Fed. So there's some components to that too. But I think as we continue to watch, I think the adoption of FedNow will significantly increase because of the comfort level of the smaller institutions, not watching the larger institutions own that network. And we're and I think we're starting to see that in our contracts.
What are the implications for you of that? I mean, just, it's always been a little bit difficult for us to understand the economic model of FedNow and Zelle and some of these, even RTP for a company like Jack.
Yeah. Zelle is not a great economic model for the financial institution, right, because nobody charges for it. So and that's why I was saying about some of the transaction types, when they become dollars and not cents, then it may be a little more, you know, impactful for Jack Henry and for our customers. Because right now it's basically, you know, in line roughly, you know, double ish of an ACH transaction. So it's not it's not a ton of money. What it is becomes stickiness. And it creates opportunities to throw other things on our platform. And our payrolls acquisition, you know, plays into this and some of the other things that I think. So at this point, until some of those use cases truly become, I think, mainstream, it's going to be some time before it becomes truly impactful.
Just in the interest of time, maybe we shift and talk about your capital allocation strategy. You guys have still had for a pretty long time now very low debt levels, very strong cash reserves. You know, you've always had a dividend, obviously, and share repurchases. But you've coupled that with quite a few deals, albeit smaller, more tuck-in size deals. Can you just help us understand the way you're thinking about capital allocation going forward?
Yeah. So I'll start and then Greg can tag on. So as some of you know, we historically were known as a serial acquirer. So between 2004, 2015, we did 26 deals, a lot of really good successful deals, albeit a lot of them tuck-ins, but really, really helped position Jack Henry. And then in the last few years, you know, when everybody was IPOing or SPACs were a thing, you know, it was tough to get a deal done because everybody thought their company was worth this much. And it's really only worth this much. And, you know, we don't do deals like that. We're a very disciplined acquirer. So it's been challenging here for the past few years. We did payrolls about 18 months ago or a little more than that. Greg alluded to that earlier. The challenge really has been around valuation.
0You know, we don't chase the shiny object. And so when we combine that challenge with valuation and not many deals to look at, I said on the last earnings call, shocking to me because I used to lead the M&A practice, I have had zero deals on my desk to look at in months. I mean, literally zero. And so, you know, it's tough to get a deal done when you don't even have anything to look at, let alone valuation. The other thing, though, kind of coupled with that is the fact that we've had so much success here with all this new product innovation that we've been doing. So as we're rolling out all these new solutions, you know, we don't feel the pressure to go get a deal done either.
Now, I have a whole bunch of folks in the space telling me that, you know, it's going to get easier here pretty soon and M&A is going to be back again. And I hope so. But for the moment, not much activity.
From a competitive landscape standpoint, in terms of the sort of the ankle biters or the startups, I mean, are there enough out there that even look interesting to you or has that changed?
There are. You know, we don't have holes in our portfolio that we have to fill. So we don't need to do a deal. There are some interesting things out there that would be nice for us to kind of as add-ons to some of the things that we're doing today, either through our digital platform or on the payments side, like payrolls. So there's some nice assets out there. But again, you know, valuations are just out of line right now. And hopefully that will change.
Well, look, you guys have obviously executed well and there's been very strong recurring revenue. So you don't need anything. But it's been a while. So maybe we'll see some to come. Guys, any quick questions in the audience before we go to the next? I think there's one in the back, actually.
Hey, thanks. You talked about the 30 competitors in the market. Are those primarily from a core perspective or can you just speak to like the product breadth that they have when competing with Jack?
Yeah. So primarily on the core side was what I was alluding to. You know, we have hundreds of competitors. When you look at all the solutions Jack Henry has, we have hundreds of competitors. But what I was alluding to there was on the core side, most of those. So there are probably, you know, six or eigh that have something beyond core. Obviously, Jack Henry has many solutions beyond core. But then most of those are smaller companies that have, you know, core and maybe one or two other things. But the reason I bring it up is because, you know, when you think about that, there are only 100 deals in the whole industry that are being done per year. If Jack Henry is winning 50-55 of them in the core space, those other companies are, you know, some of them are winning.
And yet we are winning the vast majority of those deals.
Guys, I think we're going to have to stop it there. But thank you so much. It was great having you guys.
Thanks, Darin.
Appreciate it.
See you then.
Thanks again.
Yep.
Greg.