Jack Henry & Associates Connects 40 Clients to FedNow

Bank technology services company, Jack Henry & Associates, has enabled 40 clients to connect to FedNow, the Federal Reserve’s new instant payments services system, according to the company’s President, Greg Adelson. However, these customers can currently only receive payments through the service.

Expanding FedNow Adoption

Adelson revealed this information while presenting the company’s fiscal first-quarter earnings report. He also mentioned that another 150 customers are awaiting connection to the FedNow system. The company, known for providing payment and fraud-protection software services primarily to mid-size financial institutions, had been an early adopter of the FedNow system which was launched in July.

Projected Growth in FedNow Usage

In July, Jack Henry had approximately 80 clients at different stages of implementation for the new system. Adelson stated, “We currently have more than 40 clients live on FedNow with over 150 contracts in the implementation queue. We expect to have approximately 150 live customers on the network by the beginning of 2024.”

Financial Performance of Jack Henry & Associates

The company, based in Monett, Missouri, reported a 4.6% slide in its fiscal first-quarter net income to $101.7 million for the quarter ending Sept. 30. However, revenue increased by 8% to $571.4 million.

FedNow’s Potential to Revolutionize Payments

FedNow is designed to deliver payments in 20 seconds or less. This service, available 24/7, marks a significant improvement over current processes which can take several hours or even days. The system holds potential to expedite not just consumer transfers and bill payments, but also B2B transactions.

However, only financial institutions can connect to FedNow. The central bank is reportedly encouraging more commercial use cases for the faster system. Of approximately 10,000 U.S. financial institutions, only 108 had adopted the system as of last month.

Future Expectations for the Use of FedNow

Presently, all clients are set up to only receive payments via FedNow. However, Adelson expects more clients will want to add send capabilities in early to mid-2024 as use cases become more defined.

Comparison with the RTP Network

By comparison, about 210 of Jack Henry’s clients are live on the RTP network, with another 100 preparing to add the service. The company reported a 66% increase in RTP transactions as of September, over the past year, with most transactions coming from digital wallets, bank account-to-account transfers, payroll payouts, and gig worker payments, according to Adelson.