Pinwheel’s new partnership with Jack Henry will help the latter’s clients win primacy with more clients. It is also a perfect example of how fintechs can rapidly widen their reach in a competitive environment.
The union makes Pinwheel’s direct deposit-switching solution accessible via Jack Henry’s digital banking platform. Pinwheel used the Banno Digital Toolkit to embed its technology into community and regional financial institutions’ digital offerings. The service is now available to nearly 1,000 fintechs and 7,500 financial institutions.
Pinwheel’s direct deposit-switching solution covers 100% of the American workforce. That allows employees to move their direct deposit quickly. The Jack Henry deal builds on Pinwheel’s efforts to build a payroll partner network with such companies as OneSource Virtual. It immediately identifies and authenticates U.S. workers’ payroll records within the bank account application workflow, eliminating consumers needing to know and enter credentials.
Filling the void between fintechs and large TradFis
Partnerships lead Brian Karimi-Pashaki said the Jack Henry link is the next logical step for Pinwheel. It began by working with fintechs like Credit Karma and Chime. Soon, Pinwheel saw interest from Amex and Citizens’ Bank, who saw Pinwheel as a critical part of their primacy strategies.
That left a sizeable middle segment of credit unions and small banks that Karimi-Pashaki said build software differently than the other two by using companies like Jack Henry for their cores. While prominent players have legions of engineers to build in-house solutions, the smaller players want off-the-shelf functionality so they can focus on their community-building strengths.
“It was important for us to link up with Jack Henry as we meet the demands of many credit unions that have been calling us,” Karimi-Pashaki explained.
More companies open to integration
Karimi-Pashaki said Jack Henry is a great partner because of its large roster of longer-tail banks and credit unions. Jack Henry encourages new technologies, which makes it easier for institutions to onboard Pinwheel.
He said that openness to integration is becoming more common. Every banking platform must be open to a degree. Newer players can factor that openness into their core design, while others must adapt to include it later.
More partnerships = Greater primacy
Look for Pinwheel to announce more partnerships with companies like Jack Henry in 2024 as they continue their pursuit of large banking platforms. Once they’re on board, implementation time decreases.
“Being pre-integrated into Jack Henry means it’s dramatically easier for any current customer of Jack Henry, or any prospective customer thinking about why they choose Jack Henry over another digital banking platform,” Karimi-Pashaki said. “One of the first things that we will ask them to do with Pinwheel is to switch their direct deposit over so that credit unions built on top of Jack Henry can start to win deposits and secure primacy with their users. It’s the right time in our growth as a company to focus on this as a strategic way to circulate our product out there.”
Instead of working separately with Jack Henry and Pinwheel, institutions can shorten their time to market by eliminating pre-integration tasks. Account and routing numbers reside in Jack Henry. Pinwheel then writes it into the payroll account, so the next time an end-user receives pay, it gets deposited in the new account.
“So you can see why many credit unions and banks built on Jack Henry would want this, Karimi-Pashaki said. “They need those direct deposits to establish primacy. Once you establish primacy, you do things like mortgages, personal loans, credit cards and all the other products that a bank will try to extend to you as it has evolved its relationship with you over the years and your financial journey.”
The next step beyond primacy
Once primacy is established, financial institutions can leverage AI to provide their customers uniquely tailored experiences. That’s several steps up from the old uniform philosophy.
“With things like direct deposit, you’ll see that primacy looks different for different people,” Karimi-Pashaki said. “A high-income earner who only has half of their paycheck going to your account will probably be treated a little bit differently than a person with a lower income who has their entire paycheck going to your bank.
“Once you start to discern differences between customers, you can meet them where they are and market to them differently. You can give them the products that are right for them rather than this one-size-fits-all strategy.”
Tony is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.