Jack Henry & Associates, Inc. JKHY

The business

Jack Henry runs the general ledger of the American community bank. Core is the account system of record, the thing that knows your balance. Payments moves the money, card and automated clearing house and remittance. Complementary is everything bolted on top: the mobile app the customer actually sees, lending workflow, fraud screening. Contracts run multiple years and renewals are near-automatic because replacing a core system is a two-year project that gets a chief information officer fired if it goes wrong.

The customer is a bank with somewhere between a few hundred million and a few billion in assets, run by people who have known their Jack Henry representative for a decade. That relationship is the moat and the constraint. Nobody switches, and there are fewer of these institutions every year.