Some of those things have the ability to create a threat vector. And so what we’re asking them is, how do you think about things today? Are you still leaning into customer experience? Or are you more leaning into fraud management, 100% of them said, boy, I’m willing to give up some of the customer or member experience to fight fraud because fraud is just — is really becoming a big deal for me. And then finally, modern money movement, right? Obviously, as the generations change, if you look at something like a bill pay, it looks a lot like a checkbook. And so, what our customers have asked us to do that we’ve built for them is can I have a much more modern looking money movement place where somebody comes in and they’re selecting between four or five different options of how they can move money as opposed to going to three or four different applications that are unintegrated.
So, any kind of friction reduction, digital account opening, any kind of ease of buying a product, any — a lot of investment around fraud and fraud management and the discussion of the nuances between the balancing of a good experience with fighting fraud and then providing a more modern payment experience.
Bryan Hill: And Adam, with the innovation that’s occurring to the digital banking platform that Alex was describing, that’s the driver in the market. That’s the tailwind in the market for companies like Alkami to pick up the number of new clients and the digital users that we’re picking up. The current providers in the space are not keeping up with the mega banks and some of the super-regional banks and what they’re investing through their digital banking platform, and that’s what requires the end market to look at more of a contemporary provider of services in the space such as an Alkami, which is benefiting us in the market share that we’re gaining.
Adam Hotchkiss: Got it. Thanks. That’s all really useful color. And could you just remind us what the typical product road map looks like for a bank versus a credit union and how that land and expand motion differs between the two? Just curious if there’s anything you’ve learned in some of your earlier bank cohorts have matured a bit.
Bryan Hill: So we’re pretty early in the early innings of penetrating the bank market. And it really depends on the bank financial institution. So if it’s a bank financial institution that’s heavy leaning into commercial clients and commercial deposits, then the primary difference between a credit union and a bank is the commercial banking offering. As it relates to the retail side, if it’s a bank financial institution that’s predominantly growing and has a strategy more focusing on retail clients, it looks very similar to a credit on. So not a lot of differences there.
Alex Shootman: Maybe you can comment, Brian, on just what we’re seeing from an ARPU perspective between new logo bank and a new logo credit union?
Bryan Hill: Sure. So — and the best way to look at that is to unpack our backlog that we have going into the year. So 44 financial institutions, 1.3 million digital users and the ARPU on our backlog going into 2024 is around $26, a bank financial institution or the banks that we have in our backlog and there are 17 of them, they’re averaging $31 per user compared to the credit unions, which are $23 per user. — even the $23 per user on the credit union side of our backlog, that’s a significant uplift above where the company’s blended averages. What’s driving that is the number of products that are being adopted on the MSA and on the original sale. As I mentioned earlier, on average, now our clients are adopting 18 products on the original order compared to 17 a year ago, 15 a year before that.
So much different. But what’s driving the increase between a bank and a credit union is predominantly the commercial banking platform and commercial banking application that they’ll take.
Adam Hotchkiss: Really great, Coller. Thanks a lot, Brian. Thanks, Alex.
Operator: And your next question comes from the line of Saket Kalia from Barclays. Your line is open.
Saket Kalia: Okay, great. Hey, guys. Thanks for taking my questions here and nice quarter.
Bryan Hill: Hey, Saket.
Saket Kalia: Hey, Alex, hey Bryan. Listen, sorry in advance if these questions have been asked. But maybe first for you, Brian, on the ARPU point, the revenue per user that really stood out to me this quarter. And you just touched on sort of the add-on sales motion really adding more product to the existing base. Can we just talk about maybe 1 or 2 of those additional products that are most substantial to sort of that ARPU lift?
Bryan Hill: What we’re seeing a lot of product adoption is really in 4 areas in ’23. And those are pretty consistent with ’22. So in the money movement area of our platform, we’re seeing nice cross-sell activity that’s happening also in the customer service area, which is where you’ll see some machine learning type of products that come through like chat bots and those type of things. Security and fraud is an area where we’re having some pretty strong cross-sell activity. A lot of that’s being driven by our ACH alert acquisition from a couple of years ago. And then a core segment, that’s contributing a lot on the marketing side of our platform and driving some adoption there. All those products that I just mentioned are those product family groups, those are what I would refer to as more of a richer RPU set compared to some of the other product groups that we have.
Saket Kalia: Got it. Got it. That makes sense. Alex, maybe for my follow-up for you. A lot of focus, a lot of success in the bank vertical here. And I think you made some comments earlier just on the pipeline. I’m curious, how is sort of the win rate in that vertical evolved? And do you feel like you’re getting the reference enough reference customers to sort of — to help that discussion to shorten the sales cycles going forward? Anything on that win rate and sort of sales cycles, if you will.
Alex Shootman: Yes. From a market perspective, one of the things that we measure is what is the awareness of us as a provider. And that’s something that we continue to try to move forward. We still have room to go there. We are consistently number one or two in the crane market in terms of a buyer being aware that they should consider Alkami. We’re currently number seven in the bank market. So we still — we’re building a new business in that market. And so we’re still making progress in terms of general awareness. We had — I think we talked about this in the last call, probably a year to a year and a half ago, we had a really high win rate in the bank market, but we didn’t have a lot of that. And we said to ourselves, we it’s probably not good news.
We actually need to see a win rate come down, which means we’ll have more at that. So we had more at bat this year. The win rate came down, and that is a result of being more well-known now in the bank market. So, in summary, we have room to go to become known as a provider in the bank market, and we’re working on that. We got more at bats this year than we had last year. And so year-over-year, the win rate went down as a result of the increased at bats.
Bryan Hill: Yes. And second, when we look at the bank market, there’s a lot of factors that drive success there. It’s not just — at least at this stage, it’s not just the number of new clients that we’re adding. It’s how are we moving the product? What’s the product market fit. And as Alex mentioned earlier in the call and some prepared comments, is we had a consultant come in, they evaluated our commercial offering. And we feel like we’re 90%, 92% there in having the right product to reach a broad set of bank financial institutions, and we’re going to close the remaining gap in 2024. Also, it’s the core integrations that you have. We now have a core integration into 8 bank core systems. There’s probably two to three more that we need to add to even provide greater density, but we’re making a lot of progress in adding additional bank core integrations.
And then unaided awareness or share of voice, however you want to describe that what Alex was just describing. If you go back two years ago, we were only in 20 bank deals. In 2022, we were in about 45 or so in 2023 that moved up to over 60. So now we’re being invited to more deals. That results in a lower win rate. But as all three or four of these factors come together, that’s ultimately how we’ll forge success moving forward with the objective by 2026 when you look at our new — the composition of the new clients that we sell in 2026, our view is half of those would be credit unions and half of those would be bank financial institutions.
Alex Shootman: And I would just probably summarize to say there’s a management team here that has been in companies that have entered markets. And what we understand is that you can’t learn the women in the front yard. And so, you decide to go in the market and you go and start attacking that market and then you understand what you need to take as a next step. And so, we’re exactly where we expected to be at this point in time in terms of building in the bank market. We know what to do next with products, with skills, with awareness, with marketing. We’re really pleased with the progress.
Saket Kalia: Got it. Really nicely done. Thanks, guys.
Operator: Thank you, and our Q&A has now ended. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
