Basis 100 may corner the North American e-mortgage marketplace
Ticker T.BAS
Home page: basis100.com
Si Thread: Subject 31515
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Extract from the Stockbastard site
This is an exciting new venture of e-commerce applications to enable the delivery of diverse financial services through intermediaries such as brokers, agents, and financial planners, etc. and directly to the consumer using the Internet.
Basis 100 Inc. currently operates one of North America?s first and largest, internet-based mortgage networks that links eight major Canadian financial institutions being Bank of Montreal, CIBC. Citizen?s Bank of Canada, Hong Kong Bank of Canada, London Trust and Savings Corporation, Sun Life Trust, First Line Mortgages and MCAP Mortgage Corporation. This network is an example of a 'community of interest network'(COIN). Each COIN has the ability to link all participants in a business segment, including customers, employees and branches, suppliers, partners, distribution channels, etc The concept of a 'COIN' is not new, however, previous attempts have suffered from narrow margins, budget overruns, and the inability to expand beyond one or two partners. Basis 100?s unique enterprise JAVA software platform has overcome these problems and can now result in enormous profits(in relative terms) with its ability to be scaled quickly to many users, reducing development costs and critical time to revenues.
Basis 100 Inc. offers products and services in the two dominant markets of e-commerce: business-to-business and business-to-consumer. They derive their revenues in the following ways: (1) transaction commission revenue generated by facilitating the distribution and sale of financial services over the COIN networks; (2) an up-front or an on-going annual fee for customized financial solutions; (3)monthly fee-based agreements based on the cost savings generated by the use of Basis 100 services; (4) professional service fees from the consulting division which advises dealers and brokers on Internet-based sales
models and end-customer portfolio management support.
Currently, Basis 100 Inc. operates two Internet-based mortgage networks in North America. In Canada, the Internet multilender site is www.themortgage.com while in the U.S., the multilender site is operated by BCE Emergis and is locat ed at www.multilender.com. Both sites allow potential borrowers to compare and apply for a mortgage among the various lenders who are signed on to the service. Multilender Software(MLS) and Singlelender Software(SLS) are two variations of Basis 100?s software architecture. In the U.S., Freddie Mac co-markets (with BCE Emergis) the MLS and SLS software to its 1800 lenders.
The revenue model for the MLS system is based on annual license and maintenance fees while the SLS system is based on a one time license fee and an annual maintenance fee after the first year.
In Canada there is an opportunity for Basis 100 Inc. to become the sole network application operator for the entire Canadian mortgage market, a market which currently processes about $90 billion annually in residential mortgages. Basis 100?s recently announced 2 Minute Mortgage program automates the entire mortgage process and is changing the way that consumers obtain mortgages. The 2 Minute Mortgage solution incorporates the I-Formation technology of Cebra Inc. This I-Formation technology translates information into digital format that can be used by virtually any trading partner on whatever computing platform or data format they currently use. This is done through a secure single point of access and enables completion of loans for mortgages and automobiles within minutes. Cebra Inc. is a wholly owned subsidiary of Bank of Montreal and through an exclusive 10 year licensing agreement Basis 100 Inc. not only gains the use of Cebra?s proprietary technology but it also delivers Bank of Montreal as a valued customer. Cebra also works closely with insurance, financial, government, and health-care sectors and thus provides Basis 100 with further opportunities to expand their technology.
On November2, 1999 Basis 100 Inc. announced an exclusive agreement with Morty Systems, Inc.(MSI), a major national mortgage broker supplier. Basis has acquired MSI?s existing technology as well as agreements with their 27 lenders and over 1250 mortgage brokers and producers. Basis 100 will migrate MSI technology to the Internet platform. MSI technology is currently employed by such lending institutions as TD Bank, Scotia Mortgage Corporation, National Bank and Caisse Populaire Desjardins de la Rive. MSI?s customer base will now benefit through immediate access to Basis 100?s technologies, services and product expertise.
This is just the tip of the iceberg in the financial e-commerce enterprise. Opportunities for growth and expansion appear limitless. Basis 100 Inc., through its early entrance into the market, appears at present, to have a major advantage. Competition is segmented into 4 main groups: (1) outsourcing companies building solutions for legacy systems of large financial institutions; (2)financial institutions themselves developing proprietary solutions in-house; (3)large systems integrators developing infrastructure for a number of financial institutions; and (4) small financial services companies capitalizing on small niche applications. Basis 100 will approach each of these segments on an ongoing basis for consideration of working relationships, mergers, alliances, or, in the case of the smaller ones, an outright acquisition.
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From the Financial Post's Hot Stock profile of December 24, 1999
Basis 100 takes winning technology south
Stephen Miles
Financial Post
Basis 100 Inc. wants to revolutionize the way you purchase a home.
The fledgling Toronto-based company, which went public on the Toronto Stock Exchange through a reverse takeover of Autrex Inc. in October, offers online financial services, including a two-minute mortgage that automates the entire loan application and approval process from start to finish.
The mortgage market in Canada is worth between $70-billion and $100-billion a year. Basis 100 intends to tap into that attractive market by forging alliances with major lenders.
The company already has won the blessing of nine major institutions, including Bank of Montreal, Canadian Imperial Bank of Commerce, Hongkong Bank of Canada, Citizens Bank of Canada and Home Savings & Loan Corp., which all signed partnership agreements with the firm.
Basis 100 generates revenue from the institutions and mortgage brokers it serves through a fee imposed on customer-completed transactions using its software and network. It specializes in both business to business and business to consumer mortgages.
Consumers can apply online to institutions for a housing loan and bank branches and mortgage brokers also can use Basis 100's technology as a central network to quickly -- and cheaply -- process loan applications through to head office.
Basis 100 has yet to post financial results since entering the public arena, but it is expected to report
revenue for the three months ended Oct. 31, 1999, before
year-end.
The firm already is the biggest online mortgage player in Canada and has plans for expansion into the United States. Those plans received a significant boost when U.S. investment banker Lehman Brothers made a minority investment in Basis 100 as part of a $12-million special warrant financing completed just before the company went public. Lehman also is acting as the Canadian firm's lead financial advisor in its U.S. strategy ... "Lehman Brothers' involvement with Basis 100 offers significant opportunities for us in the United States," says Gary Bartholomew, chief executive of Basis 100.
"Access to the business to business and business to consumer niches that we are targeting will be enormously augmented by our partnership with an organization of Lehman's stature."
Lehman's strategic stake also has fuelled speculation that Basis 100 would eventually apply for a listing on the white-hot Nasdaq Stock Market.
Market watchers say that Basis 100's business model of linking back-office processing of lenders and mortgage brokers could just as easily be duplicated in the United States.
Jason Smith, Basis 100's executive vice-president of retail financial services, says interest from major lending institutions south of the border has been overwhelming.
"The U.S. mortgage market is so fragmented. Nobody has been able to create an industry-wide platform to allow these transactions to take place," he says. "There are tremendous opportunities for us. Lehman's quite excited about that and so are the mortgage banks."
Lee Einbinder, managing director at Lehman, says Basis 100's strong position in Canada is appealing to major U.S. lenders.
"The company has a solid business to business strategy for automating mortgage processing and their technology has applications in key sectors of the U.S. lending market," he says.
"We are excited to participate in Basis 100's early development as we continue to support emerging technology firms that can improve business efficiency in the markets we serve."
Basis 100 shares (BAS/TSE) began trading on the TSE at $3.05 on Oct. 28 and quickly climbed to $6.95 by Nov. 26.
Quizzed by the TSE over the quick, one-month rise, Basis 100 management said it had been on a road show across Canada to tell the investment community its story. Management added that a Nov. 18, 1999, press release, which told of recent developments and alliances in its brief history also were partly responsible for the move.
The shares have levelled off a little since then, closing yesterday up 30½ at $5.40.
Last month, Basis 100 extended its financial services reach when it branched out into insurance, finalizing a licensing agreement with Cebra Inc., an e-commerce unit of Bank of Montreal, to manage, operate and enhance Cebra's I-formation for Insurance service worldwide.
The I-formation agreement creates cross-selling opportunities for mortgage brokers, insurance brokers and financial planners, Basis 100 says.
"This technology will allow Basis 100 to empower the knowledge broker to fully service their customers by offering a full suite of financial services," says Basis 100's Mr. Smith.
I-formation clients represent about 20% of all premiums in the insurance marketplace and the service is used by more than 650 insurance brokers, he says.
BASIS 100 INC.
CEO: Gary Bartholomew
Ticker: BAS
Listed: Toronto Stock Exchange
Head office: 1Adelaide St. East, Suite 2520, Toronto, Ontario M5C 2V9
Telephone: (416) 364-6085 |
