Equifax Inc., the credit bureau, has expanded its loan-processing capabilities by buying the core operations of the financial software company Appro Systems Inc. for $92 million.
Appro's best-known software product, LoanCenter, automates applications and the origination, and underwriting of car, mortgage, and other loans by midsize banks. The company has 450 banks and credit unions as customers.
"This is a very natural extension of what we do," Tom Chapman, Equifax's chairman and chief executive, said in an interview Monday. "We're the only company in our space that has really narrowed in on the loan processing business, and it sets us apart."
Equifax, of Atlanta, already has a similar product, but it is customized for larger companies. J.P. Morgan Chase & Co. and SBC Communications Inc., for example, use it.
"Appro gives us a different set of customers," Mr. Chapman said.
The deal is expected to close in 90 days. Appro is to retain its name, its employees, and its headquarters, in Baton Rouge. Its founder and chief executive, Steve Uffman, will join Equifax as the group executive for enabling technologies.
In 2002, Appro adopted an application service provider model, eliminating the need for up-front customer investments in hardware and support. Equifax said the ASP system was an important factor in its choice.
Appro generated about $20 million in revenue last year. "Based on current economic conditions, Equifax expects annual revenue growth for the Enabling Technologies business to be in the mid-teens," Mr. Chapman said in the press release announcing the deal.
Disposition of certain assets will reduce the net cash impact of the purchase to about $74 million, Equifax said.
Equifax is not the only credit bureau looking for other ways to make money. Experian Inc., of Costa Mesa, Calif. has shown interest in scoring, loyalty marketing, and automated decision-making services. Last fall it started offering a Web-based service that automatically makes decisions on credit lines or loan amounts by following customer-defined rules on things such as credit scores.
The service, marketed to lenders, also provides a rules-based mechanism for alerting customers to changes in consumers' credit quality.
Experian also sells a service that notifies lenders within 24 hours when certain consumers submit applications or obtain credit lines. It claims the service provides the most up-to-date information a lender can get about potential customers' behavior when shopping for credit.
TransUnion LLC has diversified into home equity loan processing. Last fall the Chicago credit bureau enhanced its automated valuation model and added to its line of products an alternative form of title insurance for home equity lenders.
Fair Isaac Corp., the provider of FICO scores, has also been branching out. In 2003 it entered a market that nearly every financial institution seems to want a piece of these days: payments.
Last month the Minneapolis company and Total System Services Inc. expanded the credit card portfolio management services they jointly provide to issuers.
Fair Issac also recently started selling a system meant to help banks automate the creation of new accounts, set policies for the process, and monitor compliance with them.
The company has said it will release other products this year to address application processing, data interface, and analytics procedures.
