Xerox Corp. is pushing further into the financial services market with a deal to buy a company that provides software for exchanging mortgage documents electronically.
The Stamford, Conn., company announced its $32 million deal for Advectis Inc. of Atlanta on Wednesday.
John Kelly, the president of Xerox's Global Services North America division, said in an interview that his group's mission is "helping clients with the most document-intensive processes."
The company "lacked a very strong digital platform — paperless platform," he said. "In Advectis we found everything we were looking for."
Advectis sells the BlitzDocs platform, which lets mortgage industry participants exchange documents over a network. Greg Smith, Advectis' co-founder and chief executive, compared the platform to the fax machine, which transformed office procedures only after it became widespread.
"When the first fax machine was created, it had no value in and of itself. … When there were a thousand fax machines, there was more value," he said. "The same is true in our environment."
Lenders using BlitzDocs can shave $100 to $150 off the cost of handling each loan, and the added efficiency could allow for more business, Mr. Smith said.
"There is a lot of inefficiency in our industry and in the process of getting a mortgage today," he said. At each point "there is a handoff" from one entity to another, "and that handoff is a friction point."
Mr. Kelly cited research from TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., which found that lenders spent $3.2 billion on document management last year. "If we took 20% to 30% out of that, that's a sizable opportunity for us to go after," he said.
He would not discuss Xerox's plans for similar acquisitions, but siad, "we're always looking for the right opportunities. We don't have to build it if we can buy it."
Mr. Smith, who would become a vice president and general manager at Xerox, said he hopes to take advantage of its technology to improve Advectis' offerings.
Mr. Kelly said that Xerox, in turn, is hoping that Advectis' system will appeal to its existing customers. Xerox can use its relationships to sell BlitzDocs to large lenders that may have been out of Advectis' reach, he said.
Craig Focardi, TowerGroup's research area director for retail banking, said the deal is important for a company like Xerox that focuses on multiple industries.
"This acquisition addresses that issue for Xerox," he said. "It enables Xerox to more quickly apply its strengths and core competencies beyond the enterprise level and down to a specific line of business."
Mr. Focardi expects electronic document exchange to cut the average cost of loan document processing by 31%, to $140 a loan, by 2012.
Madhavi Mantha, a senior analyst at Celent LLC in Boston, said Xerox already provides a lot of outsourcing and document management services to the financial services industry. "It's a big space for them."
The deal for Advectis is "an example of Xerox looking selectively for assets that complement its existing focus," Ms. Mantha said.
There is certainly a need for electronic document exchange in the lending business, she said. "In many lending operations, all of this is managed through a pile of file folders on a lending officer's desk. They're literally dealing with a pile of paper." Handling those documents electronically is "much faster," and very few rivals offer something comparable to Advectis' method of building a network.
The deal is expected to close within 30 days.
