HomeBank Technologies Inc. sells home-banking and loan application software to credit unions and small banks, but those institutions never open a box or download from a CD.

The software resides on a central HomeBank server, or at a server farm. When customers want to pay bills, transfer funds or apply for a loan, the institutions' online systems take them directly to the central server that runs the HomeBank application over the Internet.

"We develop the interface to the back end of the financial institutions' databases so they can run sexier, more robust applications that are Internet based," says HomeBank CEO Bryan McCaw. "This gives them the same capabilities as the big banks that they compete against, but at a much lower cost."

These cost savings come largely from the common-server approach, known as an Application Service Provider or ASP model. Maintenance is shared among numerous institutions, because updates and fixes are done only once at the central server. And the upkeep is therefore continuous -- because it's so easy -- and instantaneous.

The Internet-based ASP delivery model also lets HomeBank charge a combination of licensing, maintenance and user fees. Serving customers centrally is also an attractive means of expanding into the beckoning US market without massive increases in costs.

Over the past four years, HomeBank has gradually gained attention with its home-banking product, which allows customers of small financial institutions to conduct their banking at home over the Internet. Typically, a credit union pays 25 cents per home-banking transaction when its customers use the HomeBank service.

HomeBank's most recent successes, however, hinge on the introduction of its ProLender loan application software. Using a Web browser, customers apply for loans and send their electronic forms to their bank or credit union. The HomeBank software in turn links to various credit bureaus, call centres, loan scoring centres and loan processors.

The attraction for financial institutions is a direct cost savings. Mr. McCaw says HomeBank charges about $25 to $30 per application, while financial institutions spend on average more than $200 to process an application manually. Additionally, by automatically processing routine loans, the HomeBank service frees bank or credit union personnel to handle more complex transactions.

HomeBank recently completed a $2.5-million agreement to provide its new ProLender loan application software to 58 Saskatchewan credit unions. After sales of $2.1 million for 1999, Mr. McCaw says the sale should make HomeBank profitable for 2000.

The ASP model of product and service delivery has radically altered HomeBank's strategy. Initially conceived as a hardware, software and systems integration company, HomeBank is now entirely focussed on its software, with Internet delivery playing the central role in distribution.

For example, Mr. McCaw is now about to add customer-relationship management software to the HomeBank product line, and plans to introduce wealth management analysis software soon afterwards. All will target small financial institutions and all will be delivered through the remote ASP model.

"Financial institutions tend to develop systems that are oriented toward transactions and accounting," says Mr. McCaw. "Our focus is on providing products that complement these systems with more customer-centric applications."