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PLANAXIS BANKS ON FINANCIAL E-TRANSACTIONS. Linking institutions a profitable niche. Company survived tech bubble's collapse by keeping focus on building secure links

In 1997, Eric Cote thought that "Internet business services were destined for a great future."
So the young Paribas Bank executive thought it would be timely to found a firm that would offer financial institutions a range of online services - which he did with his friend, Jean-Francois D'Amour.
Then the tech bubble burst, and you know the rest of the story, right? Not even close.

"Planaxis not only survived the tech bubble burst, but continued expanding right through it," said Emilio Imbriglio, who is a partner at accounting firm Raymond Chabot Grant Thornton, and also assurance partner, a type of auditor/adviser, for Montreal-based Planaxis.

"We didn't ride any crazy, sudden wave, so there was no terrible ride back to the bottom," Cote said.
Planaxis specializes in business-to-business online banking, but with a twist: "That's bank to business," laughed Cote, president and CEO of the firm. In essence, it offers services to banks and other financiers, especially in the area of secure transfers, usually involving massive amounts of money, stocks or bonds - a $3-billion takeover, for example, or a $550-million bill payment. Not your $80-withdrawal for weekend beer money.

"In 1997, when we started, there was a flagrant absence of competence concerning every aspect of online banking transactional systems," said Cote - his conversation tends to veer into such formulations, reflecting the complexities of his highly technical field.But in layman's terms, it worked like gangbusters.
Planaxis started off with Internet-related services, but that's no longer its niche - a mantra word in that field. It has evolved into a services company for banks and other institutions to optimize their existing transaction systems between themselves, or with brokers, stock exchanges, businesses or investment managers.
"The bank is a kind of hub linking all of those ... and we're principally an
integrator," Cote said.

"A and B want to communicate. They either know what they want to do, but not how, or they don't know what they have to do. We analyze and help them along."

One thing he's found out is "how incredibly paper-based this critical sector still is. Very little is electronic, still."

That's good for Planaxis, though. The transformation to more efficient electronic systems is not about to slow down.

The company was formed while Cote was in the middle of his five-year stint in Paris working for Paribas before its merger with BNP. It was a useful apprenticeship. Working from the inside enabled him and D'Amour to assess every weakness and gap in the system, devising and tailoring solutions to remedy them. He approached Paribas with his ideas, and struck out on his own - the bank is still Planaxis's main customer, accounting for about one-quarter of the firm's $10 million in annual revenues.

In fact, the company is truly 21st century. Its main office is in Montreal, but most of the 97 employees are in Europe - 80 of them, in fact. The travel schedule is relentless, a veritable "if today's Monday, this must be Brussels" syndrome, including stops at satellite offices in Montreal, Toronto, Paris,
Madrid, London, New York and Luxembourg. Global as it is, Planaxis has a ways to go before catching up to the industry's gorillas - IBM, LogicaCMG and Capgemini.
"They're bigger," said Cote, "but they don't have the great specialties we do."
One growth channel will be Planaxis's adherence to Brussels-based SWIFT, a 7,000-bank consortium, an exchange network which issues codes to customers for transfers.
Through SWIFT, Planaxis hopes to add to its roster of about 25 clients, mostly in North America, to diversify away from dependence on European institutions. Besides, the expected wave of bank mergers is always good for IT companies like Planaxis.
Cote and D'Amour's age - both 34 - belies their maturity, Imbriglio said.
But perhaps the highest accolade Planaxis has received is the involvement of Pierre Ducros, another Quebecer and a trailblazer in the information-technology business.
"Theirs is a niche that has tremendous potential," Ducros said.
If anybody knows, he would. The co-founder and former president of DMR Group Inc., which was sold to Amdahl Corp. in 1995 for $194 million, followed much the same pattern: breaking away from an employer (IBM, in Ducros's case) and setting up a Montreal IT company with international offices to serve an underserved market.
"This is a relationship business, and the individuals are what drew me. I have enormous confidence in Eric, Jean-Francois and Pascal," he said.
Ducros was asked to sit on their board, and eventually brought aboard two other knowledgeable former associates, Parisian Jean-Louis Melle, who directed DMR's European activities, and Joseph Casola, who was his marketing man - quite a sounding-board from which to cull advice and wisdom.
"We're going to advise them on managing growth and how to develop new markets," Ducros said. Cote and partners are heeding that advice. They're not interested in going public, nor in a quick flip - building it up to sell it. "In 10 or 15 years, I think we'll have about 500 people and revenues of between $60
million and $75 million," Cote said. "Again, nothing crazy.