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Bank of America Corp. reshuffled top retail bank executives yet again this week, according to an internal memo obtained by American Banker.
October 21 -
Using technology to reach out to small businesses is often a challenge for financial institutions, and this difficulty is spreading to social media.
October 13
Bank of America Corp. on Monday announced its use of an Intuit Inc. payments product designed to alleviate a big headache for most small-business owners: payroll.
Intuit Full Service Payroll is being made available to Bank of America's 4 million small-business customers. By offering it, B of A is going after the lucrative small-business market, which experts say is chronically underserved by banks.
The product outsources payroll functions completely. It calculates local, federal and state tax as well as other voluntary withholdings. It also provides live advice, by phone, email and chat, and it has a technology that spots potential errors in paychecks before they are written. B of A offers a 100% guarantee of accuracy.
These are improvements on a self-service payroll product from Intuit that B of A has offered for about five years. That product, Easy Online Payroll, connects directly through online banking sessions and lets small-business owners calculate and process payroll, automatic employee deposits, pay statements and electronic tax payments, among other things.
Full Service Payroll "is a logical extension of our self-service offering and of our strategy evaluating different ways to meet our small-business customers' needs," says Jarett Isralow, small-business customer segment executive at Bank of America.
Small-business owners also connect through online banking to the Intuit product. Full Service Payroll reduces the complexity of payroll while saving clients time and money, Isalow says.
About a third of small-business owners make a mistake on their payroll and pay an average penalty of $850 a year, says Karen Peacock, vice president of marketing for Intuit, of Mountain View, Calif.
But with this product, "if we make a mistake, we get the mistake fixed and we pay the tax filing penalty," Peacock says, adding the entrepreneur also will get a free month of payroll service, which costs $99 a month, plus $2 per employee and $10 per state for companies with out-of-state employees.
That's about 20% less than competing services, such as from Automatic Data Processing Inc. of Roseland, N.J., Peacock says. ADP did not provide pricing and said it does not comment on competitors. It processes payroll for 400,000 small businesses.
Intuit processes payroll for more than a million small businesses. Intuit's services are responsible for paying one in 12 U.S. employees, Peacock says.
Though small businesses and the households of their owners constitute a minority of customers at most banks, they can contribute up to 45% of a retail bank's revenues, says Les Dinkin, managing director at Novantas. On average they are three to seven times more profitable than a bank's retail customers.
About 20% of small-business owners find it challenging or extremely challenging to process payroll, and more than a quarter are dissatisfied with the products their banks offer, according to an August survey by Aite Group of 291 owners of businesses with revenue below $10 million.
"It is a pain point," and the B of A product "addresses the challenges small-business owners face," Christine Barry, research director at Aite, says.
Despite massive employee cutbacks elsewhere, B of A has added 550 dedicated small-business bankers in areas with large numbers of small businesses. It says it plans to increase that number to 1,000 in the next year.
