Bank of Boston Corp. is looking to start marketing its new small- business credit card nationwide next year, a corporate executive said.
The New England powerhouse currently is doing market research and developing credit scoring models, as well as gauging whether such a marketing strategy would be profitable.
If the $62.4 billion-asset banking company follows through, it will become one of the handful of banks vying for small business dollars on a national scale.
"There's a great deal of interest in doing it, we really want to do something," said Sandra Uhlig, senior vice president of small business loan center for BayBanks Systems Inc., a Bank ofBoston subsidiary. "But there's a lot of analysis left."
Bank of Boston acquired BayBanks this year, and Ms. Uhlig will rise to be the holding company's director of small-business loan centers when the two banks combine operations next spring. The holding company eventually will be renamed BankBoston Corp.
The credit card is intended to complement the holding company's credit products, Ms. Uhlig said. Until Bank of Boston launched one two months ago, neither it nor BayBanks had offered a small-business credit card.
"We had heard through many, many customer focus groups that they wanted a dedicated business card they could hand to their employees for travel and to make purchases," Ms. Uhlig said.
Bank of Boston two months ago started offering a small-business Visa card through its branch network, Ms. Uhlig said. In the fourth quarter the bank will conduct a direct-marketing campaign in New England for the card, which has an upper credit limit of $35,000. The results of that venture will be scrutinized before the company strays from its traditional turf.
Bank of Boston wants to market its card nationally for several reasons, Ms. Uhlig said. For starters, the holding company believes that small- business lending is a profitable niche and wants to exploit it further; it currently has about $860 million in small-business loans.
"The bank wants to grow and feels that that's a profitable segment of business," she added.
Also, the card can be a means of establishing Bank of Boston's franchise in certain markets and possibly paving the way for further sales efforts, she said.
"We could use it to build a base," Ms. Uhlig said.
Bank of Boston will pinpoint businesses by mining data bases and isolating good risks through credit scoring, Ms. Uhlig said. She conceded that there are some risks in entering markets where the bank doesn't have a presence.
"There's a potential for greater losses because we aren't close to the customer," she said.
Bank of Boston is responding to a small-business marketplace in which nonbanks are stepping up their lending efforts across the country, and some banks are following suit.
Wells Fargo & Co., San Francisco, last year gave the industry a wake-up call by sending line-of-credit offers to businesses in every state.
"Some of our customers have been solicited for credit with prequalified and preapproved offers from Wells," she said. "They (customers) have been kind enough to pass the offers on to us."
Wells isn't the only bank going beyond its traditional boundaries.
For example, First Bank System Inc. offers a small-business credit card nationwide. Some of the Minneapolis bank's credit card executives were hired away by Charlotte, N.C.-based First Union Corp., which this spring started marketing its small-business card outside its East Coast market.
Meanwhile, BankAmerica Corp., San Francisco, has promised to start offering small-business products nationwide and is already doing government-guaranteed lending in the District of Columbia and five states where it doesn't have retail branches.
"The major banks are all at least looking at doing this," said Charles Wendel, president of New York-based Financial Institutions Consulting.