Visa International's recent launch of a new television advertising campaign targeting small businesses underscores the financial services industry's growing recognition of this segment's potential profitability. And while Visa focuses on mass-market advertisingotaking on the American Express small business card in what many anticipate will be a fierce battleobanks like First Union Corp. are busily expanding their product lines and setting up content-rich Web sites in an effort to identify and cater to this fast-growing, convenience-seeking and highly diverse market. The Charlotte-based bank's latest appeal to small businesses is a partnership with The Hartford, a $108 billion- asset insurance and financial services operation. Martha Hayes, svp and manager of First Union's small business banking division, says the move is supported by the bank's research over the last three years showing that small business financial needs and potential profitability go far beyond loans and deposits; they need insurance, accounting and payroll services. Most of all, small business customers are looking for convenience. To this end, banks and nonbanks are exploiting technology that will enable them to cost-efficiently deliver products and services. American Express, for example, is planning to set up a Web-based service that will allow customers to check billing statements and travel bookings, says spokesperson Richard D'Ambrosio. First Union has developed an application to offer small businesses a commercial CAP Account, which ties a normal checking account together with an investment or brokerage account and overnight automatically sweeps excess cash from one to the other. "Those are the thingso long termothat are going to (yield) competitive advantage," says Hayes. -prince specialreport

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