Small Business Banker - September 2000

Financial Services Firms Use PEO to Penetrate Businesses

Bank, insurer and non-bank lenders target two markets at once: small businesses and employees

Searching for the most efficient way to reach small businesses and their employees, a trio of big-name financial services companies has signed alliances with Administaff Inc., one of the largest professional employer organizations.

The alliances are significant, industry executives and small business owners say, because of the PEO’s ability to bring together thousands of small-and mid-size businesses located anywhere in the country.

"That provides us with the ability to talk to two markets at the same time," said Bruce Luecke, president of Interactive Delivery Services at Bank One Corp. "We can not only sell services to that business but to that businesses’ employees."

Because of the alliance with Administaff, Bank One now has access to more than 3,500 Administaff clients and the 60,000 employees working for those 3,500 companies. Those employees can now open accounts, view transaction records, apply for loans and credit cards, pay bills, invest and have access to the tools and calculators used in financial planning.

"It’s not a lot different than bank-at-work programs," said Luecke. "But it’s difficult to get to smaller companies. This is a way we can do that, and it provides Administaff with another bullet in their holster."

He said Bank One had targeted Administaff as a partner because of its business model and because both companies operate in similar geographical areas.

Bank One’s services are available through Administaff’s electronic commerce portal, opening a new channel through which Bank One can sell banking products, in addition to the telephone, branches, ATMs and Bank One’s Internet site.

Bank One announced the deal to provide online banking services to Administaff clients in April. Two months earlier, Aon Enterprise Insurance Services Inc., a subsidiary of Aon Corp., said it would offer property and casualty Administaff insurance products to small businesses through the portal.

In addition to the alliance with Bank One and Aon, American Express has taken an equity stake and signed a joint marketing program with Administaff.

Administaff’s core market is made up of businesses with between 10 and 100 employees. The company specializes in offering benefits and payroll administration, health and workers’ compensation insurance programs, personnel records management, employer liability management and employee recruiting and selection.

Richard G. Rawson, chief financial officer of Administaff, said the PEO industry has been around for more than 15 years, and it’s making an impact on small businesses that need help with regulatory and administrative expertise.

Reprinted with permission from Small Business Banker.