Banks experiment with small-business payroll services. (Marketing News).

Offering payroll services to small-business customers is a new marketing strategy that is being tried by more and more financial institutions. In the recent past, both Chase Manhattan Bank and Wells Fargo & Co. have announced partnerships with small-business payroll services. FleetBoston has acquired a payroll service provider. Both Microsoft and Intuit are competing with banks for the market

"Banks need every advantage they can get," says Michael D. Alter, head of business development and marketing at SurePayroll, Chicago. "And offering payroll can be an important weapon in a bank's marketing arsenal." Payroll services can attract new clients, keep existing ones and enhance cross-sell capabilities, he claims. SurePayroll is a provider of online payroll services for small businesses. It uses banks as a key distribution channel.

Why are payroll services so appealing to small-business owners? Alter contends that most small business hate payroll because it is tedious, time-consuming and error-prone. Despite this, only 25 percent of small businesses currently outsource. Alter argues that more would outsource if they were aware of the newer developments, such as online payroll, which eliminates many of the drawbacks and costs inherent in traditional payroll services.

SurePayroll announced recently that LaSalle Bank, Chicago, had added a co-branded online payroll solution from SurePayroll through its 125 branches.