Small Biz Payroll: New Opportunities Online & Mobile

Transcription

1 Small Biz Payroll: New Opportunities Online & Mobile Tom Lopes Alex Infante 1

2 Citibank at Glance Roots Date Back to 1812 About 240,000 Employees Worldwide Over 200 Million Client Accounts High percentages of Fortune 500 Companies and Global Fortune 1000 Companies as clients Global Capabilities Over 160 Countries Wide Array of Products supporting the Complex Fortune 1000s to the Consumer and SMB Space 2

3 SurePayroll at a Glance Founded in 1999, recognized industry innovator and leader Exclusively focused on online payroll for small to mid sized businesses (1-100 employees) 1st 100% online full-service payroll provider 100% SaaS delivery Tens of thousands of business clients today $15+ billion in payroll funds managed annually A wholly-owned subsidiary of Paychex 3

4 Today s Game Plan The Payroll Landscape Today Level Set why Branded Online/Mobile Payroll Matters Discuss Things to Do and Consider Lessons Learned from a product launch Legal, Regulatory and other Concerns Fun and Useless Trivia Game Valuable Prizes 4

5 Think about major Cash Management Products. ACH Origination ARP/Positive Pay (Check/ACH) Lockbox Corporate Cards Remote Check Deposit Controlled Disbursements Merchant Services All Great products but not used/needed by all But all businesses do need to make payroll. 5

6 58% of small business ($100k-<$10MM) online users rate single login for all online service (i.e. payroll, lockbox, etc.) a top priority/very important feature. * * Barlow Research s 2014 Digital Business Banking Study 6

7 What is the Landscape in the World of Payroll Total US D&B business records 17.2M Less: Subsidiaries, branches and divisions Non-marketable records (0 EEs or>1,000 EEs) SIC Codes not serviced (Unionized, Farm, Government) Businesses with no one paid as part of regular payroll (5.0M) Total Market Opportunity for Payroll 12.2M Owner-Only Businesses (30% of total market opportunity) 3.7M Traditional Businesses with Employees (70% of total market opportunity) 8.5M 7

8 How are Small Businesses doing payroll..* 8 *Internal Research Paychex

9 51% Still process payroll manually! 9

10 Why Businesses Outsource Payroll Compliance 1 out 3 employers are assessed penalties for payroll mistakes There are over 8,000,000 payroll tax penalties assessed per year The IRS estimates that over 40 percent of small businesses in the United States pay penalties of over $800 per year... the result of late or incorrect filing and payments 70% of businesses audited by the Department of Labor are found to be out of compliance The Department of Labor launched the Plan, Protect, Prevent Initiative in 2012 and hired hundreds of new auditors to seek out the catch me if you can employers 10

11 Issues Impacting Small Business 11

12 Mobile Technology Fact Sheet Highlights of the Pew Internet Project s research related to mobile technology. As of January 2014: 90% of American adults have a cell phone 58% of American adults have a smartphone 32% of American adults own an e-reader 42% of American adults own a tablet computer As of May % of Cell Owners Use the device to go on the internet 12

13 Businesses Perceive Mobile as Important! Q: Regardless of whether your business plans to switch financial institutions, if you were to look for a new banking relationship, how important a consideration would mobile banking (smartphone or tablet) capabilities be? Very Important 22% Important 29% Only A Little Important 7% Neutral 21% Not Important at All 21% Source: Aite Group Survey of 1,003 businesses generating less then $20MM in revenue, Sept

14 Perception Meets Usage Reality at least for Online Payroll SurePayroll conducted a survey last year to non-clients and asked the preferred method of handling payroll. 10% of General Business stated the preferred method inputting payroll is with Tablets and Smartphone In January Only 3.7% of our entire client/employee base used a Tablet or Smartphone to view/access SurePayroll web pages. So for online payroll the overwhelming access method is the still going to be the PC for a while but. 14

15 .There are Key Feature and Functions Clients do Want/Use/Expect via a Mobile Device Alerts and Notifications Incoming Transactions Information Reporting Current and Previous Day History Balances and Transactional detail Multi-Bank Reporting Transaction Approvals Positive Pay Actions (Check and ACH) ACH Batch Release Wire Reviews Credit Card Transactions Payroll Review/Approval 15

16 Five Years Ago New Regulations on Banks (Dodd Frank) Slowly Emerging from Great Recession High Unemployment/Housing Crisis Great Time to Launch CitiBusiness Payroll Day One.Zero Clients today many thousands 16

17 Why Payroll and Your Brand Increased Fee Income CNR Growth and Balance Lift Payroll is a Sticky Product Promote Your Brand Business Client Cross Sell Consumer Product Cross Sell Automate W2 delivery for SMBs reduce fraud 17

18 Remember when Stealing Checks was the easy fraud MO. It's not rocket science It doesn't take a brilliant criminal mind to commit tax fraud. All a crook needs is some basic information a Social Security number and possibly a W-2 form to file a false return. "Tax fraud is easy," said Ray, a convicted identity thief serving a long prison sentence in California. "You can just go through mailboxes and there's a lot of W-2's out there." 18

19 Seek and Obtain Internal Product Approvals Your Eight Bosses are (Maybe you have more) : Legal/Regulatory Audit/Compliance AML and Risk Technology Cash Mgt. and Branch Sales Operations Client Services Banking Segment Senior Management Vendor Management/Procurement 19

20 Red Pill or Blue Pill? Choices To Consider for a Payroll Product 1) Single Sign On (SSO) via Online Banking? 2) Full Service Offering vs. Reminder Service? 3) Payroll Portal for Employees? 4) Direct Sales vs Referral or both? 5) Offer HR Modules? 6) Are all State Taxes Supported? 7) Accounting Software Integration? 8) Time Clock Integration? 9) Who Services the Customers? 20

21 Choices The Potential Partners/Vendors 1) Limited Number of Players in the Online Space 2) Do a Formal RFI/RFP 3) Can the provider give you the Stuff you want? 4) Demo the Product - Invite your 8 Bosses 5) Great Name Brands Don t Always = Best Offering 6) Lowest Price is Not Always King 7) Provide a sample contract in the RFP 8) Perform Due Diligence Like you would for a Client prospect 21

22 Think about the theme in these Films Colossus The Forbin Project (Colossus) Westworld (Delos Control) Wargames (WOPR/Joshua) Trancendence (Will/Johnny Depp) The Matrix 1-3 (The Machines) Terminator 1 10? (Syknet) I, Robot (VIKI) 2001: A Space Odessey (HAL) 22

23 Trusting Your Providers Computer Systems 1) Their system and Issues are now Yours 2) Your Name is on it = Your Bank Is Responsible 3) Make Sure Data Is Secure (PII is Resident - SSN) 4) Care for Breaches/Outage Contractually and remediation A Few To Do s: 1) Vulnerability Assessment/Ethical Hack 2) Ensure VA Issues are Fixed Per Contract 3) Do a TPISA (Third Party IS Assessment) 4) Engage in Service Call Monitoring 23

24 Regulators (and you) need to care. Highlights OCC Bulletin A bank should adopt risk management processes commensurate with the level of risk and complexity of its third-party relationships. A bank should ensure comprehensive risk management and oversight of third-party relationships involving critical activities. An effective risk management process throughout the life cycle of the relationship includes plans that outline the bank s strategy, identify the inherent risks of the activity, and detail how the bank selects, assesses, and oversees the third party. proper due diligence in selecting a third party. written contracts that outline the rights and responsibilities of all parties. ongoing monitoring of the third party s activities and performance. contingency plans for terminating the relationship in an effective manner. clear roles and responsibilities for overseeing and managing the relationship and risk management process. Documentation and reporting that facilitates oversight, accountability, monitoring, and risk management. Independent reviews that allow bank management to determine that the bank s process aligns with its strategy and effectively manages risks. 24

25 The Offer of your Payroll Product to clients 1) Many of your Eight Bosses need (insist) to give Input 2) Look Closely at Market Pricing 3) Trial Offers are Well Accepted in the Target Space 4) Don t Under Value the Offering! (Lesson to all ) 5) Look at Pricing for like services, Including Traditional Providers 6) Hard Charge or Soft Charge 7) Consider all in vs. modular Pricing Remember the Value of the offering is not only fee based. Value your relationships and grow with your clients. 25

26 Promotion and Marketing Your client Offer 1) Internal branch and banker Training Should be Mandatory 2) Develop Marketing Web Site for Info and Lead Generation 3) Internal Web site for Staff with Cross Links 4) Consider Web Search Optimization Tools 5) Direct Mail can still Work 6) Statement Inserts 7) Bundled Pricing Offers 8) Special Incentives Test Drive It 9) In Branch Promotions 26

27 Launching The Product 1) Do UAT in QA and Production Systems 2) Friendly User Test Before Roll Out 3) Consider a Soft Launch 4) Stagger Launch for Different client segments 5) Be Aware of Payroll Conversion Heavy Seasons 27

28 S,,,,Happens.(Stuff) 1) Like all products issues will happen 2) Payroll is extremely sensitive 3) Some folks will panic over non critical issues 4) Many issues are client induced but that doesn t matter! 28

29 Make sure your provider has an clear escalation chain Jump on issues fast cause misunderstandings = bad word of mouth Typical issues that WILL arise Tax Notices Mis-directed Direct Deposit W-2 Errors Exception Fees 29

30 Benefits to Banks and Customers Payroll has proven to be a solid catalyst for a bank s growth and client retention. SurePayroll s partners have reported that account churn is reduced by 80% when a DDA account is paired with online payroll, and fees earned from the typical small business client more than double. Our partners also report that they ve increased new client acquisition 20% by offering our payroll solution when small businesses are looking for a bank to do business with Scott Brandt, VP of Marketing at SurePayroll Barlow Research Analyst s Journal- December 17,

31 Thank you for your attention drinks on the house! 31