Colorado Business Bankshares has turned an outsourcing arrangement into an in-house revenue source.
Lacking the top-notch benefits needed to keep key employees, Colorado Business Bankshares five years ago hired fellow Denver company Employee Benefits Services Inc. to upgrade, obtain, and manage that function. This year, it occurred to the bank that it could save and even make money by hiring David Bashford away from the consulting firm and offering his guidance to small businesses lost in the benefits maze.
In May, using authority granted by the Gramm-Leach-Bliley Act permitting banks to offer a wide range of consulting services, Colorado Business Bankshares created CoBiz Connect Inc. and named Mr. Bashford to head the unit. It is among the first banks to establish an employee benefits subsidiary.
Company officials began to see benefits consulting as both a natural extension of the trust- and money-management services the bank was offering its small-business customers -- not to mention a new source of noninterest income.
"We realized this was a great value-added service," said Virginia Berkeley, president of Colorado Business Bank, the principal subsidiary of $610 million-asset Colorado Business Bankshares. "For small businesses, it can be very frustrating to try and navigate the employee benefits field."
Paul Pusterino, an analyst with Grant Thornton in Chicago, predicted that other banks will start employee benefits firms.
"This is absolutely necessary," he said. "Small-business people need all kinds of advice and services. …