Industry Information

With the development of society, whether at work or in daily life, performance is becoming increasingly refined. For workers, the happiest day of the month should be the day wages are paid. However, in the early days, most companies first withdrew cash from the bank and then distributed it to each employee through financial management. But doing so is really time-consuming. Many older people have probably had moments when they queued to receive their pay—that sweet yet agonizing wait.

But nowadays, companies handle employees' bank cards at a fixed bank, and monthly salaries are paid directly from the bank to employees' bank accounts. This seemingly ordinary banking business is welcomed by various banks, with many even competing to do it. So, this kind of "Salary payments on behalf of othersWhy are banking matters so popular among banks?

1. Payroll distribution procedures

The so-called bank agency payment of employee compensation means the company selects a bank, signs a representative agreement with the bank for distribution of payroll, and the company will request or assist the employee in opening an account with the bank and declare the company. This way, when paying salaries, the company only needs to allocate the full salary funds to the account bank and then provide the payroll list to the bank to complete the payroll payment.

Yet, even though this seemingly ordinary bank business is welcomed by all banks, if a company announces it wants to handle payroll agency processing, many bank clerks will immediately come to discuss collaboration. In fact, if the company is large, the bank president might even come in person to discuss cooperation.

We all know that in a bank, the highest-paying business is usually corporate affairs. This is why many bank clerks want to enter the corporate affairs category. The "payroll distribution" services in banks and enterprises belong to this category. Many internal staff at banks leak information, and the commission earned by a "payroll drop" firm is higher than handling a dozen credit cards.

2. Specific process for payroll agency distribution

So, what advantages does the so-called payroll distribution service ultimately bring to a bank that makes so many banks flock to it? There are roughly three main points.

1. Starting with the setup is complicated, but later it's simple

With the rise of fintech, banks now cannot operate and mostly rely on computers. The workload of distributing salaries is not very large compared to other bank affairs, and the cost is relatively low. It's just a bit more troublesome at the beginning, but once you sign with the company,Salary payments on behalf of othersAfter the agreement, you can open a corporate account for the company. After that, you only need to obtain the list of company employees and bank card numbers.

For enterprises, paying salaries to employees requires the Finance Department to distribute them one by one. But for banks, as long as the employee's bank card code is entered into the computer, a one-time loan can be issued directly to all employees.

Moreover, banks do not need to study how much salary each employee will pay, because companies will send each employee's payroll slips to the bank, which can be entered into the system and completed. What bank wouldn't like such a simple matter?

2. Add available bank deposits

As an important intermediary institution in China's financial market, banks' fundamental function is to collect deposits and issue loans. A bank's primary surplus business is lending operations, so for banks, the amount of available funds is an important evaluation of a bank's surplus capacity. The "distribution of salaries" process brings a lot of usable deposits to the bank.

For a company, after cooperating with a bank, it is not just about storing the monthly salary in the account, but about paying much more than the monthly salary it should pay. The interest rate on the fundamental account of such companies is generally very low compared to the rate on time deposits, allowing banks to collect a large amount of available deposits at very low rates, which is a significant profit opportunity for the bank.

Similarly, for corporate employees, opening a salary account at this bank means long-term use of the bank's services. Regarding monthly salaries, many employees do not withdraw their entire salary immediately, so the remaining money in the bank account is equivalent to the employee's demand deposit at that bank. Obtaining a large amount of available deposits at relatively low interest rates is something banks often dream of, so banks welcome such activities.

3. Added many customers for the bank

If a company signs a payroll distribution contract with a bank, it means that all employees involved in the company will have a savings card processed at that bank. For a company, every year many new employees participate, allowing the bank to acquire many new deals without having to personally intervene, naturally increasing the bank's customer base.

Once they have a flow of customers, banks naturally won't miss the opportunity to expand their business. Soon, many staff members will come to promote their bank's wealth management products or credit card matters to customers who have opened their own bank savings cards.

Let's make an assumption: if a large enterprise with 2,000 employees cooperates with a bank, with an average monthly salary of about 6,000 yuan, and 20% of employees purchasing the bank's wealth management products, it can bring the bank at least about 2.4 million yuan in wealth management funds per month. Many wealth management funds also provide financial support for banks' external investments and credit affairs.

If more employees process bank credit cards, the bank can generate more income. The more credit cards processed meant the bank had more interest rate spread. Which bank wouldn't welcome this kind of operation, which can increase both customer numbers and bank funds?

For enterprises, it saves human resource costs and reduces operating costs. For employees, it saves them the time and cost of collecting salaries from the company's finance office, which can boost their work motivation to some extent. For banks, it allows both credit funds and customer traffic, allowing them to earn returns at lower costs. Therefore, this is a win-win form for multiple investors.