Smaller banks may soon be able to offer customers a financial service provided only by large banks until now thanks to a plan by an upstate New York bank.

Canandaigua National Corp. plans to offer its legal and regulatory expertise in the mutal fund market to other banks at a reduced cost either by outsourcing its investment services to small banks or by helping them start up their own mutual fund family.

"It can cost a bank up to $70,000 to begin offering mutual funds," Robert Swartout, vice president and investment officer at the $500-million-asset bank, told Financial Modernization Report last week. "But through working with us, other banks could save a bundle of money and not have to reinvent the wheel by spending $200 an hour in lawyers’ fees."

Sharing resources will help banks profit from the mutual fund business, said Swartout, adding Canandaigua plans to begin offering its legal and regulatory expertise in three-to-six months.

He said keeping up with the regulatory burden of a fund family can be "a grind" for small banks. "But we think we might be able to deliver our system of dealing with the Blue Sky Laws (regarding full and proper disclosure by securities sellers) and other regulatory matters relatively inexpensively."

Swartout said a pool of community banks have already expressed interest in Canandaigua’s program. He said once the program is up and running Canandaigua will add staff to handle the legal and regulatory work for its small bank clients.