FleetBoston Financial Corp. aims to establish itself as a nationally recognized brand in small business and is putting the Internet at the heart of its small-biz strategy.

The Boston company is developing a Small Business Portal that will provide access to credit, cash management, payroll services, account aggregation, bill presentment/payment, and discounted office products. The portal will be integrated with Fleet's existing online capabilities for small-business customers and is slated to be operational within six months.

Norman J. DeLuca, managing director for Fleet's small-business services, conceded in an interview last week that the portal plan is a reaction to new options in small-business lending, including online offerings from Wells Fargo & Co., Bank of America Corp., and American Express Co.

Fleet also had in mind GE Financial Network's new direct-to-business site. Mr. DeLuca said the GE site epitomizes new competition in the small-business sector from companies that recognize the relative ease of online marketing.

Fleet, the nation's seventh-largest banking company, says bringing in new business from outside its branch base in the Northeast is secondary in its portal plan.

"Our first priority is to keep the customers we have," Mr. DeLuca said in his keynote address at the American Banker/RMA Small Business Banking conference Thursday in Chicago. "The Internet is a way to position ourselves with newer segments of the marketplace - especially younger small-business owners."

It is emphasizing them because they are more comfortable with the Web, he explained. "Some entrepreneurs, because they are younger, are not traditional users of bricks-and-mortar. In the past, people chose banks based on location for deposits or if we gave them credit."

Fleet has been making other moves to expand in this sector. It already has 500,000 small-business customers - companies with sales of less than $10 million - and its deal to buy Princeton, N.J.-based Summit Bancorp, announced in September, would add 125,000 small-business accounts.

Fleet is also boosting its participation in the Small Business Administration loan program. It made about 3,000 loans in fiscal 2000, tops in the program. (About 15% of Fleet's small-business customers are borrowers.)

Mr. DeLuca said one of Fleet's immediate challenges in developing the portal is to sell the very concept. At the conference, he cited research from CyberDialogue 2000 that said small-business owners ranked banking as the least appealing Internet activity; most said they would much rather read online editions of newspapers than do their banking business online.

In time that will change, Mr. DeLuca said, as switching to faster connections makes the efficiency of the Internet more evident.


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