To stay competitive in the 401(k) business, a midsize Pennsylvania banking company has acquired an employee benefits consulting firm that offers employee education and automated customer service.

Harrisburg-based Keystone Financial Inc., which has $7 billion of assets, this month bought MMC & P, a Pittsburgh firm that does record keeping for 401(k) plans and actuarial services for defined-benefit and pension plans.

The bank, which has $4 billion in retirement assets under administration, said it bought MMC & P, which handles $750 million in retirement assets, to get a technology upgrade.

Keystone had worried that it might lose some of its 700 retirement plans to larger banks because it had not been able to offer 24-hour-a-day computerized customer service, said Robert E. Leech, president of the asset management division.

Small businesses "bank with us, and we do their investments," Mr. Leech said. "We felt like we'd be at risk if we let someone come in and do their retirement plan," because these competitors might try to cross-sell other products.

MMC & P will operate as a wholly owned subsidiary and will retain its name. Account officers in Keystone's six community banks will continue serving their local clients, but the record keeping and back-office work will be centralized in Pittsburgh.

Deals like Keystone's purchase of MMC & P will keep happening, according to investment bankers who work on such transactions, because buying a benefits consulting company is less expensive than creating one.

If "you buy a going concern, you have immediate cash flow, credibility in the marketplace, and existing clients," said Jeb Britton 3d, a senior consultant with San Francisco-based Spectrem Group, Keystone's adviser in the deal.

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