Fidelity Investments, which has been trying to make inroads among small businesses, hopes to add 300 of them next year as customers for its new electronic payroll service.
It now has 50.
Many financial services firms have targeted small businesses, in part because they tend to use several products per provider. Fidelity, which already offers integration between payroll administration and benefits, says its customers want more services bundled into the package.
Theres been a significant trend toward integrating benefits with other services, said William C. Carey, an executive vice president with Fidelity Institutional Retirement Services. And a lot of our customers are asking us to do more for them.
The payroll service, launched in August, caters to companies with fewer than 1,000 employees. It is designed to dovetail with Fidelitys e401k product, an online retirement services plan for small companies that was introduced last year.
Fidelity Electronic Payroll allows businesses and their employees to handle payroll administration as well as benefits transactions online, according to Mr. Carey.
Getting into payroll processing was a natural progression for Fidelity Institutional Retirement Services, where the core competency lies in technology and data, he said.
The payroll product allows human resources professionals to enter employee details for benefits and payroll in one place, Mr. Carey said. Employees can then make many adjustments online, for example changing their tax status or retirement plan contributions.
Employees can divide their paychecks among eight deposit accounts, including a Fidelity Brokerage account that allows check writing, bill payment, and other services, along with traditional brokerage services.
Fidelity currently has 7,000 plan sponsors from the small-business sector signed up for its retirement services. They represent some 1.3 million plan participants, or $40 billion of retirement assets.
Though Boston-based Fidelity has a ways to go to catch up to the strong relationships that banking companies have forged with the small-business community, many banks have had to outsource electronic payroll processing.
In October, Chase Manhattan Corp. signed on with Powerpay.com to offer payroll processing and tax filing, among other services, to Chases 300,000 small-business clients.
Fidelity will be getting some new competition soon from FleetBoston Financial Corp., which is developing a portal that will deliver services such as cash management, payroll services, and bill presentment and payment to its 500,000 small-business customers.