AMP will be launching a digital bank division built specifically “for the transaction needs of sole traders and small business.”
AMP will work with Engine by Starling, the SaaS subsidiary of UK digital bank, Starling Bank Limited, allowing it to leverage:
- Starling’s ‘Engine’ technology platform, and
- Engine’s expertise to build the new AMP digital bank division, to be in market by 1Q 2025
– ~$60m investment over FY24 and FY25, absorbed within current controllable cost targets
The new digital bank division is expected “to be Net Profit After Tax (NPAT) and Return on Capital (ROC) accretive for AMP Bank from 2027 onwards.”
The next step in AMP Bank strategy is “to lessen funding risks in the medium term through a focus on building deposits.”
AMP confirmed that it is progressing “with the next phase of its Bank strategy with the launch of a new digital bank offer targeting the small business and consumer markets.”
The solution will be built in FY24 and launch “in Q1 2025, operating on a separate technology platform, as a new division to AMP Bank.”
AMP is working with Engine, the SaaS subsidiary of Starling Bank, a UK digital bank. AMP will leverage Starling’s ‘Engine’ technology platform in “building the new AMP digital bank offer, under a Software as a Service agreement.”
Targeting sole traders and small businesses “with 1-20 employees, the new digital bank division will offer transaction and savings accounts.”
It will be designed to “provide tailored functionality and features to help small business owners manage their finances ‘on-the-go’ from their mobile phones.”
Deposit balances from the sole trader and small business segment “totaled nearly $220 billion as at June 2021. Out of 2.6 million businesses in Australia, these segments accounted for 2.5 million businesses as at June 20222 .”
The new digital bank division requires an investment “of approximately $60 million across FY24 and FY25, which will be absorbed within current controllable cost targets and of which approximately $40m will be capitalized.”
This near-term cost outcome reflects “the repurposing of existing Bank investment spend, as well as the positive impact of the broader ongoing business simplification program.”
It is expected to be Net Profit After Tax (NPAT) and Return on Capital (ROC) accretive for AMP Bank from 2027 onwards. There is expected “to be no impact on AMP’s previously announced FY24 and FY25 controllable cost targets.”
This next step in the AMP Bank strategy also aims “to lessen funding risks over the medium and longer term, with a focus on continuing to build a sustainable funding base.”
Alexis George, AMP Chief Executive said:
“This new offer builds on AMP Bank’s strengths and addresses an under-served and growing segment of the market. Importantly, it will reshape the Bank portfolio in the medium term to better position AMP for the headwinds the industry is facing when it comes to bank funding. In Engine by Starling, we have chosen a partner with a track record of success and will leverage their innovative technology platform, their highly successful go-to-market expertise and ways of working.”