AMP announces new digital bank division targeting sole traders and small businesses

Australian financial services giant AMP has announced its next strategic phase in banking, focusing on launching a new digital bank division. This innovative move targets the small business and consumer markets, with the launch scheduled for the first quarter of 2025.

Collaboration with Starling Bank’s Engine Technology

To build this digital banking solution, AMP is collaborating with Engine, the Software as a Service (SaaS) subsidiary of Starling Bank, a UK digital banking leader. This partnership will leverage Starling’s ‘Engine’ technology platform under a SaaS agreement, aiming to provide advanced digital banking services to sole traders and small businesses.

Focusing on the Sole Trader and Small Business Segment

The new digital bank division will specifically cater to businesses with 1-20 employees, offering transaction and savings accounts. It aims to provide mobile-friendly banking solutions to support small business owners in managing their finances on-the-go. With nearly A$220 billion in deposit balances from this segment as of June 2021, AMP is tapping into a significant market opportunity.

AMP to invest A$60 Million in new digital banking offer for small business sector

Financial Investment and Expected Returns

AMP plans to invest approximately A$60 million across FY24 and FY25 in this venture. This investment will be absorbed within current controllable cost targets, with about $40 million expected to be capitalized. The new division is projected to positively impact AMP Bank’s Net Profit After Tax (NPAT) and Return on Capital (ROC) from 2027 onwards, without affecting AMP’s FY24 and FY25 controllable cost targets.

Building a Sustainable Funding Base

AMP’s Chief Executive Alexis George highlighted the new offer’s alignment with AMP Bank’s strengths and its focus on addressing a growing market segment. By partnering with Starling Bank’s Engine, AMP aims to leverage their innovative technology and market expertise. This strategic step also intends to mitigate funding risks in the medium term, focusing on building sustainable deposits.

The launch of AMP’s new digital bank division marks a significant step in the company’s strategy, positioning itself to better serve Australia’s growing number of small businesses and individuals with their banking needs.