AMP will be launching a digital bank offer designed for small businesses and sole traders in Q1 of 2025.
In an update to the ASX, AMP said is working with Engine, the SaaS subsidiary of UK-based Starling Bank, to create the solution. It will be built in FY24 and will operate on a separate technology platform as a new division to AMP Bank.
Targeting sole traders and small businesses with 1-20 employees, the new digital bank division will offer transaction and savings accounts, and will also include features to help small business owners manage their finances on their mobile phones.
Deposit balances from the sole trader and small business segment totalled nearly $220 billion as at June 2021. Out of 2.6 million businesses in Australia, these segments accounted for 2.5 million businesses as of June 2022.
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 $40 million will be capitalised.
It is expected to be net profit after tax and return on capital 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.