AMP is set to launch a digital bank division designed for small businesses and sole traders, reinforced by software-as-a- service banking platform ‘Engine by Starling’. 

The new bank has been developed specifically to manage the transaction needs of smaller businesses, using the Engine platform which is a subsidiary of UK digital bank Starling Bank.

The SaaS Engine platform is a core banking proposition built from the technology that underpins Starling Bank and is a cloud-native, fully managed service. 

AMP will work with Engine to use its technology platform and expertise to build the new AMP digital bank division, set to be in market by early 2025. 

On the financial front AMP expects a ‘go-to-market investment’ of around $60 million across FY24 and FY25, roughly $40 million of which is to be capitalised.

At an AMP Investor presentation, CEO Alexis George said the new digital bank is focused on transactions, payments and deposits, adding “lending we’ll come but that is not our focus”.

“We decided that we wanted to embark on a program where we did and could manage risk. And as a result of that, we have partnered with Starling which is the leading UK digital bank,” she said.

“We want to leverage its expertise, not only in terms of the platform engine but also in the way it takes its proposition to market, the way it makes decisions, and the way it operates”.

The build will take place over roughly a 12-month period and “will operate within the existing bank but will be separate in the way it makes decisions and the way it operates.”

Group executive of AMP Bank Sean O’Malley will lead the division with George adding “it’s very important that he takes accountability for the whole proposition”.

O’Malley described the Engine platform “as a deep core platform”.

“This will help transform AMP Bank from a mortgages and savings bank to one that has a full transactional banking experience for both small businesses and everyday consumers.

“We’ll be taking a very considered and efficient approach to any integration with the current bank.”

While O’Malley said there won’t be changes to the underlying banking platform or systems, he added “we will look for opportunities to help our existing banking customers sign up and take advantage of the new platform and the wonderful new offerings.”

“We do believe that the Australian market is ripe for a new entrant, with no digital-first offering tailored specifically for the needs of small business.

“We think AMP Bank is well placed to disrupt the small business market and offer a compelling proposition that helps small business start, run and grow their businesses.

“We’ll do this via the delivery of a feature rich, convenient digital banking service, leveraging simple everyday banking products such as transactions, savings, payments and cards, and adding smart digital tools including integration to various services, starting with accounting software integrations.”

He said progressively AMP will be “delivering a connected digital ecosystem that offers digital access to many of the services that small businesses need”.

He said the Engine integrated platform “allows us to deliver seamless human support for those customers, which will include a 24/7 contact centre, including chat, as well as phone.”

O’Malley said AMP will also adopt Starling with an “incremental low risk phased approach”, replicating how the platform was launched to the UK market.

“The build phase is really about integrating and connecting the highly successful Engine platform into the Australian ecosystem,” O’Malley said.

“So, imagine connecting things like payment rails, identity providers, and some, but a very small number, of AMP shared systems such as our general ledger and our HR systems.”

According to O’Malley, Engine’s “deep core” means the business won’t “need to connect it into a multitude of other peripheral systems, things like CRMs and workflows and telephony platforms.

“This is a really differentiated major advantage and it allows us to move quickly and efficiently relative to those other options.”

Other features and products will be added, post launch, including term deposits, savings accounts, and small overdrafts.

O’Malley added: “This new division does sit under our existing AMP current banking license and we will leverage some of our shared services so as to maximise efficiencies.”

O’Malley told iTnews that once the new division is launched AMP will “progressively stop originating new deposit accounts on our current ecosystem “.

“What we’ll be left with is our lending customers on our current bank, including their offset accounts and their ability to make payments, etc – on our current stack and all of our deposit customers and our small business customers on the new stack.”

Engine by Starling architecture

CEO of Engine by Starling Sam Everington said Engine “is built as a collection of pre-integrated modules, communicating through APIs and events to deliver effectively real-time banking capabilities to customers, very importantly in a resilient and scalable way.”

He said its implementation approach is designed to de-risk delivery “with a focus on getting new products out to market as quickly as possible to enable growth.

“We can do this because the project is starting from an integrated and running system, and so rather than building and composing from a list of requirements and a number of vendors, we start by reviewing existing journeys and operational processes instead.”

From this point, “we work together to configure and to localise these both for AMP products and for the market in Australia,” he said.

A “combination” of AMP tech teams and Starling teams will work together on the system integration and build. 

Next step in AMP Bank strategy

George said the new bank “is the next step in our bank strategy”.

“It does provide us with revenue diversification, funding diversification and really will help to drive profit enhancement over the future years,” she said.

“There is no change in the strategy that we’ve been talking about for the last couple of years.”

This strategy has seen AMP on a path of simplifying its business model and undergoing a rebrand of the organisation.  

George said AMP will “grow our bank responsibly as well as platforms and the other businesses continue or improve mode.”