Morningstar underwhelmed by AMP digital bank move
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There are few synergies likely to be generated between AMP’s financial advisers and the company’s pursuit of a digital bank offering, according to research and ratings house, Morningstar.
In an analysis of the AMP digital bank announcement, Morningstar said that it did not foresee the digital bank substantially enhancing AMP’s competitive position or generating material revenue synergies.
“The product targets small to micro businesses, a cohort not typically served by AMP’s advisors,” the analysis said. Unlike other firms that complement their digital bank with other offering, such as Tyro with merchant acquiring or Judo with business lending.”
The analysis said that AMP’s digital bank was a stand-alone and that despite the company’s assertion that the product offered superior functionality Morningstar believed the technological features were replicable “and can only get so far on gathering deposits before they are imitated”.
“It’s likely that AMP will have to continue offering more attractive rates than the larger banks – albeit less aggressive than before – underscoring our expectations for its net interest margin (NIM) to continuously remain below its larger peers,” it said.
The analysis said Morningstar was trimming its fair value estimate of AMP to $1.30 from $1.35 due to a slower than expected recovery in AMP Bank’s net interest margin.
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