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AMP Bank chases depositors

AMP’s (ASX: AMP) wholly owned subsidiary AMP Bank has announced the launch of a new product which could be enticing to depositors. The product offers a minimum variable rate 100 basis points above the Reserve Bank of Australia’s cash rate with funds available for withdrawal at 31 days’ notice. As AMP states, the AMP Notice Account offers “a highly competitive interest rate without having to lock your money up for a long time, offering the best of both a term deposit and a high interest savings account.”

With more and more banking being conducted online, AMP has the potential to capture a greater share of the deposit market given its expansive network of customers and financial planners. Whereas until recently the lack of a ‘bricks and mortar’ bank might have been seen as a disadvantage for AMP, in the future the majors including Commonwealth Bank (ASX: CBA) and Westpac (ASX: WBC) who have a large, entrenched physical banking presence within the domestic economy may find this ‘offline’ structure a drag.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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