J.P. Morgan & Co. and American Century Investments have developed their first joint product for banks.
The Same-Day Sweep Program lets banks offer their corporate customers automatic sweeps into any of four J.P. Morgan money market funds.
The companies also provide the sweep technology, along with record keeping, statement generation, and compliance reporting.
Morgan, a New York banking company, and American Century of Kansas City, Mo., are marketing the program to banks with $6 billion or less of deposits since larger banks tend to use their own money market funds for sweep accounts, said David Larrabee, the head of bank sales for American Century.
The companies-which foresaw such cooperative ventures when Morgan took a 45% stake last year in American Century-are touting the program's ability to move money from corporate checking accounts to money market funds on the same day.
Sweep product providers, including banks and mutual fund companies, sometimes complete a sweep the next day, a practice that gives customers a slightly smaller profit.
A recent survey of 149 banks that offer money market sweep products found that 107 offer same-day sweeps and the rest offer next-day sweeps.
Though the relative advantage of a same-day sweep is small, many banks use it as a selling point, said Michelle Hoffmann, a senior analyst at Treasury Strategies Inc., the Chicago firm that did the survey.
"It's a competitive business," she said.
Sweep accounts move idle funds from checking accounts into short-term investment products like money market funds.
The J.P. Morgan/American Century product was rolled out in October; no banks have signed up yet, Mr. Larrabee said.
The companies have been cross-selling each other's mutual funds since forming their partnership.
Separately, American Century's bank sales division has met its goal of making distribution deals with 30 banks this year, Mr. Larrabee said.
That means it has about 70 bank relationships.
Most recently it has made arrangements with SunTrust Banks, Atlanta; U.S. Bancorp, Minneapolis; and First Maryland Bancorp, Baltimore.
American Century, which offers only no-load mutual funds, gets most of its bank patronage through 401(k) plans and other retirement products but has made inroads recently into other areas of bank business through its wrap products.
Retail brokerage departments account for 15% of American Century's sales through banks, up from 10% in August, thanks to increased wrap business at big institutions like BankAmerica Corp. and First Union Corp., Mr. Larrabee said.
And personal and institutional trust business accounts for 17% of American Century's bank business, up from about 5% in August, he said.
"Our goal was to try to diversify and expand beyond employee benefits, and we're doing that," Mr. Larrabee said.
