Westpac is betting that investors in term deposits will become more sophisticated in their use of the product and start to look for some diversification in interest rate structures and terms.About 12 months ago the bank started selling a range of products called Retirement Deposits. One of the products in the suite, Coupon Select, allows investors to pick terms as far out as 10 years; to pick fixed or floating rates, or a combination of the two; to switch from floating to fixed, and to opt for a return of capital with the interest payments.Wholesale investors (with a minimum of A$500,000 to invest) can have terms out to 25 years. Another product, CPI Plus, offers a fixed base-rate (currently 3.5 per cent) plus the annual rate of inflation on top of that. If inflation is three per cent, CPI Plus will pay 6.5 per cent.The products have been a success and now Westpac is negotiating with adviser groups and superannuation funds to carry Retirement Deposits on their various investment platforms.Westpac's move is part of a recent push by banks to extend the distribution of their deposit products and design hybrids that will open up new markets. In September, ANZ put a range of term deposits on the investment platforms of its wealth management arm, OnePath.In April, Commonwealth Bank launched a hybrid term-deposit on Colonial's First Choice platform. The investment matures in 2017 and has a rate that is re-set as the Reserve Bank changes rates, paying one per cent above the cash rate.One of the country's biggest superannuation funds, Australian Super, is set to announce it will carry National Australia Bank and ME Bank term deposits on its investment menu. Westpac Institutional Bank's executive director global capital markets, David Van Ryn, said that since the financial crisis the bank has been looking for ways to increase its deposit base."The bank came to us to develop an alternative deposit product," he said."The thing we focused on was the re-investment risk people take on with term deposits. Average terms are short and people have almost no diversification."Van Ryn said the average term for investors in Retail Deposits was 3.5 years - much longer than with standard TDs. Institutional investors have been more inclined to take advantage of the opportunity to go for very long terms; one investor has a 23-year term deposit.The products conform to the Australian Prudential Regulation Authority's standard for inclusion as retail deposits. Van Ryn said his aim was to raise as much as $10 billion over the next two to three years.