WSJ Writes Again on AI, Deposits
We wrote yesterday, "WSJ Discusses AI's Impact on Brokerage Sweeps and Bank Cash Sorting," which said, "Just [last] week, the growing interest in Meta Platforms' artificial-intelligence agent Muse once again spooked markets into worrying that cash will be ever easier to move. If it is as simple as directing your agent to find the highest yield, then the inertia that used to protect financial institutions is going away." Today, the Journal follows up and asks, "Lazy Customers Are Great for Banks. Could AI Change That?" This update explains, "AI assistants may soon run your financial life. That could be a big problem for banks." The latest Journal piece tells us, "Americans forgo untold sums of money every year on what some might call a laziness tax, for oversights like failing to refinance their mortgage or incurring a late fee after forgetting to pay a bill. Another silent wealth killer: keeping too much cash sitting in checking or savings accounts that pay little or no interest. Now, artificial intelligence is threatening to put an end to all that." It states, "Apollo Global Management Chief Economist Torsten Slok recently raised the prospect of an AI-induced bank run, saying that people could use bots to sweep their money into accounts that pay higher interest rates. Slok's observation was widely shared on X, and brought to the fore other ways AI could save people money -- and hit corporate profits." The piece says, "The prospect of losing deposits sitting in checking and savings is especially troubling for banks, which rely on those funds to make loans that help keep the economy humming, pocketing the extra interest they make. 'Banks may call it an agentic bank run. Customers might call it checking the interest rate,' said one user on X, in response to Slok's observation. About $7.12 trillion sits in consumer and business bank checking accounts, according to the Federal Reserve Bank of St. Louis. Those often bear little or no interest." It adds, "Many Wall Street analysts don't think a draining of deposits would happen overnight, if at all. For one, banks' larger institutional clients are largely already doing this as a part of so-called treasury management, which involves moving cash into higher-yielding accounts or using it to pay down debt. Consumer accounts may only have a few thousand dollars in balances, and thus relatively less to gain." Finally, the WSJ writes, "There's also the trust factor. People like having their money somewhere they feel is secure, which is often in the traditional banks they know well. Big banks, for their part, tend to covet customers' direct-deposits, sticky funds that rarely move or chase rates, while accounting for the chance other deposits are flightier. 'You're not going to give your money to some bank you've never heard of,' said Peter Crane of Crane Data, which researches money-market funds. Still, investors appear to be taking the prospect of AI disruption seriously."
