Banks traditionally rely on customers keeping their money idle in savings and checking accounts, but this model may soon become obsolete, according to Bank of America.
In a client report on Wednesday, BofA warned that autonomous AI assistants like Meta’s Muse — capable of performing tasks independently, including making purchases and handling account administration — represent a “multiyear evolutionary threat” to banks’ business models.
The logic is straightforward: these AI assistants could eventually manage and transfer money for individuals, automatically allocating funds to specific investments rather than letting them sit in low-interest savings or checking accounts.
“The key insight for banks is the precedent, not the e-commerce application: large-scale platforms are integrating payment credentials into third-party agents,” wrote Ebrahim H. Poonawala, a research analyst at Bank of America. “The distance between ‘find me a better product and pay for it’ and ‘find me a better yield and move my excess cash’ is shrinking.”
He further noted: “While a chatbot can inform customers they are earning too little, an agent can detect excess liquidity, compare returns and take action.”
In savings and checking accounts, banks offer interest rates typically well below 0.1%. Meanwhile, many money market funds yield approximately 4% annually.
Federal Reserve statistics indicate that around $5.4 trillion is held in checking accounts, representing funds that are missing out on higher returns that could compound over time. A Bankrate study shows that $10,000 earning 4% annually would generate $2,167 over five years, whereas at a 0.01% interest rate, the same amount would earn only $5 over the same period.
Losing out on these returns would significantly impact banks’ profit margins. Investors have already acknowledged these risks for financial sector stocks. The State Street Financial Sel Sec SPDR ETF (XLF) has declined 2.4% since the start of trading on Tuesday, while the Invesco KBW Bank ETF (KBWB) has dropped 3.2%.
Nevertheless, agentic AI will not gain immediate traction, providing banks with time to respond, Bank of America stated.
One potential strategy is for banks to “self-disrupt” by deploying their own AI assistant to help customers manage their finances. This approach could at least retain funds within their ecosystem using their investment products, BofA suggested.
“Banks that offer integrated consumer banking, brokerage, and wealth management platforms are better positioned to maintain balances within their ecosystems,” Poonawala wrote. “Those lacking such integration may need to enhance their offerings, collaborate with third parties, or accept increased funding and margin pressures.”