AI agents could spark bank runs by yanking cash from low-paying accounts: Apollo economist | Latest Tech News
AI agents could spark a new sort of bank run by routinely yanking customers’ cash out of low-paying checking accounts and chasing larger yields, Apollo chief economist Torsten Sløk warned — the latest dire prediction about artificial intelligence in a wave of doomerism.
The menace to banks could emerge as personal AI agents such as Meta’s newly launched Muse gain access to customers’ financial info while taking on a growing vary of duties on their behalf, the egghead explained.
“If every household used AI agents to optimize the return on their cash balances, banks could lose a large share of the cheap deposits they rely on to make loans, which would be a problem for the entire financial system,” Sløk wrote in a Sunday word.
AI agents could finally transfer customers’ cash out of low-paying bank accounts and into higher-yielding options, Apollo chief economist Torsten Sløk warned. Bloomberg via Getty Images
For customers, the motivation appears apparent: a $10,000 stability incomes 0.1% generates about $10 a yr in curiosity, while the same quantity at 5% would earn roughly $500.
Sløk’s word recognized 11 fintech and online accounts yielding 3.3% to 5% curiosity, with AdelFi topping the record at 5% and SoFi offering 4.5%.
By comparability, the FDIC national averages cited in the word have been 0.4% for financial savings accounts and just 0.1% for checking.
But a potential windfall for savers could turn out to be a headache for banks if AI agents make it simpler for prospects to transfer cash out of low-paying accounts en masse — depriving lenders of a budget deposits they rely on to fund loans.
Banks benefit when prospects depart cash in low-yield accounts, permitting lenders to pay depositors comparatively little while lending that money out at larger charges.
Meta’s Muse can access user-authorized financial info through Plaid, though Plaid’s announcement doesn’t say the AI agent can switch money between accounts. Christopher Sadowski for NY Post
AI agents could threaten that model by making it simpler for customers to establish higher-yielding options and shift their cash, Sløk famous.
Meta launched Muse on Sept. 8, trumpeting its potential to perform duties for customers instead of just answering questions like your run-of-the-mill AI bot.
Financial providers company Plaid says its community provides Muse access to user-authorized data from more than 12,000 US financial establishments and apps, including balances, transactions, investments and mortgage particulars.
Plaid has not specified whether or not Muse can truly switch money between accounts.
Sløk framed automated cash sweeps as one thing that “could soon” occur, slightly than a functionality Muse at present possesses.
His warning also rests on the technology being adopted on a large scale.
Banks could face a new menace as AI agents make it simpler for prospects to hunt down better returns on their cash. hedgehog94 – stock.adobe.com
Sløk shied away from estimating how a lot money could finally transfer out of conventional bank accounts — or how rapidly that could occur.
Shama Hyder, a professor of apply at the Link School of Business in Miami, told The Post that Sløk is true about the broader menace AI poses to banks, but said the technology shouldn’t be yet close to triggering a mass flight of deposits.
“Where I’d pump the brakes is the timing. A run-like event needs millions of households to hand an AI agent the keys to their checking account, and they aren’t there yet,” she said.
“People will use AI tools long before they trust them with the transfer button,” Hyder added.
Still, the prof said banks that closely rely on prospects leaving money in low-paying accounts could finally face strain as AI makes it simpler to store around for better charges.
“A bank that depends on customers not bothering to shop around has a business model built on friction, and AI is very good at removing friction,” Hyder told The Post.
The Post has sought remark from Meta and Plaid.
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