+34
Meta's new Muse AI agent has intensified investor concerns that artificial intelligence could help customers move idle cash into higher-yielding investments, potentially reducing banks' access to low-cost funding. Financial stocks, including Charles Schwab, fell as markets assessed the disruption, though analysts said the impact remains largely theoretical until deposit costs and customer behavior visibly change.
Wall Street's latest artificial intelligence fear for US banks is that AI agents might help customers get a better deal on their cash. ) newly released Muse AI agent hit a viral moment earlier this week, financial and other consumer-facing stocks, including Charles Schwab tumbled about 2.6% on Tuesday as investors grappled with the new AI threat.
Bank stocks have since clawed back some of those losses. Meta's new agent is just the latest signal that AI advancements could make bank customers' idle cash balances less idle, crimping a crucial margin banks earn from this otherwise cheap funding source. The app can connect a user's financial accounts, monitor balances and investments, offer recommendations, and take actions on a user's behalf.
That's a big deal for banks, which benefit from customers keeping their cash balances idle in lower-yielding checking, savings, and brokerage accounts. The rapid adoption of Meta's new app"establishes the opportunity" for margin compression, Bank of America analyst Ebrahim Poonawala wrote in a Thursday note to clients, adding that real proof that agentic AI is changing customer behavior would come in the form of higher deposit costs for banks.
"Until deposit costs rise faster than can be explained by rates or competition, the disruption thesis remains conceptual," Poonawala said. Meta CEO Mark Zuckerberg presents the Muse Charm during the Meta Connect event at the company's headquarters in Menlo Park, Calif. , on Sept. 23, 2026. Charles Schwab faced significant cash-sorting pressure in 2023 as interest rates rose and customers moved billions from lower-interest accounts to higher-yielding money market funds.
The sudden shift forced the company to draw on expensive short-term funding, which caused a decline in profits throughout the year.
"We see deposit sorting — frictionless movement of excess liquidity to higher-yielding alternatives — as a real threat to industry net interest margins," Bank of America's Poonawala added. The fresh AI threat comes as competition for deposits has already been heating up. The Federal Reserve has begun raising interest rates, upping the pressure on banks to pay customers higher rates on their accounts. Banks are also hungry for more deposits as lending growth has accelerated this year.
Meanwhile, the country's personal savings rate is hovering near) rolled out a new savings rate initiative aimed at attracting more of its customers' existing cash and other asset balances. The move followed similar incentive rollouts by PNC ( Banks are also taking steps to defend against the cash-sorting threat. JPMorgan Chase's Jamie Dimon floated a yet-to-be-released wealth management product called Smart Cash earlier this year.
Bank of America, meanwhile, offers a corporate treasury platform that helps businesses forecast and manage cash. David Hollerith covers a range of developments throughout the financial sector, from Wall Street to banking and asset management to crypto and fintech. Email him at david.hollerith@yahoofinance.com. Follow him on X at @DsHollers.
Artificial Intelligence U.S. Banks Bank Deposits Margin Compression Charles Schwab
Canada Latest News, Canada Headlines
Similar News: You can also read news stories similar to this one that we have collected from other news sources.
AI ‘superintelligence’ ban proposed in U.S. as rogue agent concerns ramp upThe bill calls for a prison sentence of up to 20 years for those who violate the restrictions, similar to existing penalties related to unlawfully developing nuclear weapons.
Read more »
Meta is banking its future on its Muse AI agent — and winning user trustMuse is Meta's vision for its future.
Read more »
Microsoft adds Copilot coding tool and always-on AI agentMicrosoft unveiled new Copilot features including a coding tool called Code and an enterprise AI agent called Autopilot, alongside cost-management capabilities.
Read more »
Meta Nears $2 Trillion Market Cap as Muse AI Agent Drives Stock SurgeMeta Platforms shares jumped nearly 13% this week, approaching a $2 trillion market capitalization, driven by its new Muse AI agent and device launches.
Read more »