Those sleepy deposits that are 90% of your customers are waking up

Torten Slok is not a household name. I'm pretty sure he's never been talked about on The Daily Show, for instance, but the chief economist at Apollo Global Management is influential in financial circles. So when he suggested in his Daily Spark newsletter on Sunday that AI agents could lead a massive flood of deposits moving out of banks, the assertion got noticed. 

I saw several references to it online, and by the time I brought it up with my fellow editors here at American Banker on Monday, all of them had already seen it as well. Slok's post was all of two paragraphs and a chart (that's the format), but it seems to have hit a real nerve, and it wasn't just that he was talking about something related to AI. From what I saw, a lot of people were genuinely surprised by the reality that banks rely on cheap deposits. (Not AB's editors! We knew that.)

What Slok said was that not only could AI agents conceivably be used to not only find the best interest rates on savings products, but also they could move money on behalf of users. The underlying argument is that banks have been offering paltry rates on their savings products, have somehow gotten away with it, and that the gravy train may be coming to an end.

While the post caused a ruckus, AI agents causing widespread bank runs is almost certainly premature, as our Penny Crosman explained on Thursday. On a purely logistical level, there is a lack of interoperability across banks, a lack of authentication and authorization controls, regulatory and liability questions, and banks' restrictions on third-party access. Moreover, many consumers don't actually trust AI agents or the tech companies behind them.

Still, the whole thing does highlight the fact that banks have been offering less and less to their savers.

I'm old enough that my first experience with banking came via the passbook, a little softbound book that recorded transactions in my savings account. If you wanted to deposit or withdraw money, you brought your passbook with you to the local branch and the teller recorded the transaction in the book. Back in the early '80s having a savings account was a literal thing. Banks could offer more than 5% in interest on those accounts. 

Today, the average interest rate on a "savings" account is 0.4%; many obviously pay much less. And yet, most people don't move their money, even though there are more options today than there were 40 years ago. These so-called sleepy deposits are a critical foundation of the entire industry. More than 90% of customers leave their money sitting in bank accounts regardless of the interest rate, a Harvard Business School study concluded. Those deposits comprised more than 60% of a bank's total value, the study said.

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This is why Slok's assertion hits so hard. If the friction to moving deposits were suddenly removed, and if an AI agent could quickly and seamlessly find a user better rates, and even move the money for them, well, that would be very bad for the industry. That capability may still be premature, but it's not that premature.