LIVE MARKETS-AI agents: a threat to bank deposits? 

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AI AGENTS: A THREAT TO BANK DEPOSITS?

Worries that artificial intelligence agents could trigger a wave of competition for bank deposits have resurfaced following the release of Meta's Muse, with some investors questioning whether AI will make it easier for customers to switch banks in search of higher rates.

But Citigroup believes those concerns are overstated.

"We expect to see ongoing AI adoption by banking customers, but expect trust, reliability & transparency, combined with regulatory constraints, to remain as impediments to the use of third-party AI agents to source banking products," writes Andrew Coombs, head of European financials equity research at Citi.

"Instead, we expect to see more customer AI tools embedded within each bank's own digital offering."

Even so, Coombs believes AI could increase pricing pressures in some markets. The bank has crunched the numbers and believes French, Dutch and German markets are most at risk, whereas the Spanish and Irish markets look best placed to weather any risk to deposit pricing from AI agent adoption.

Belgium, UK & Italy all reside in the middle.

"Among the incumbent banks we see BBVA, Caixa & KBC as best placed, all of which already lead with a holistic, relationship-based approach, typically using mortgages as an anchor product," Coombs says.

"While it is more difficult to use mortgages as an anchor product in other (disintermediated) markets, we believe BNPP, ING, Lloyds & UniCredit have all made in-roads into creating a more loyal & sticky customer base."

(Samuel Indyk)

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