To prevent a large loss of bank deposits, Citibank and Bank of America restrict AI smart entities from accessing customer accounts
The Block
52m ago
Ai Focus
According to the British "Financial Times," the U.S. banking industry is warning regulators that AI intelligents may automatically transfer idle funds for users in pursuit of higher returns, which could lead to a loss of bank deposits. Citibank, Bank of America, and JPMorgan Chase have already taken or announced measures to restrict external AI intelligents from accessing customer accounts, and regulators have privately welcomed these practices.
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According to a report by The Financial Times on October 16th, the U.S. banking industry has warned regulatory authorities that AI intelligent agents may automatically transfer idle funds to other accounts in order to help users obtain higher returns, leading to a significant loss of bank deposits. Citigroup and Bank of America have also taken measures to restrict AI intelligent agents from accessing customer accounts.

Citi stated that in order to protect the security of customer accounts and personal information, the bank prohibits third-party AI intelligents or assistants from logging into customer accounts, nor does it allow them to conduct transactions directly through Citi's digital banking platform.

Brian Moynihan, CEO of Bank of America, stated that the bank has also restricted access by AI entities to individual customer deposits and is working on establishing rules to clarify the ultimate responsibility for AI authorized payments. He said, "We firmly believe that the transfer of account funds must be authorized manually. We are in communication with the entity service providers, telling them: 'You certainly don't want consumers to come back and complain that money from their accounts has been transferred without their knowledge, and they have no idea where it went, only to find out later that it was done by the AI entity.'"

An informed source confirmed that Bank of America has taken restrictive measures.

In September this year, after Meta launched AI, a personal assistant, Muse, concerns among the banking industry regarding deposit losses have further intensified. Banks are worried that AI intelligent systems will find deposit accounts with higher returns for consumers, transferring a large amount of idle funds from their existing accounts.

At the same time, AI companies are competing to launch new tools and chatbots to help consumers manage their personal finances.

Torsten Slock, the chief economist at Apollo Global Management, warned in a report that AI assistants may automatically transfer family funds from checking accounts with an average interest rate of only 0.1% across the United States to other accounts with interest rates ranging from 3.3% to 5%, which further exacerbates the concerns of the banking industry.

JPMorgan Chase, Bank of America, and Wells Fargo collectively hold $1.6 trillion in interest-free deposits, which accounts for 16% of the total liabilities of these three banks. If they were to pay interest to depositors at a rate of 3%, the banks would need to incur an additional expense of $47 billion per year, which is nearly half of their total annual profits.

Reports say that if banks are forced to raise personal deposit interest rates in order to prevent customers from moving their funds to other institutions with higher interest rates, their profits could shrink significantly.

The aforementioned report indicates that if every household utilizes the AI intelligent entity to increase the returns on their cash deposits, banks could lose a significant portion of their low-cost deposits, which are used for lending. This could pose problems for the entire financial system.

An informed source revealed that regarding the increasing use of AI intelligents to handle financial transactions on behalf of consumers, Wall Street executives have also expressed their concerns to Federal Reserve regulators.

Regulatory officials privately welcomed the practice of banks preventing AI intelligents from accessing customer accounts. They believe that the law may need to be further clarified regarding how consumers should authorize AI intelligents to conduct financial transactions on their behalf, and who should be held responsible in case of transaction issues.

Citi stated that customers can still authorize some open banking service providers to access account information in a read-only manner within limited scope.

JPMorgan Chase CEO Jamie Dimon stated this week that due to the concern of potential thousands of out-of-control agents, the bank will restrict access to customer accounts by AI agents. He said, "We must ensure that customers are protected in an appropriate manner, so we are also developing corresponding tools for this purpose. During this period, we will not allow any external AI agents to enter the bank system at will, as the risk is too great for both customers and JPMorgan Chase."

Christopher Sturmeyer, a senior partner at consulting firm Simon Kuh & Company, stated that banks need to take measures to encourage customers to continue depositing money and must find ways to increase customer loyalty to deposit products. Specific approaches can include expanding customer loyalty programs and offering different loan interest rates through these programs.

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