Meta's Muse AI sparks bank margin worries, KBW index falls 2.6%

The immediate trigger is Meta's Muse AI agent, which can connect a user's financial accounts, monitor balances and investments, offer recommendations, and take actions on a user's behalf. That matters to banks because they earn a crucial margin from customers keeping cash idle in lower-yielding checking, savings, and brokerage accounts.

The fear is not new behavior. 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, forcing the company to draw on expensive short-term funding and causing profits to decline throughout the year. Adding to that pressure, the Federal Reserve has begun raising interest rates, banks are hungry for more deposits as lending growth has accelerated this year, and the country's personal savings rate is hovering near a four-year low.

What remains undecided is whether AI agents actually accelerate that shift. Poonawala said real proof would come in the form of higher deposit costs for banks, and until deposit costs rise faster than rates or competition explain, the disruption thesis remains conceptual. For bank deposit teams, the test is whether customer behavior changes at a pace that shows up in funding costs.