• Fifth Third warns online-only banks face heightened AI-driven deposit risks
• Autonomous financial agents could redirect deposits toward higher-yielding accounts
• CFO Bryan Preston considers immediate disruption concerns exaggerated
• Fifth Third prohibits external AI agents from initiating customer transactions
• JPMorgan, Citi and Bank of America restrict external agent access
• Fifth Third plans to integrate competing AI capabilities into banking applications
• Average core deposits rose 3% to $236 billion
• Deposit costs increased while net interest margin declined to 3.34%

Online-only banks could face the greatest disruption from artificial intelligence-powered cash optimization as autonomous financial agents increasingly threaten to redirect customer deposits toward higher-yielding accounts, according to Fifth Third Bancorp CEO Tim Spence.

Speaking during the bank's third-quarter earnings call, Spence argued that digital lenders relying predominantly on competitive pricing were particularly vulnerable to AI tools capable of automatically identifying better returns and transferring customer funds between institutions.

The emergence of Meta's AI assistant Muse has intensified concerns that agentic technology could weaken traditional deposit relationships by enabling customers to optimize their finances without directly engaging with their banks.

However, Spence suggested that established institutions offering branch networks, integrated financial services and broader customer relationships were better positioned to withstand the disruption.

The most exposed lenders were "the ones that have nothing but pricing defining their value propositions," he said.

Fifth Third CFO Bryan Preston described concerns surrounding AI-driven cash optimization as "likely overblown," suggesting expectations about the speed of adoption may be premature.

Nevertheless, the bank is monitoring developments closely, particularly questions surrounding security, transaction authorization and accountability.

Fifth Third currently prohibits external AI agents from initiating transactions within customer accounts, reflecting broader industry concerns about granting autonomous systems access to sensitive financial infrastructure.

JPMorgan Chase, Citigroup and Bank of America have also restricted external AI agents from accessing customer accounts, according to the Financial Times.

JPMorgan CEO Jamie Dimon recently warned that customers needed to understand the potential transfer of liability when delegating financial activities to autonomous agents.

"You've got to make sure customers aren't hurt by it, and so that is of concern," Dimon said during the bank's October 13 earnings call.

"You don't want rogue agents, and there could be thousands of them."

Preston argued that Fifth Third's deposit composition provided additional protection against automated cash movements.

The bank's median household checking balance stands at approximately $3,000, leaving relatively little surplus cash available for redistribution into higher-yielding products.

Commercial deposits are also predominantly operational, supported by banking services that strengthen customer relationships beyond interest rates alone.

Rather than surrendering customer engagement to technology companies, Fifth Third intends to incorporate comparable AI capabilities into its own digital platforms.

Spence said banks could introduce subscription management, budgeting tools and automated savings recommendations while maintaining established security protections.

"Every time you have a new platform like this, the battle for a market comes down to whether incumbents get the innovation faster than the insurgents get distribution," he said.

The strategy reflects growing competition for deposits as financial institutions seek funding to support lending activity.

Fifth Third reported average core deposits of $236 billion in the third quarter, representing sequential growth of 3%.

However, deposit costs increased by 10 basis points to 1.64%, while interest-bearing deposit costs climbed 11 basis points to 2.24%.

The bank's net interest margin declined two basis points to 3.34%, illustrating the continuing pressure associated with deposit competition.

Fifth Third is pursuing additional deposit growth through branch expansion across the Southeast and Southwest and investment in its recently launched innovation banking platform.

Spence emphasized that sustainable access to low-cost funding required long-term investment rather than reliance on pricing alone.

"If you're going to get low-cost deposits, it has to come from some structural investment that accumulates over time," he said.

The challenge for banks is increasingly clear: retaining deposits may depend as much on controlling the digital customer relationship as offering competitive financial products.