M&T says it’s monitoring impact of AI agents on deposits
- Key insight: M&T Bank CFO Daryl Bible downplayed the impact that consumers’ increasing use of AI agents could have on banks’ deposits.
- What’s at stake: Following the recent release of Meta’s Muse product, the potential for AI agents to accelerate deposit outflows has become a key topic among bankers and regulators.
A top
Processing Content
Speaking on the Buffalo, New York-based bank’s third-quarter earnings call, Chief Financial Officer Daryl Bible said AI agents that are already in use could make it easier for customers to move deposits between institutions to maximize yields. But the bank has yet to see a significant effect on deposit flows, he said.
“We aren’t really seeing much impact of actually money being moved out or anything yet,” Bible said. He added that
Bible expects the potential impact to become less significant over time, as the technology matures.
“It’s not going to be as much of a big deal,” he said.
The potential for AI agents to accelerate deposit outflows has emerged as a recurring topic on third-quarter bank earnings calls and among banking regulators. The conversation kicked off last month following Meta’s launch of its Muse agent.
“It’s something we’re certainly watching very closely,” Hill said.
Read more:
Hill said it remains an open question how willing individuals and businesses will be to delegate decisions about moving their money to AI tools. He also noted that businesses account for a significant share of deposits across the banking system and have numerous reasons for choosing particular banking relationships.
In a note Friday, Jaret Seiberg, managing director at TD Cowen, agreed that the risk of consumer-deposit outflows may be limited, but cautioned that regulators should examine the potential implications, as the risks could grow over time.
“What concerns us are not just AI agents. It is the marriage of AI agents with tokenized deposits, tokenized money funds, stable coins, and a potential Open Banking rule that could make it easier for consumers to disintermediate their bank,” Seiberg wrote.
Third-quarter earnings
For the third quarter,
Average commercial real estate loans and mortgage loans both increased 4% year over year, reaching $24.9 billion and $25.2 billion, respectively.
The growth in average CRE loans reflected strong loan originations in the third quarter, along with stable payoffs and paydowns, Bible said. Average consumer loans rose 5% year over year to $27.3 billion.
Average total deposits increased 2.6% year over year to $166.8 billion, driven by growth in commercial, mortgage and business banking. Bible said deposit growth allowed the bank to reduce its reliance on borrowing. Average short-term borrowings fell $2.8 billion to $5.2 billion.
The bank’s provision for credit losses rose by 8% year over year to $135 million, and by 12.5% from the previous quarter.
Noninterest expenses rose to $1.39 billion from $1.36 billion a year earlier, driven by higher salary and benefit costs and increased spending on outside data processing and software. Software-related costs rose $19 million from the previous quarter, reflecting higher costs associated with software maintenance and enhancements to
