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Economist Warns AI Could Spark New Kind of Bank Run
Confirmed
In Short: Torsten Slok, chief economist at Apollo Global Management, warned that AI agents like Meta's Muse could trigger a new kind of bank run by automating the movement of household cash into higher-yielding fintech accounts.
Slok's warning, detailed in a recent note, highlights the potential for AI agents to disrupt the traditional banking model by making it easier for consumers to identify and switch to accounts paying 3.3% to 5%, compared to the national average of 0.1% on checking accounts.
According to Slok, if AI agents gain the ability to move money on behalf of users, they could sweep significant amounts of cash into fintech accounts, depriving banks of the cheap funding base they rely on to make profitable loans.
Slok's analysis is based on Apollo's Daily Spark research, which lists 11 fintech and online accounts offering higher interest rates.
The economist noted that the timing of AI advancements, such as breaking RSA encryption records, could exacerbate the risk of a mass deposit flight from traditional banks.
In an interview with The Daily Hodl, Slok elaborated on the potential for an 'agentic bank run' if AI agents go mainstream, emphasizing the threat to the financial system.
Shama Hyder, a professor at the Link School of Business in Miami, agreed that AI poses a threat to banks but noted that the technology is not yet close to triggering a mass flight of deposits.
Hyder told The New York Post that banks that depend on customers leaving money in low-yield accounts could eventually face pressure as AI makes it easier to shop around for better rates.
What this adds
The report adds to the growing concerns about the potential risks of AI in finance, highlighting a new mechanism for bank runs.
The sources have not established the exact timeline or the extent to which AI agents will impact bank deposits.
The impact of AI on the real estate market, as highlighted by the National Association of Realtors, is not directly related to Slok's warning about bank runs.
What's confirmed
- “If every household used AI agents to optimize the return on their cash balances, banks could lose a large share of the cheap deposits they rely on to make loans, which would be a problem for the entire financial system.” Blockworks co-founder Jason Yanowitz highlighted the warning on X.
What's still developing
- Torsten Slok says that gap is what decides how the next bank run starts.
- Apollo Global Management's chief economist Torsten Slok laid out that gap in a note published Sunday, and his point wasn't really about interest rates.
- AI agents just broke two RSA factoring records in sixteen days - how AI agents are breaking RSA encryption records - AI factoring records RSA security implications for crypto The timing matters.
- BlackRock published its own thesis this month, arguing that AI agents could become major users of stablecoins.
- Apollo Economist Warns AI Agents Could Trigger Bank Runs at Machine Speed A $10,000 checking balance earns about $10 a year at the national average rate.
- Here's the mechanism, and it's a genuinely different one from a classic bank run.
- Apollo Global Management chief economist Torsten Slok says Muse and similar agentic AI assistants could soon begin to automatically move household bank balances into higher-paying accounts.
- "We talk about data centers as though they are one category, and they are not," said Nadia Evangelou, the principal economist and director of real estate studies for the National Association of Realtors.
- To help real estate agents address these concerns, the National Association of Realtors commissioned a first-of-its-kind study aimed at evaluating data centers' impact on the real estate market.
- The threat to banks could emerge as personal AI agents such as Meta’s newly launched Muse gain access to users’ financial information while taking on a growing range of tasks on their behalf, the egghead explained.
- AI agents could spark a new kind of bank run by automatically yanking consumers’ cash out of low-paying checking accounts and chasing higher yields, Apollo chief economist Torsten Sløk warned — the latest dire prediction about artificial intelligence in a wave of doomerism.
- Banks benefit when customers leave cash in low-yield accounts, allowing lenders to pay depositors relatively little while lending that money out at higher rates.