McKinsey warns that customer adoption of AI agents could trigger catastrophic profit erosion across the financial sector unless institutions fundamentally rethink their business models. The consultancy predicts banks could lose as much as $170 billion from their bottom lines if they fail to adapt.
Customer-deployed AI agents are poised to automate deposit switching at scale, draining profits from accounts where consumers currently hold money at close to zero interest rates. McKinsey estimates that $23 trillion of a total $70 trillion in consumer deposits sit in low or zero-interest accounts. The fundamental threat stems from automating what has long been a source of banking profits: customer inertia.
“Imagine you have an AI agent that says: ‘Hey, you could save $2,000-a-year by moving your money,'” said Pradip Patiath, senior partner at McKinsey. “It automates a lot of the inertia that is in the system today.”
Should customer adoption of agentic AI proceed unabated, banks could face a nine per cent profit collapse. This is precisely the threshold that would push average returns below their cost of capital, creating a structural profitability crisis across the sector, reports Bloomberg. The threat extends beyond deposit flight; customer-deployed agents would fundamentally alter how banks compete for deposits.
Paradox of AI adoption
The paradox, however, is that AI adoption itself offers banks a partial escape hatch. The sector stands to realise cost savings of between fifteen and twenty per cent through automation and operational efficiency, reports Bloomberg. Yet McKinsey warns this advantage will likely dissolve as competition intensifies. The McKinsey report stated that “competition will likely erode the gains for banks and most of the benefits will accrue to customers.”
This dynamic creates a narrow window for first-mover advantage. Banks that deploy agentic AI and cut costs before competitors could capture temporary returns before efficiency gains become the industry standard, according to McKinsey. Bloomberg reports that early adopters are likely to get “some first mover advantage before the water level resets,” as McKinsey’s Patiath noted. Beyond that window, competitive pressure will reset all gains to zero, with customers capturing the full value of improved financial optimisation and lower costs.
The warning arrives as financial institutions grapple with competing pressures: the technological imperative to automate operations, the commercial necessity to deploy AI before competitors do, and the structural reality that their most profitable business model (holding customer deposits at minimal cost) is now a vulnerability rather than an asset.
