TL;DR

• Agentic AI could eliminate $700-800 billion in banking costs (15-20% reduction) through operational efficiency
• Consumer AI agents threaten $170 billion in profit pools by automating deposit optimisation and debt consolidation
• Banks must adopt “precision, not heft” strategies as traditional scale advantages diminish in digital-first environment

Peak Performance Masks Structural Vulnerability

The global banking industry achieved record-breaking financial performance in 2024, yet capital markets remain deeply sceptical about sustainability. This paradox reflects investor concerns that current profits derive from temporary tailwinds rather than fundamental innovation. The widening valuation gap signals market expectations that profitability will erode without significant strategic transformation.

The primary threat arrives in dual form through agentic AI. Operationally, AI enables “zero-touch” workflows where one human employee supervises 20-30 autonomous AI agents. Whilst this promises $700-800 billion in cost savings across the industry, competitive dynamics will ensure these efficiencies ultimately benefit customers through lower fees rather than sustained bank profitability — following the pattern of previous technological innovations.

Consumer AI Attacks Profitable Inertia

The more significant disruption stems from customer-side AI adoption. Third-party AI agents threaten to eliminate customer inertia — the behavioural foundation supporting profitability in deposits and credit products. AI agents can automatically move $23 trillion in low-yield checking deposits to higher-rate accounts and systematically consolidate high-interest credit card debt into cheaper personal loans.

This automation particularly threatens credit card lending, where 75% of US revolving balances belong to prime or super prime consumers who have access to lower-cost alternatives but fail to act. Should these tools achieve widespread adoption, aggregate profit pools could decline by $170 billion (9%) by 2030, reducing average return on tangible equity by one to two percentage points and pushing many institutions below their cost of capital.

Precision Replaces Scale as Competitive Advantage

Customer loyalty has collapsed alongside these technological shifts. In the US market, the proportion of consumers opening new checking accounts with their existing bank plummeted from 25% in 2018 to just 4% in 2025. Banks must now compete to enter customers’ Initial Consideration Set rather than relying on existing relationships.

This environment demands a “precision, not heft” strategic framework emphasising targeted, data-driven resource allocation over traditional scale advantages. Institutions embracing this model stand to gain four percentage points in return on tangible equity over peers, whilst slow movers risk uncompetitive cost bases and market irrelevance. The coming era will be defined by strategic focus rather than asset size.

Article based on analysis by Finextra