The banking industry will respond to the rise of artificial intelligence-driven cash optimization tools by using relationships with customers and offering the same services these tools offer, with the added benefit of bank-grade information security, Fifth Third Bancorp Chairman, CEO and President Tim Spence said Monday (Oct. 19).

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Spence was asked about these tools and their potential impact on deposits during the bank’s third quarter earnings call. He said there is already a lot of sorting that goes on in the banking industry and history has shown that the companies that are most affected by new technology platforms that reduce friction or increase transparency are the ones whose only value proposition is price.

“Which I think in our world, in the case of deposits, would mean the online-only banks who have to lead with rate or who don’t have any distribution and therefore have to buy liquidity through aggregators, or the wealth platforms that are pricing sweep deposits at inferior yields to market rates where there are equivalents, not the folks who have either distribution or product advantages or relationship advantages, as I certainly believe that we do, because those are the things that justify incremental margins,” Spence said. “It’s the sweep deposits of the world, the online-only deposits, are going to go from being low-margin products to even lower margin products.”

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