As if things couldn't get worse for banks, artificial intelligence could present a problem for the group. The Invesco KBW Bank ETF (KBWB) fell 2.3% last week, marking its third straight weekly decline. That matches the fund's longest losing streak since mid-March. Month to date, the KBWB is down 5.7%, on pace for its worst monthly performance since March 2025, when it plunged nearly 10%. Goldman Sachs and Bank of America are the fund's worst performers this month, falling more than 8% each. Morgan Stanley is also down nearly 8% in September. Other parts of the financial sector have also been hit. Brokerage stocks Charles Schwab and Interactive Brokers are off by 9.8% and 8.3%, respectively, this month. KBWB 3M mountain KBWB 3-month chart What's the culprit for these declines? Two words: Interest rates. U.S. Treasury yields have soared to multiyear highs of late, as traders bet elevated oil prices will lead the Federal Reserve to tighten monetary policy further. Higher rates may slow loan growth for banks, hurting their bottom lines. Apollo Global Management is also raising another concern: "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," wrote Torsten Slok, the firm's chief economist. Slok pointed out that many fintech companies offer much more attractive yields than traditional banks. Deposits on SoFi Technologies , for example, have an APY of 4.5%, he noted. The national average, meanwhile, is 0.1%, he said in a post titled "Is an Agentic Bank Run Coming?" "Muse and similar agentic AI assistants could soon sweep household cash automatically into accounts paying 3.3% to 5.0%, instead of the 0.1% national average on checking accounts," Slok noted. To be sure, there are no signs that a run on the banks is happening — or will happen — anytime soon. However, if Slok is correct, agentic AI could make it easier for consumers to move money into higher-yielding fintech deposit accounts — putting pressure on banks.
