Banks could lose $170 billion in profits due to AI - McKinsey

Banks' profits could fall by around 9% if they do not adapt their business models to a new environment where customers are increasingly using third-party AI assistants, McKinsey, one of the world's largest consulting firms, has warned. Its analysts have calculated that banks could lose about $170 billion in 2030, based on a forecast of $1.8 trillion in total profits that year.

According to the report, the mass proliferation of so-called agent-based AI - autonomous digital assistants - could reduce banks' profits from customer funds in low-yielding accounts. According to the analyst firm, about $23 trillion of the total $70 trillion in customer funds is placed in zero-rate accounts, with the rest in accounts with relatively low rates. If this money starts to flow en masse to more favorable products managed by AI agents, this, in turn, will lower the average profitability of banks below the cost of capital.

"Imagine you have an AI agent that says, 'Hey, you could save $2,000 a year just by transferring money to another account,'" McKinsey senior partner Pradeep Patiat explained in a Bloomberg presentation. - "It automates a lot of the inertia that's in the system now.

Financial institutions, on the other hand, that are able to implement agent-based AI first and have time to cut costs - will gain a short-term advantage, McKinsey noted. "Early adopters will be able to take advantage of the first mover advantage - before the market levels off," Patiat added. Overall, the consultancy estimates that the use of AI will allow banks to cut costs by 15-20%. However, over time, competition is likely to "eat up" this benefit, and most of the benefit will go to customers.

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