Banks have profited from idle cash for years. AI agents could change that.

Wall Street's latest artificial intelligence fear for US banks is that AI agents might help customers get a better deal on their cash.

As Meta's ( META ) newly released Muse AI agent hit a viral moment earlier this week, financial and other consumer-facing stocks, including Charles Schwab ( SCHW ), JPMorgan Chase ( JPM ), Booking Holdings ( BKNG ), Expedia Group ( EXPE ), and Arthur J. Gallagher ( AJG ), faced a fresh wave of disruption worries.

The KBW Nasdaq Bank Index ( ^BKX ) tumbled about 2.6% on Tuesday as investors grappled with the new AI threat. Bank stocks have since clawed back some of those losses.

Meta's new agent is just the latest signal that AI advancements could make bank customers' idle cash balances less idle, crimping a crucial margin banks earn from this otherwise cheap funding source.

The app can connect a user's financial accounts, monitor balances and investments, offer recommendations, and take actions on a user's behalf.

That's a big deal for banks, which benefit from customers keeping their cash balances idle in lower-yielding checking, savings, and brokerage accounts.

The rapid adoption of Meta's new app "establishes the opportunity" for margin compression, Bank of America analyst Ebrahim Poonawala wrote in a Thursday note to clients, adding that real proof that agentic AI is changing customer behavior would come in the form of higher deposit costs for banks.

"Until deposit costs rise faster than can be explained by rates or competition, the disruption thesis remains conceptual," Poonawala said.

Charles Schwab faced significant cash-sorting pressure in 2023 as interest rates rose and customers moved billions from lower-interest accounts to higher-yielding money market funds. The sudden shift forced the company to draw on expensive short-term funding, which caused a decline in profits throughout the year.

"We see deposit sorting — frictionless movement of excess liquidity to higher-yielding alternatives — as a real threat to industry net interest margins," Bank of America's Poonawala added.

The fresh AI threat comes as competition for deposits has already been heating up. The Federal Reserve has begun raising interest rates, upping the pressure on banks to pay customers higher rates on their accounts.

Banks are also hungry for more deposits as lending growth has accelerated this year. Meanwhile, the country's personal savings rate is hovering near a four-year low , adding another constraint to the broader funding environment.