Weekly 10-Q
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Fifth Third is putting its banking relationships to work to find new growth
As AI makes cash easier to move, Fifth Third is betting that better digital tools, established relationships, and banking infrastructure can give customers reasons to stay.
AI-powered financial tools could make relationships more transactional, helping customers compare yields, spot idle cash, and move funds with less effort. Fifth Third [FITB] CEO Tim Spence sees a particular risk for banks that compete primarily on rates. “It’s the sweep deposits of the world, the online-only deposits, that are going to go from being low-margin products to even lower-margin products,” he said during the bank’s Q3 earnings call this week.
Fifth Third wants to give customers more reasons to stay beyond the rates it offers on their deposits.
Bring the money management tools inside the bank
Fifth Third already sees customers moving money between accounts as paychecks arrive, promotional rates expire, and certificates of deposit mature. Spence said about $2.5 billion in deposit flows on the bank’s platform are sorted each month as customers move money between accounts and other destinations. This is a monthly flow rather than a measure of deposits leaving the bank’s balance sheet. Fifth Third retains about 80% of that flow, he said. Of the retained funds, about 90% typically return to a deposit, while the remainder goes to a liquidity portal or investment account.
The activity illustrates that customers can value their banking relationship and still move money when another option offers a better return.
The response: Fifth Third plans to bring more money management tools into its own apps, including capabilities such as reviewing subscriptions, finding more opportunities to save money, and budgeting.
“We’re going to take every valuable service that you can get done on Muse, whether that’s looking at subscriptions and finding opportunities to generate savings or budgeting or otherwise, and we’re all going to build them into our apps,” Spence said, referring to Meta’s AI assistant. He noted that Fifth Third could pair those services with bank-grade information security and keep customers’ financial information separate from the social data platforms use for advertising.
The aim is to give customers more reasons to manage their finances through Fifth Third rather than turn to outside platforms. That could help the bank compete on convenience and trust instead of relying on deposit pricing alone. But the strategy depends a lot on execution, as customers will have little reason to use the bank’s tools if they offer less useful insights or a less convenient experience than alternatives. The bank needs to make its digital experience useful enough to reinforce the relationships it already has.
The advantage: …
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