J.P. Morgan Chase led off the latest batch of Q3'26 quarterly bank and brokerage earnings calls. If this first call is any indication, the discussions are likely to be filled with comments on the impact of AI cash optimization tools. (See the JPM earnings call transcript here.) CFO Jeremy Barnum says during the Q&A, "There's obviously been a lot of focus on the Smart Cash solution, which I think is a small piece of the overall story. That is live now actually as of the last couple weeks. Very early days, and it remains a targeted pilot type thing. It is interesting to learn some things about what clients care about and sort of see how it works to kind of sell a product like this in the field. So maybe more to come on that in the future." (See Crane Data's 9/29 News, "WSJ Discusses AI's Impact on Brokerage Sweeps and Bank Cash Sorting, and see our latest Money Fund Intelligence newsletter.)
He explains, "I think the bigger picture here is around there have been a couple of releases of personal agents this quarter, which have really gotten a bunch of attention in the market, and we saw a little bit of a response in bank stocks around those releases. I guess the way we think about that from our perspective is that, on the one hand, it's nothing new. But that doesn't mean that we're complacent about it. So if you think about what is the nature of the competition that comes from these agents, it's really the intersection of two things that we've been talking about for a long time -- one is yield-seeking flows. Obviously, we deal [with that] today and have dealt with all the various rate cycles with a lot of competition from yield-seeking flows."
Barnum continues, "Our strategy remains focusing on primary bank share, not chasing every dollar of yield-seeking money. So that doesn't mean that competitive pressure isn't real. It just means it's not particularly new. The other piece is competition from fin-techs who are innovating and providing great customer experiences, and we've also been talking about that for a long time. [We're] ensuring that we have parity with them, and we're leaning in enough to make sure that we're giving people the experiences that they want through all the various channels, including digital. In that sense, the kind of agentic personal agents, whatever stuff, it's just the intersection of those two things, and it's not new. As I said, that doesn't mean we're complacent about it."
He adds, "We're spending a lot of time on it, and it's going to be interesting to see how the space develops and what we ourselves offer there at some point. But when you take a really big step back from a competitive position, I think we really like our hand in no small part because of the sort of multiple decades of investment in the branch network, the value proposition, and not least trust that our customers have in us."
Asked about "rate seeking behavior ... aside from agentic," Barnum responds, "It's a good question. I think the simple answer is no significant change to our core expectations here. I think we've seen kind of the reassertion of consumer deposit growth over the last couple of quarters as the yield-seeking flows have faded, and that continues to be our basic expectation. That's the big picture. I do think that since that outlook was shaped, we have seen a somewhat higher rate environment, and that does raise the question of what will be the impact of that on consumer deposits. So in the normal course, you will obviously have higher rate paid from the high beta products, from CDs and premium deposits. All else equal, you would probably expect some amount of additional internal migration out of checking and savings into CDs, for simplicity, resulting in higher weighted average rate paid."
He explains, "Maybe you see a little bit of additional outflow pressure which results in, therefore, slightly weaker deposit growth. So that's all totally speculative, and it's very much a function of which side of the argument you land on in terms of some people believe. [Some say] all the cash sorting that's going to happen has already happened, and therefore, these things are relatively insensitive to slightly higher rates. I don't personally believe that. I think it's probably a little bit more on a continuum than that, and therefore, I would expect a little bit of additional pressure. But in the end, it's a matter of degree. No one really knows. The good news, I would say, is that the core franchise performance is exceptionally strong, driven no small part by the net new checking account acquisition."
Responding to a question on the "deposit beta outlook," Barnum answers, "I think it is an important thing for people to be thinking about because this ... latest rate cycle, is arguably even more unprecedented than the last one. We just don't have a lot of historical data about how people behave when you see rate hikes from the launch point that we've seen this cycle. So it's been an unusual 10-plus years, I would say, and I think it's quite important for people to realize, especially people who are doing this by training models on historical data, that the historical data set's just not that rich. So it's very important to be kind of thinking out of the box."
He tells analysts, "In that context, though, I think locally, our beta story is pretty easy, actually, in the sense that you can almost think about the franchise as pretty barbeled between a bunch of very high beta deposits, like most of wholesale, as well as CDs and premium deposit and consumer, and then a stack of very low beta deposits. The question is probably less the pricing of any given product, although that's always going to respond to competition and to market conditions, and more the sort of migration behaviors across products in this cycle. Our local expectations are that it's going to behave roughly the way it has been behaving. But I do think it is right to note that this is different cycle and therefore we have to be thinking about all scenarios as we always do."
Another question asked about agentic AI and regulators, and Barnum replies, "You can argue that it is sort of downstream of the narrative that the SVB run was a sort of social media phenomenon, and we were never big buyers of that idea. I think the better way to understand that situation was as an extremely concentrated and undiversified deposit base that was wholesale ... and kind of monoculture in terms of who was shaping the thinking around that. Arguably, in a world with TV and fax machines, I think you probably would have gotten essentially the same answer in terms of the speed of the run. It might have been the processing of the fax machines into wires might have taken an additional 8 hours, but the core ingredients there were the same."
He adds, "I think everyone is pretty eager to tell a sort of fast deposit run story in this new technology-enabled world. I am just a little bit less persuaded that you really have cliff effects there. Sure, therefore, like in a world with agentic consumer cash movement, it is easy to create a story where it becomes even easier to move cash under certain types of crises. But I think the right way to sort of ensure that your deposits are stable is to run the company with fortress principles so that people are confident in you. And the ease, you are probably not supposed to be hoping that your deposits are stable because the money is difficult to move, I guess, is what I would say."
CEO Jamie Dimon comments, "If you take a step back, first of all, we have $1.5 trillion of cash and marketable securities, so [you're] not worried about JPMorgan's liquidity. But if you take a big step back, banking services are necessary, credit cards and debit cards and movement of money and insured deposits and [you need] branches. And one of the ways you earn that is NII from money that sits there idle. But if you couldn't do it that way, over time, you'd do something different. Subscription, of course, you're getting investment accounts combined with checking accounts. So over time, it will adjust. We want to do a great job for our clients. It costs a lot of money to run these banking systems. Most of it's a fixed cost.... It's a new world, and with all these bots and agents and stuff like that, could someone get hurt and cause a problem? Maybe. If I was a regulator, I'd try to be prepared for that."
In response to a question on growth in "non-interest-bearing deposits," Barnum states, "I guess just to reiterate a couple of points, number one, our net new checking account growth has been exceptionally strong, 650,000 this quarter.... [T]he question a little bit in this rate hiking cycle is going to be how those balances behave and how pricing pressure behaves, and how much migration we see to the higher beta products and so on. We'll see. I think we're relatively optimistic right now. We wouldn't expect radical changes for small local moves. But we do think a lot about the different rate regimes and how that can affect deposit beta. I think that's part of just being prepared for everything."
Finally, he says, "I think to be honest, the reporting is a little confusing in part because of the famous ECR product that sometimes makes it look like on the wholesale side, there are more non-interest-bearing deposits than there actually are. That's just an artifact of the rules for how we have to report.... At a high level, I would say that wholesale deposits have been, continue to be, and in fact, at the margin are a little bit more competitive. But the way to think about that is not that the product offering allows us to grow non-interest-bearing deposits. It's there's an overall margin that you earn on your deposits as part of the bundle of products, and that's a function of how good your service offering is. And we have quite a good track record there of winning share and winning mandates as a function of the quality of our products."
For more on AI and Cash Sweeps, see our recent Crane Data News stories: "WSJ Says Investors Clinging to Cash; RIA Biz Says Schwab Shifting Sweep" (8/13/26), "Money Funds Low Profile on Q2 Earnings Call Radar; Schwab, Northern" (7/23/26), "Barron's Writes Again on Sweeps and AI; Crane 100 MF Index Up to 3.44%" (6/2/26), "LPL Sees No AI Risk of Cash Sorting" (5/4/26), "Raymond James Call Responds to 'Agentic AI Cash Sweep Optimization'" (4/24/26), "Barron's on Schwab AI Sweeps Worries" (4/21/26), "Earnings: JP Morgan Talks AI Cash Allocation Tool; BNY on Tokenization" (4/20/26), "Schwab Says AI a Tailwind, Not a Threat to Cash Sweeps on Q1 Update" (4/17) and "Morgan Stanley Q1 Call: AI & Sweeps" (4/16).
