How AI Helps Banks Keep Their Deposit Customers

AI is helping banks keep their edge in the fast-changing world. Banks face a perfect storm of challenges: mounting regulatory pressures, capital constraints, and intense competition from fintech firms make it harder to maintain profitability.

One area of acute concern is deposit customers, who are increasingly attracted to fintech alternatives offering convenience and competitive products.

As banks scramble to retain these core customers, AI-driven platforms are emerging as an appealing strategy to secure deposits, strengthen relationships, and fuel sustainable growth.

The Battle for Deposit Customers

The value of a deposit customer goes beyond the money in their account. Deposit accounts often serve as an “anchor” product, binding customers to the bank. The Customer Lifetime Value (CLV) from a deposit only customer may range from $1000 to $2000.

When a customer has a checking or savings account, banks can cross-sell other products like credit cards, mortgages, and investment services. This cross-selling potential is especially valuable because deposit customers are often the “stickiest”—they’re more likely to stay with the bank, providing a stable foundation for growth. Once a customer has purchased additional products, the CLV can increase a material amount.

However, this landscape is shifting rapidly. Fintechs and neobanks are offering streamlined digital experiences and appealing products that attract customers who feel underserved by traditional banks. If a bank turns down a loan, that customer might secure a loan through a fintech provider, transferring other financial activities along with it. When this happens, the bank risks losing not just a loan but a deposit customer—and, with it, a stream of future revenue.

The stakes are high. Retaining deposit customers is critical for banks to ensure low-cost funding and sustain CLV. Deposit accounts serve as the bank’s most affordable funding source, and their retention is essential to profitability. With competition intensifying, banks need more than traditional strategies to keep customers. They need AI-driven solutions to reinforce loyalty.

AI as a Competitive Advantage

AI can be transformative for banks, enabling them to serve customers more effectively through personalized services, timely products, and seamless user experience. For deposit customers, this can mean more tailored financial offerings, like pre-approved loans that meet their needs without the hassle of a traditional application.

AI’s ability to assess creditworthiness using non-traditional data points is especially impactful for low- to moderate-income (LMI) customers who may lack extensive credit histories but have other indicators of financial reliability.

By analyzing a broad spectrum of data, AI can produce more accurate and inclusive credit assessments, allowing banks to extend credit to customers who might otherwise be overlooked. This gives banks a way to compete with fintechs, which often use similar models to attract these same customers. In fact, machine learning-based models can more precisely evaluate creditworthiness and create a 10 to 15 percent performance lift compared with traditional linear and logistic regression models.

If a customer is denied a loan by their primary bank, they may immediately look elsewhere, taking their deposits with them. However, with AI-driven models offering a more complete view of creditworthiness, banks can retain these customers by approving loans they might have historically declined. In this way, AI strengthens customer retention and fosters long-term relationships.

Reinforcing Customer Lifetime Value

AI also enhances CLV by making deposit customers more “profitable” over time. With AI, banks can analyze a customer’s entire financial relationship, identifying opportunities to offer additional products and deepen engagement. By understanding the range of products, a customer has and how they use them, banks can make data-driven decisions to enhance those relationships.

A well-served customer is more likely to stay, increasing both CLV and bank profitability. AI not only helps banks retain deposit customers, but also makes those relationships more valuable over the long term.

Building a Resilient, Customer-Centric Future

Banks must act to protect their most valuable assets. By leveraging AI and adopting innovative strategies, banks can retain and strengthen customer relationships, offering inclusive and personalized services that meet modern expectations. This approach is an opportunity to innovate, build a resilient financial system, and ensure that banks remain at the heart of their communities for generations to come.

Sanjiv Das is the President of Pagaya Technologies, a fintech that leverages AI to help partners evaluate credit and make lending decisions. Previously, he was the CEO of CitiMortgage & Caliber Home Loans.