Our industry was exposed as unserious and incurious this week - insofar as personal finance goes - as AI/neobank fever continues to grow. Bank deposits do not generally pay a high yield. This is not disputed. The question you should ask is why. If your answer is “my target user is lazy, stupid, or too busy to care about money” then you’re already at an intellectual cul-de-sac. You should start from the premise that your target users are not irrational, at least in aggregate. Banks primarily carry transaction accounts for a household. This is money that needs to be received and then paid out reliably, and in a safe and convenient manner. The average personal checking account in the US lasts for 19 years. It’s not for the yield. It’s for the accompanying services. ATM access, direct deposit, mobile banking, and automatic recurring payments were all features used by >80% of US checking account holders. More than half still used paper checks. (Source: 2022 Survey of Consumer Finances by the Fed, the most recent year) So looking at the interest rate on a bank account is going to mislead you. DO NOT BASE YOUR BUSINESS PLANS ON THE ASSUMPTION BANK DEPOSITORS ARE UNCOMPENSATED. Instead, think of them being paid-in-kind with a bundle of services. Notably, that bundle of services is not taxed, unlike if the bank just paid them interest. So $100 of interest vs $100 of services will overstate the benefit of the interest. But let’s concede the premise going around Crypto Twitter and AI Twitter that households DO want to optimize for yield on their cash, rather than convenience, reliability, and associated services. Automatic rebalancing across high yield savings accounts? This exists! It’s got such creative names as “automated savings management” and branded as things like “Autopilot”. But what about all that switching of direct deposits and bill pay between all those accounts? Surely that needs an agent? Don’t be silly. You have those services in one feeder account that pushes and pulls into the yield accounts. And… this is already a thing! The hard truth is that US bank depositors are mostly not a good audience to win on the basis of higher yield on balances. Those that already cared strongly have mostly migrated to money market funds and brokerage accounts and duration products. My advice to would-be agentic neobankers: If you are competing on yield, you are not competing with US banks. You are competing with money market funds. There is plenty of open space between these two products - something that can produce near-MMF yields and also near-bank account transaction services would be a genuine value proposition. But worse risk-reward to MMF combined with worse services than a bank account is probably not the business plan I would adopt