Ally Financial expects deposits to flow out as interest rates go down, but it is looking to digital tools and experiences to maintain — and even grow — deposits. 

“Our focus remains on providing a great customer digital experience while simultaneously demonstrating efficiency by adapting to different operating environments” like a low-rate cycle, Russ Hutchinson, chief financial officer, said during the company’s third-quarter earnings call today.

Ally reported deposits of $141 billion in Q3, up 1.1% year over year, but down 0.7% sequentially. 

Many financial institutions will lose deposits due to lower interest rates, James White, general manager of banking industry at software company Total Expert, told Bank Automation News. 

Customers are going to take money out for savings accounts and CDs and deploy it in more “financially viable vehicles” like stocks and mutual funds for better returns, White said. 

JPMorgan similarly expects deposit outflows on the heels of Federal Reserve rate cuts, Chief Financial Officer Jeremy Barnum said during the bank’s Q3 earnings call on Oct. 11. 

The $191 billion bank engaged with more than 1 million customers for digital investing, direct deposit and digital savings tools in Q3, according to the earnings report.  

BY THE NUMBERS: In Q3, Ally reported: 

• Net income of $357 million, up 20% YoY; 

• Efficiency ratio of 58.3%, compared to 62.6% in Q3 2023; 

• Customer base of 3.3 million, up 10% YoY; 

• Non-interest expense of $1.2 billion, down 7% YoY; and 

• Active credit card users of 1.3 million, up 8.3% YoY. 

OF NOTE: Ally is developing AI technology to make operations more efficient for customer servicing teams and increase customer engagement through personalized products and marketing, Sathish Muthukrishnan, chief information, data and digital officer, previously told Bank Automation News. 

The bank last year launched generative AI-driven chatbot, Ally.ai, which helps representatives summarize calls for analytics. Ally is also deploying Ally.ai for its marketing teams, Muthukrishnan said. 

MARKET REACTION: Shares of Ally Financial (ALLY) were down 2.32% to $35.01 per share at market close. Ally has a market capitalization of $10.67 billion. 

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