I hadn't even thought of it that way, but I can see that angle. Allen attributes the deposit increase to additional growth and new customers. He hasn't noticed the balances of existing customers' accounts go up considerably, but thinks that will happen over time if the stock market continues to rumble. But if market volatility continues, they will see an increase in deposits. He guesses it will take six months to a year to occur.
Banks use deposits as their source of money to make loans.
The availability of good core deposits by customers benefits banks, which generally pay less for core deposits than if they have to get money from other sources. Blue-chip stocks are not so volatile. When blue-chip stocks get punished, we'll see people going to safer accounts like money market accounts and CDs. And we will welcome them with open arms. Excluding the past couple of weeks, the Nasdaq has been sinking since last fall and recently, the Dow Jones industrial average succumbed to large bouts of selling.