Right Offer, Right Time: The Future of Personalization is Contextual
There is a growing recognition that contextual personalization in banking represents more than just another industry buzzword; it's quickly becoming an essential capability for financial institutions looking to remain competitive.
By Jim Marous, Co-Publisher of The Financial Brand, CEO of the Digital Banking Report, and host of the Banking Transformed podcast
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Executive Summary
- One of the primary challenges and opportunities in banking today is creating contextual customer experiences.
- The future of customer engagement is driven by AI, enabling hyper-personalization at scale by leveraging both internal and external data.
- While the technology to build cognitive banking exists, success in deploying proactive engagement requires support across the organization with a commitment to trust, privacy, and transparency.
At a pre-conference symposium on personalization, sponsored by Personetics, that I hosted at April’s Financial Brand Forum in Las Vegas, it was clear that the ability to drive greater engagement in real-time was a hot-button topic for executives of financial institutions of all sizes. What was anticipated as a modest gathering of 50 leaders became a standing room only crowd wanting to hear from presenters and panelists including Lindsey Johnson, President & CEO of the Consumer Bankers Association (CBA), Scott McQuilkin, Director of Sales Engineering at Personetics, Sumeet Grover, EVP, Chief Strategic Growth & Digital Officer at UFCU, and Jody Bhagat, President Global Banking at Personetics.
Back to Banking’s Roots, At Scale
What was termed ‘Cognitive Banking’ at this event represents what historically made community banking great: a financial institution that deeply understands each customer’s needs and context, but doing it at a massive scale through AI and data analytics. Almost a ‘Back to the Future’ moment for banking.
The underlying concept isn’t complicated: Banks and credit unions that know their customers, understand their needs, and can reward them for their loyalty can be in a better position to retain and grow the relationship. What’s more exciting than ever is our ability to understand millions of customers at an individual level – something that was previously impossible without today’s technology.
“Banking has existed for thousands of years, evolving from simple deposit-taking to the complex digital ecosystem we have today,” noted Jody Bhagat during his presentation. “The institutions that will thrive will be those that use cognitive capabilities to strengthen relationships rather than just facilitate transactions. They’ll be the ones that understand banking is fundamentally about helping people achieve their financial goals, not just moving money from one place to another.”
Personalization on Steroids
The banking industry has discussed personalization for years, but cognitive banking takes this concept to an entirely new level. It’s about the bank actively thinking on behalf of its customers, using data to identify potential issues and opportunities before they occur, and taking proactive steps to help them achieve their financial goals.
An analogy would be the evolution from static maps to intelligent GPS systems, where passive information has been transformed into dynamic, responsive guidance. What is possible today is a GPS for banking.
Instead of relying on historical data and broad demographic or product segments, AI allows financial institutions to process multiple contextual signals simultaneously in real-time. It not only considers a customer’s financial relationships with your bank, but also their current location, time of day, device, purchase history, social signals, inferred emotional state (based on interaction patterns), competitive interactions, and immediate needs to create a personalized engagement experience.
During our AI in Banking panel, Scott McQuilkin did a deep dive into practical applications of AI in creating cognitive banking experiences. He explored how banks can utilize existing data to generate proactive insights and actions that customers value, highlighting how advances in AI are enabling the interpretation of complex financial data and translating it into simple, actionable guidance for consumers.
He explained how, compared to personalization of the past, AI-driven contextual engagement adapts moment by moment.
Dig deeper:
- How Agentic AI will Disrupt Retail Banking’s Future
- How Banks Can Build Revenue Engines From Customer Data
- How Agentic AI Will Transform Banking (and Banks)
Customers Want Enhanced Personalization – With Conditions
Customers do want AI-driven personalization, but they want it on their terms. They’re willing to share data for genuinely valuable, personalized experiences – but only with companies they trust, when they understand what they’re getting in return, and when they feel confident their privacy will be protected.
According to Personetics‘ recent Global Consumer Banking Survey, 52% of consumers now rank financial wellness as their top life priority, ahead of both health and family relationships. Additionally, 70% of respondents want their banks to understand their needs through analysis of their daily spending and saving habits. Even more telling: 84% say they would consider switching banks to get AI-driven, contextualized tips and insights, with that number jumping to 95% among Gen Z customers.
When 9 out of 10 young customers say they’ll switch for better financial guidance, that’s no longer a nice-to-have. If you’re not building cognitive capabilities today, your competitors will gladly welcome your customers tomorrow. But, success requires treating privacy and trust-building as core features of the personalization strategy, not afterthoughts.
As President & CEO of the Consumer Bankers Association (CBA), Lindsey Johnson acknowledged that helping consumers have greater control and a deeper understanding of their finances is the ultimate goal. She also shared a regulatory perspective that financial institutions must consider.
“As we talk about AI and personalization and what the future of this industry is, we are thinking about it from a consumer protection lens,” Johnson explained. “How do we meet the consumer’s needs while also being safe and compliant? It’s a delicate balance.” She emphasized that, from a third-party risk management perspective, banks will be held to the highest standard and underscored the importance of “clean, usable data” as the foundation for any cognitive banking initiative.
Technology Is Key, But Bold Leadership Is Required
While the symposium I hosted focused heavily on technological advancements, each speaker emphasized that none of the technology mattered without leadership willing to step beyond legacy thinking and make decisions that might feel uncomfortable but are necessary for progress. During the session, our panel of experts expanded on these themes, offering valuable perspectives on the opportunities and implementation challenges of contextual banking experiences.
The takeaway from the sessions was that if an organization doesn’t build a cognitive banking relationship, it’s missing out. This is because customers and members know that financial institutions collect a vast amount of information throughout their entire relationship. They get frustrated when their bank or credit union doesn’t use it. This frustration manifests in tangible losses, like the staggering 40-60% abandonment rate we see in digital account openings.
Reflecting on the point about leadership, Sumeet Grover noted that, beyond technology, success requires organizational alignment and a culture that embraces data-driven decision-making. Executives also need to champion these initiatives and ensure they’re connected to clear business outcomes. “I cannot lead that alone,” Sumeet emphasized. “My CEO, my CFO, and my Chief People Officer have to be aligned. It has to be more strategic, not just about cost efficiency.”
In a digital world where data flows across thousands of platforms and institutions, organizations can make a meaningful difference. The technology exists. The customer demand is clear. The missing piece is often the courage to do things differently than we’ve done in the past. Banks that wait to adopt cognitive banking risk falling behind both customer expectations and competitors, whether traditional banks, digital-first challengers, or big tech companies entering the financial space.
The Value of Contextual Personalization
Banks implementing future-ready contextual personalization capabilities are seeing measurable results across key metrics – from customer retention to deposit growth to daily engagement. When banks and credit unions shift from simply processing transactions to actively helping customers manage their finances more effectively, engagement soars and relationships deepen.
Consumer expectations continue to be shaped by experiences with companies like Apple, Google, Amazon, and Uber. The imperative for financial institutions to deliver more intelligent and proactive services grows stronger. The future is no longer about just lowering costs – it’s about delivering dramatically better service at lower costs.
This pattern is consistent across markets. Whether we’re looking at established banks in North America, digital-first institutions in Europe, or rapidly growing Asian banks, the outcome is similar: increased engagement and deeper customer relationships. But the road ahead requires both technological investment and cultural change. It means shifting from being product companies to becoming true service providers that put customer financial wellness at the center of the business model.
The good news is that numerous solution providers are ready to help financial institutions become future-ready.
