Customers in Control: What Personalized Banking Means Now

Bankers have long talked about personalization as a strategy to attract new consumers and keep existing customers engaged. Emmanuel Daniel, author and global banking influencer, says most banks and credit unions conceive of personalization as customizing what they offer, but customers instead want creative control to assemble the products and services they will buy.

Banking personalization — despite all its intricacies and philosophical complexities — can be summarized using a single metaphor, says Emmanuel Daniel, an author, global banking influencer and founder of The Asian Banker.

Daniel compares it to ice. Not ice as an element exactly, but the ice business.

Think of it this way: Ice wasn’t always as popular or accessible as it is in the 21st century. In the decades before electricity became widely used in households, ice had to be sawed loose and hauled in big chunks out of lakes and rivers. Transporting blocks of frozen water was a big business. Ice was a prized commodity — a merchant’s dream.

Now, thanks to refrigeration, people have the ability and know-how to make ice as frequently as they want. The middleman is virtually removed, except for gas stations and grocery stores, which have other primary services.

“Refrigeration is the personalization of ice,” says Daniel. What changed the ice business from commodity to personal product was a synthetic chemical called chlorofluorocarbon, more often known by the brand name Freon (now heavily restricted for environmental reasons).

Speaking with Jim Marous in a Banking Transformed podcast, Daniel argues the age of personalization will soon overtake the traditional era in banking — something most financial institutions are not ready for despite years of talking about it.

Just as “personalized ice” wiped out the ice merchant and warehouse industry, the personalization trend will bring a similar downfall if banks and credit unions don’t learn the dynamics of strong customer personalization tactics in the coming years. In short, financial institutions have to figure out what the Freon of finance will be in the future.

Following the podcast discussion with Marous, who is Co-Publisher of The Financial Brand and CEO of the Digital Banking Report, Daniel elaborated on his ideas on personalization in the banking industry during an interview. He also explores the topic in his new book “The Great Transition: The Personalization of Finance Is Here.”

3 Key Takeaways From Emmanuel Daniel


  1. Personalization isn’t about banks designing personalized banking products. It’s about being a core part of a customer’s personalized banking experience.
  2. Banks and credit unions that are in control of consumer identities will win the digital banking race.
  3. Strong personalization in banking isn’t solely about technology. But, APIs (application programming interfaces) are a critical part of getting customers to trust financial institutions with their personal financial data.

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Where Did the Ice Analogy of Banking Personalization Come From?

If you ring Daniel, he might be in Singapore, Beijing or New York — all three of which he calls home at different times of the year. Or he could also be headed for one of the 90+ countries he has yet to visit, on top of the 100 he has been to so far.

His travels might seem irrelevant for bankers at first glance, but his world treks have offered him a deeper look at how consumers interact with financial institutions globally. The ice analogy is only one invoked by his travels, reaffirmed after a recent stroll in Guyana, where he snapped a photo of an old ice warehouse that stood empty.

If banks and credit unions aren’t careful, Daniel warns they could be walking the same path.

Daniel says banks and credit unions need to adopt a philosophical perspective shift more than anything. Instead of looking at personalization as a way to improve individual existing products, financial institutions should look at personalization through the eyes of the customer. It’s not a supply problem to solve — it’s a demand one.

“The personalization I am talking about is the user-side definition, which is that I, the customer, get to decide what the product should be in the first place,” Daniel explains. “This is something people who are on the institution side really need to start harnessing into their thinking, that personalization is not about the institution or the product.” Instead, “it’s on the user, on the community, on the demand side of the equation.”

Daniel sees personalization elevating to a central strategy in banking. Until recently, he explains, personalization has depended largely on customers’ willingness to put their data on a bank’s platform so that the bank could figure out what to offer. But that willingness is “slowly eroding” because customers want greater control to build their own personalized product.

Learn More: How to Build Humanized Digital Banking through Personalization

What Is the Key To Bank Personalization, Then?

The way Daniel sees it, there are three elements to finding the “chlorofluorocarbon of finance”: identity, non-repudiation and a strong credit profile.

The identity component is of particular importance, because, he asserts, whoever controls identity controls finance. But what exactly does it mean to control identity?

What many financial institutions struggle to realize is that while people have one physical identity (there’s “only one me and there’s only one you,” Daniel says) in a digital world, they may have multiple identities.

For example, if identifying information is lodged in a blockchain, that’s one identity. But in another blockchain ecosystem, the same person may have a different identity.

Evolving ID:

People have multiple identities — including in blockchains. Knowing that is critical for banks to win in the data game.

“That whole identity dimension is a work in progress that is going to be taking shape as we go along,” Daniel says, adding there is more at play than what financial institutions can control. “Some of it will depend on what regulators allow people to do. Some of it is technology.”

“Identity is becoming complex, but what eventually transpires and becomes commercially viable is the combination of the technology, as well as the platforms on which the business models will evolve,” Daniel explains. He says platforms will remain relevant, but not in the way corporations have grown used to them in the past several decades.

Building a Strong Banking Customer Identity

There’s some good and bad news for legacy banks in the personalization dialogue.

The good news: It’s not all about refining the technology. There’s more to the banking customer experience that will keep people returning to traditional financial institutions over fintech and tech-based disruptors. Daniel points to a dependable deposit-focused strategy.

“Traditional bankers will resonate with this: the most profitable banks around the world and in the U.S. have been the banks with a strong deposit base and not an asset base,” he says.

This deposit-gathering capability spurs profitability, something nearly all digital banks and disruptor fintechs lack, and will eventually fall apart without.

“It’s not even the technology they’re using,” Daniel says of the digital banks. “It’s ‘I give a higher rate, and therefore I win for a few months.’ And then the next digital bank that’s funded by venture capital comes in and gives a better rate. That’s an unsustainable business model.”

The bad news: It’s not all about technology, but it still is a major component to banking’s success in becoming a part of a customer’s personalized banking experience. Daniel says banks and credit unions are missing the boat in the APIs they’re installing — which could set them back against future competitors.

Traditional financial institutions initially missed the point of an API when they first became popular, a mistake banks can’t afford to make again. “APIs were meant for the users of financial services to define how they wanted to interact with the bank,” Daniel says, not as a patchwork solution for internal tech issues.

A strong API is key to gathering consumer data that can aid in the building of consumer identities. Daniel uses the gaming community as an example.

“Microsoft and Adobe [have created] a platform where people can create their own games to connect with the platform,” he explains. “That’s personalization where the user defines how they want to relate to the institution.”

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