Personalised Banking: From Impersonal Demographics to a Life-Centric Approach

The banking industry is witnessing a paradigm shift in personalisation. It’s no longer enough to view consumers in terms of demographics and statistics. Basic segmentation has given way to “life-centricity,” where all aspects of their lives are connected in a central hub. For many, this hub is their bank, where finance, lifestyle and future goals intertwine. According to experienced industry players such as Yerbol Orynbayev, independent financial services consultant, banks are missing a trick if they don’t capitalise on this gap in the market by developing all-encompassing apps.

Fortunately, banking institutions across the globe are racing to meet this need. By leveraging advanced analytics and artificial intelligence (AI), banks are working to treat each customer as a unique individual, offering tailored experiences that build loyalty and trust. Together, we’ll explore the rise, evolution and future of personalised banking. So, let’s jump in!

Traditionally, banks have attempted to personalise products and services by relying on demographic data such as age, income, financial bracket and location. While functional, this approach fails to address individual customers’ nuanced needs and aspirations. Accenture’s 2024 Global Banking Report emphasises that modern customers crave personalised interactions that resonate with their life stages, financial goals, and behaviours. They want to feel that their bank knows what they need and tailor their products and services to meet them at their specific stage of life.

In our modern age, where digital tools allow businesses to access, analyse and utilise information like never before, banks must evolve from viewing personalisation as a marketing tool to embedding it as a core business strategy. Viewing customers in their entirety enables banks to build meaningful connections that enhance loyalty and drive growth. They want to stick with service providers that make them feel truly seen and heard rather than merely another number on a spreadsheet.

It’s no secret that the key to achieving life-centric banking lies in the effective utilisation of advanced analytics and AI. These technologies enable financial institutions to analyse vast datasets quickly and efficiently to derive actionable insights at the individual level. Banks, like many data-driven industries, are moving beyond basic data aggregation to create predictive models that anticipate customer needs and offer timely, relevant solutions.

For instance, Bank of America uses AI-powered tools to analyse customer feedback and interactions. This allows the bank to provide personalised recommendations, from savings plans to investment options, tailored to each customer’s financial journey.

Erica is a virtual financial assistant available to Bank of America customers. Using natural language processing grounded in machine learning, Erica can analyse your words, understand your intent and provide the most appropriate responses and personalised insights.

Each time consumers chat with Erica, the system gathers information about the types of responses that are most valuable to them. A team reviews these conversations and updates Erica to ensure the system has access to the latest and most relevant data and information for consumers.

Personalised banking has two major outcomes: it improves customer satisfaction and fosters deeper loyalty. Personalisation is no longer optional as the financial industry’s landscape remains competitive. It has become a competitive necessity. Banks that ignore this and fail to adapt risk becoming irrelevant as customers gravitate towards providers that treat them as individuals rather than account numbers.

While the benefits of life-centric banking are clear, implementing such strategies comes with its own set of challenges. Data privacy concerns, regulatory hurdles and the need for significant technological investment pose significant barriers to adoption. However, forward-thinking banks are addressing these issues by adopting transparent data practices and investing in cutting-edge technology.

The shift to banking that considers the whole individual represents a transformative opportunity for the financial services industry. By leveraging advanced analytics and AI, banks can move beyond simple AI-powered chatbots to offer highly personalised products and services that enhance the consumer experience and resonate on a deeper level.

As the industry evolves, life-centricity will likely become a defining characteristic of successful banks. By embracing this approach, financial institutions can ensure they remain relevant in a competitive and rapidly changing landscape.