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."

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.