Welcome to the Anonymously Personalized Banking Era

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Welcome to the Anonymously Personalized Banking Era
 
Key takeaways:
  • Banking products need to become more convenient and accessible, but also not compromise on security.
  • Banks need to create customer avatars that leverage edge computing to generate insight that’s detached from personally identifiable information.
  • This new paradigm is called Anonymous Personalization, where customers can receive targeted engagement based on habits or preferences without ever having to reveal their identities.

As anyone who has ever played online games can attest, creating avatars is a great way to engage while keeping your identity private.

You input real information about your preferences, but you can keep your personal identity concealed. However, you can also share whatever information you want with fellow gamers in chat rooms. This avatar creation allows for personalization – such as in-game interactions relevant to your gameplay – while giving you total control over who knows your real identity.

I hope banks take a lesson here.

Banks are swirling in data, but right now they have the challenge of attaching it to an identity. This creates a lot of concerns around compliance, data sovereignty, and cybersecurity. But it doesn’t need to be this way.

I call the next step the Anonymously Personalized era. Here’s what it looks like.

 

Stop pulling data and start questioning it

Right now, if a bank wants to analyze someone’s spending habits, it needs to pull data – physically move (or copy) it into a different database – to analyze. The problem is this process contains (and moves) personally identifiable information, which is the crux of the “security versus convenience” argument.

The argument goes that if you want the convenience that comes with good marketing analysis, you have to forgo security. But we need to change the paradigm to match our new reality. It’s no longer security or convenience, but security and convenience, accomplished by anonymous personalization.

Computing capabilities have evolved such that it’s no longer about pulling data to an analysis database. Instead, edge computing allows us to “question” data for the insight we need while keeping the rest private. It’s a lot like asking someone questions from behind a curtain who always tells the truth. You can learn anything you need about that person’s preferences or habits without ever learning their actual identity.

In the banking world, this turns data from “John purchased X and Jane purchased Y” into “This person purchased X and this other person purchased Y.” Preferences and activities are encoded but identities remain private.

 

Building a trustless middle

Questioning data means that every customer has an avatar, very similar to the online gaming world, where their identities are private even as their preferences are known.

This small deviation – disconnecting identity from preference and using avatars instead of personally identifiable information – creates a “trustless middle” in three steps:

1. Avatar creation: This avatar is a digital representation of you and can be segmented based on your habits, preferences, and other insights gleaned from questioning data about you. However, it’s also randomized and detached from you the moment insights are generated, making it significantly more secure, easier to protect, and worthless to hackers in the first place.

2. Avatar mapping: Preferences, batched into segments (think: “All people who like X based on Y purchase” or “People who have Z product”) are then mapped across all products and services offered by a bank or its partners, both your activity directly and what your activity suggests about you is mapped without revealing identity.

3. Engagement opportunities: People receive different engagement opportunities based on their interests or spending habits, sent directly to emails on file or to an app. This last step – the “anonymous personalization” – is done through technology, not humans. The engagement opportunity is sent to all avatars within a segment. The avatar profile then sends to the relevant actual human automatically without disclosing identity or contact information.

Within this model, personal information is hidden behind avatars and tied to segments. For example, a reach out about a mortgage. In traditional circumstances, a bank would need to know your identity in order to make a recommendation in a branch or similar environment. In an anonymous personalization world, all people who paid for home inspections but don’t have a mortgage would receive a notification asking if they need mortgage assistance. If they respond, they get connected to a real person who knows their identity. If they don’t, nothing happens and privacy is maintained. In this scenario, no one knows who you are, just that your habits suggest you may want to take advantage of the offer.

On the customer side, everything is optional. No one has to accept any engagement opportunity they don’t want to, people can give feedback to refine what kinds of engagements they get over time, and people are also given the option to not receive any communications at all. In the end, this system provides more choice, convenience, and optionality to customers without compromising security.

 

The era of anonymous personalization

Anonymous personalization is the new way we must build financial products. Not only is it more secure (which reduces security costs), it also respects data sovereignty for customers. As open banking continues – and even if it doesn’t end up happening fully – individuals want more control over their data and expect to benefit if they are sharing it. With anonymous personalization, this is built in from the start in a way that benefits anyone.

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