AI-driven personalization in consumer finance

Executive summary

Artificial Intelligence (AI) has revolutionized numerous industries, and consumer finance is no exception. AI-driven hyper-personalization—tailoring financial services and products based on individual preferences and behaviors—holds immense potential. However, despite these advancements, a significant trust gap exists. Americans remain largely unfamiliar with AI-powered financial solutions, adoption rates are low, and concerns over data privacy persist (Figure 1). Empower's "Trust in technology: AI-driven personalization in consumer finance study” delves into the challenges and opportunities for AI-driven personalization in consumer finance.

a) Low consumer awareness:

• Two in three Americans (64%) are unfamiliar with AI-driven hyper-personalization in financial services.

• One in three Millennials and high-income earners ($100k+) are most familiar with hyper-personalization, while Baby Boomers are the least familiar.

b) Privacy and security are the key barriers to adoption:

• Despite technological advancements, only 7% of Americans say they use AI-driven financial planning tools.

• While 26% see value in AI-personalized financial services, 59% cite data privacy and security concerns as major barriers.

c) Americans demand transparency and control:

• 29% of Americans want clearer data usage disclosures from financial institutions.
• 18% prefer AI-driven financial recommendations with manual adjustments.

Low consumer awareness. Privacy and security are the key barriers to adoption. Americans demand transparency and control.

The hidden potential of hyper-personalization

Nearly two in three Americans (64%) are unfamiliar with hyper-personalization in financial services, underscoring a substantial education gap (Figure 2). Demographics play a role – awareness is higher among Millennials and high-income earners ($100k+), while Baby Boomers are the least familiar. But overall adoption lags innovation – despite industry advancements, only 7% of Americans use AI-driven financial planning tools. Privacy concerns create barriers – while 26% see value in personalized financial services, 59% cite data privacy and security as key concerns, making trust a significant hurdle.

How familiar are you with the concept of hyper-personalization in financial services? 64% not familiar at all. 17% heard of it, but don't fully understand it. 11% somewhat familiar. 8% Very familiar.

Many Americans recognize the value of AI-driven personalization in consumer finance

More than a quarter of Americans (26%) recognize and acknowledge the value of hyper-personalization in improving financial decision-making (Figure 3). Younger generations see the most value – while one in four Gen Z (24%) cite better financial decision-making as the primary advantage, one in five Millennials (22%) highlight improved savings and budgeting habits. Digital banking apps (40%) are popular among Millennials, while Gen Z follows closely (34%). Credit monitoring tools (20%) are the most widely used AI-powered financial tool among Baby Boomers.

Privacy and security are the primary roadblocks

Three in five Americans (59%) express strong concerns over data privacy and security, with one in three Americans (33%) stating they are "very concerned" (Figure 4). Baby Boomers are the most apprehensive, particularly regarding AI-driven financial tools. 

Driving consumer comfort with privacy and security

37% of Americans demand stronger privacy and security safeguards (Figure 5). 29% want clearer explanations of how their data is used. Two in five Baby Boomers (41%) and Gen Xers (40%) are the most concerned about data security. Gen Z is the most likely generation (15%) to already trust AI-powered financial tools, indicating a potential shift in future adoption.

The future of AI in consumer finance: Automation with oversight

Human-AI collaboration is preferred – Americans are more likely to trust AI-driven financial tools if they include human oversight (Figure 6). About one in five Americans (18%) would prefer AI-generated recommendations that allow for manual adjustments.

Americans demand practical benefits in AI-driven financial tools

Two in five Americans (19%) favor AI-powered real-time budgeting assistance and personalized investment recommendations (Figure 7). Nearly one in five Gen Z Americans (18%) would be more likely to adopt AI-driven financial tools if they provided real-time budgeting assistance.