Personalization vs. Privacy: Consumer Trust in AI-Driven Banking Marketing

Artificial intelligence (AI) has transformed the banking sector, enabling highly personalized marketing strategies that improve customer engagement and business performance. AI allows banks to provide tailored credit, loan, and investment products by analyzing financial behavior. While personalization enhances customer satisfaction and loyalty, it simultaneously raises critical concerns about privacy, transparency, and trust. Sensitive financial data, opaque algorithms, and aggressive targeting create risks of consumer discomfort, regulatory penalties, and reputational damage. Frameworks such as the European Union’s General Data Protection Regulation (GDPR) and California’s Consumer Privacy Act (CCPA) provide a foundation for safeguarding consumer rights, emphasizing transparency, consent, and accountability. This paper argues that personalization and privacy must be treated as interdependent rather than competing priorities. Banks that integrate transparency, consent-driven data practices, and explainable AI into their marketing strategies can balance innovation with responsibility, positioning privacy not as a regulatory hurdle but as a competitive advantage in fostering consumer trust.