Angus McDonald is the Co-Founder and CEO of Cover Genius.
No industry is immune to the AI revolution, but how are brands using this technology to make consumer experiences better? AI was a buzzword in 2024, with nearly $314 billion worth of investment, but I believe that in 2025, we’ll witness more ways in which it can be meaningfully implemented and operationalized.
In the industry of insurance and protection, we’re seeing a move away from blanket policies and toward operationalizing AI to hyper-personalize products for individual needs. These advancements can be applied across the industry, but I have found the implications for digital commerce, finance and travel to be particularly striking.
A New Era For Retail
Digital commerce brands are increasingly expected to provide tailored recommendations and personalized experiences that display an understanding of their customers’ preferences. For example, eMarketer found that “over 70% of U.S. digital retailers believe AI-driven personalization and GenAI will affect their business in 2024.”
Advanced AI and rich data sets now enable retailers to tailor their offerings to individual customers’ needs, and we’re seeing retailers implement everything from AI-powered visual checkout, which can expedite transactions while reducing fraud, to personalized recommendations for warranty protection. For instance, if a customer purchases a fragile item like a phone or tablet, an AI solution can automatically detect that they may want to add accidental damage coverage to their standard warranty.
A Growing Opportunity In Financial Services
Payment providers and banks also have an opportunity to hyper-personalize protection offerings. The extended warranty market is quickly growing and is expected to reach $286.4 billion by 2032, but product protection is no longer limited to just traditional warranties. As e-commerce shopping continues to grow, transactions are becoming linked across retail, banking and financial services, providing new opportunities for protection.
By analyzing customer purchasing behavior, financial service providers can identify those who would benefit from specific types of protection. For example, a customer may require travel insurance if they’ve recently booked an international trip or protection against accidental damage when they purchase a new laptop. I’ve also seen this personalized approach enhance loyalty programs in financial services, as companies can offer tailored perks to customers who have demonstrated a history of repeat business.
The Rise Of Personalization In Travel
Travel is now coming back to post-pandemic levels and even surpassing those levels in some cases. However, a flurry of events has left travelers disappointed in many aspects of the travel experience. From widespread cancellations and delays to a growing demand for more personalized hospitality experiences, travelers are craving an increased degree of attentiveness from airlines, online travel agencies and other providers.
The size of the global customization and personalization in travel market is expected to reach $620.71 million by 2032, helped by a variety of methods available to travel providers for increasing personalization. These can range from offering micro insurance options for weather, gadgets and sports gear to providing eSIMs and lounge passes.
How To Begin Personalizing Your Offerings
If you want to begin the process of implementing personalization products, I recommend first modernizing your company’s tech infrastructure, as these solutions often depend heavily on real-time data and complex API integrations. Here are several best practices to consider:
• Evaluate your current tech infrastructure to understand its functionality, dependencies and limitations. Pinpoint areas that may be hindering your business agility/innovation or creating security vulnerabilities. Also, determine if you need to modernize legacy systems, whether that means updating the current system or completely replacing it with a new platform.
• Utilize cloud platforms. Move your infrastructure, applications and data to cloud platforms that offer scalability, flexibility and cost-efficiency when deploying personalization products.
• Explore and implement emerging technologies like AI and automation. For example, consider using AI tools to analyze data faster for better risk predictions and fraud detection and determine what routine tasks can be automated, such as initial claim processing.
• Work with technology partners. If you don’t have the time, resources and/or investment to update these systems in-house, consider working with a technology provider that has the ability to integrate solutions directly into your company’s online customer experience (rather than linking out to a third party). When looking for a partner, I recommend seeking one that also has a strong history of offering their clients guidance on risk and compliance measures regarding data privacy, customer consent and data ownership.
• Maintain human oversight. While AI can enhance personalization, maintaining human oversight for complex customer interactions or support queries is important for achieving a balanced and effective approach.
Final Thoughts
As we move forward, I believe the evidence shows that the future of retail, travel and financial services lies in hyper-personalization. By thoughtfully deploying AI and leveraging rich data sets, you can enhance the customer journey with tailored experiences that meet the unique needs of each customer, driving loyalty, retention and growth.
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