How Customer Privacy Concerns Influence the Relationship between AI-Driven Personalization and User Experience in Digital Banking

AI-driven personalization is increasingly used in digital banking to enhance user experience by delivering tailored services and recommendations. However, growing customer privacy concerns present a critical challenge, potentially altering how users perceive and respond to these personalized services. This study addresses the problem of how privacy concerns influence the relationship between AI-driven personalization and user experience in digital banking. The main objective of this study is to examine whether customer privacy concerns moderate or mediate the impact of personalization on user experience, particularly in terms of trust, satisfaction, and service acceptance. To achieve this, the study proposes a conceptual model supported by a mixed-methods research design, including a survey-based quantitative approach targeting approximately 300 digital banking users, complemented by qualitative insights from follow-up interviews. The findings suggest that while AI-driven personalization generally improves user experience, its positive effects may be weakened when privacy concerns are high. This reflects the personalization–privacy paradox, where users desire personalized services but remain cautious about data usage. The study highlights the importance of integrating privacy-aware design and transparency into personalization strategies.