Insights

Universities are moving the student experience to the center of their strategy. According to a KPMG survey of 400 university executives and 400 students worldwide, 63% of responding institutions are pursuing personalization of the student experience as a top priority, and 54% regard it as a decisive factor for institutional growth and competitiveness over the next three years. The basis of competition in higher education—long anchored in tuition and research output—is shifting toward the individual student's experience.

Strategic importance is high, but maturity remains low. Only 11% of institutions qualify as Leaders with advanced personalization capabilities, while 30% are fast-following Advancers and 60% remain Planners or Starters at the planning or early-adoption stage. A consensus on strategic importance has formed, but execution capability is concentrated in a small group—a clear polarization.

The impact of personalization is borne out in the data. 73% of institutions report that personalization has improved student engagement, and students at highly personalized institutions are four times more likely to report improved well-being. Students prioritize personalized experiences in the following order: (i) an institution where they are respected as individuals and feel a sense of belonging; (ii) human-centered yet proactive, data-driven academic and career advising; and (iii) experiences that build confidence, independence, and personal growth.

AI sits at the core of execution. 93% of institutions already deploy AI to personalize the student experience, and 58% expect AI to substantially reshape university operations and modes of learning. Institutions plan to allocate 13.3% of next year's operating budget to personalization, covering data warehousing, cloud infrastructure and technology, and the cost of talent and program delivery.

M&A implications. As execution capability in personalization becomes a source of competitive advantage for universities and education companies, deal activity aimed at securing these capabilities is likely to accelerate. First, we expect the 60% of lower-maturity institutions to internalize data and AI capabilities through edtech acquisitions or strategic partnerships rather than building them in-house. Second, bolt-on acquisitions should increase across the personalization value chain—learning management systems, student data platforms, and advising-automation solutions. Third, in cross-domain deals that seek to combine AI capability with educational content and student networks, the key valuation criterion is likely to be the combination of data assets and execution capability, rather than any single technology.