The General Data Protection Regulation (GDPR) has largely been well integrated into financial services including digital banking. It is the toughest privacy and security law in the world. Though it was drafted and passed by the European Union (EU), it imposes obligations onto organizations anywhere, so long as they target or collect data related to people in the EU. The regulation was put into effect on May 25, 2018. The GDPR levy harsh fines against those who violate its privacy and security standards, with penalties reaching into the tens of millions of euros. After the implementation of the GDPR and the rise of data protection, new opportunities have emerged in the areas listed below:
Due to the implementation of GDPR, the client data has been substantially enhanced. As a result, there is now more public trust in financial institutions. With this, other nations are also wishing to incorporate more data privacy and protections into their banking systems. UK banks and fintech companies are already leading the way internationally, while countries like China, Brazil, and India consider enacting legislation that would provide protections comparable to those provided by the GDPR. Experts anticipate that this will have an international effect, contributing to the evaluation of standards throughout the world and fostering the expansion of digital banking.
Promoting open banking
The GDPR compelled compliance with tighter data handling and security protocols. Additionally, it placed a strong emphasis on customer control of personal data, shifting power towards consumers. At the time of the GDPR’s implementation, open banking had just been available, which prepared the way for a variety of innovative digital banking products and services from non-traditional providers.
Under GDPR, consumers can control which providers have access to their data, how much information is shared, and how long it can be accessed. Digital banking consumers are thus in an advantageous position as a result of the twin initiatives of GDPR and open banking, enabling them to not only protect their data but also voluntarily share that data with third parties and fintech.
Opportunities for innovation
The GDPR’s public debate has contributed to reinforcing data privacy as a key concern in the financial services industry. Indeed, boards and executives are aware of the importance of data to consumers and businesses, as well as how important data privacy is as a social concern. Business executives have evolved in their understanding of data as a result of it now being frequently mentioned as a top priority for boards.
The GDPR is more than just a new tool in the regulatory toolbox for many financial services companies; it also offers real business advantages. It means making more bolder and creative judgments is possible when data protection is included in fundamental development strategies.
Benefits of ethical data
Many consumers, especially Millennials, now consider ethics when looking to buy new goods and services because of technology, more competition, and consumer protection regulations. This emphasis on ethics has also been seen in the business world, where companies are pledging CSR and paying more attention to environmental, social, and governance issues in their supply chains and investments.
Keeping an ethical approach to data is a big benefit in this atmosphere. Financial institutions have complied with the GDPR thoroughly and prioritized the ethical handling of data. This resulted in a succinct and easily comprehensible data policy that consumers can engage with – which is good for keeping customers happy, as well as boosting corporate reputation.
GDPR: A digital defense
Most financial services companies are aware that a data breach is more likely to happen as hackers and malicious actors are growing more skilled. Any hack or cyber breach carries a certain risk of negative repercussions, but the reputational impact is greatly influenced by how such a breach is managed.
The GDPR has strengthened banks’ data operations and the protocols to follow in the case of a breach, which may be crucial for preventing reputational damage and proving to the regulator that they are reliable practices. The GDPR serves as an additional line of defense in the era of digital and open banking, assisting in ensuring the survival of online banking platforms.