Much Ado About Banking Data Privacy Regulations
Financial services organizations are a prime target for data breaches because of the potentially lucrative pickings for criminals, and data security in the banking sector is under siege. As a result, and because of a number of other negative consequences – financial, legal and reputational – of data breaches, all of which affect a company’s bottom line, the banking industry is compelled to focus on protecting customers’ personal data, or potentially lose money and customers.
The Future of Data Privacy in the Banking Sector
In the past few years, laws like the GDPR (Europe’s General Data Protection Regulations), CCPA (the California Consumer Privacy Act), LGPD (Brazil’s Lei Geral de Proteção de Dados), POPII (South Africa’s Protection of Personal information regulations), and PIPL (China's Personal Information Protection Law) have come into effect or been tightened.
Privacy regulations do not only affect banks and other financial organizations operating nationally. Most of these laws affect any organisation targeting a foreign market even if they do not have a presence there. These laws are also designed to protect anyone living or visiting a country, not only nationalised citizens. Unless a business is community based, they are likely to be affected by privacy laws.
Experts predict that privacy legislation is set to grow exponentially as countries, and independent states, adopt ever more stringent regulations. It behoves businesses to take the initiative in securing customer data before government forces them to do so, before they have to pay heavy fines for not doing so, and before they are sued by customers whose data is breached.
In addition, without complying with data privacy regulations, banks and financial institutions may well find their aspirations to expand their products and services globally curtailed, their reputations bombing on social media sites, and their ability to compete with other financial service organizations throttled.
Levelling the Privacy Playing Fields
According to Gartner, by 2023 65 percent of the world’s population will have its personal data covered by some privacy regulations.
A 2020 DLA Piper: GDPR data breach survey reported that between May 2018 and January 2020, there were 160,921 personal data breaches, with total fines of about 220-million Euros.
Even without taking potential lawsuits into account, there is a large cost involved in protecting personal data.
Security and Privacy Issues in Banking
Data privacy automation can help banks and financial enterprises to keep pace with new regulations, utilizing the latest technologies. Gaining ground are techniques like anonymization, the process of protecting personal or sensitive information by de-identifying or encrypting information that connects people to their data.
Anonymization is not just a guard against cybercrime. For example, banks may use data anonymization to share information externally – like statistics about customer loans – without disclosing individual customers' indebtedness. Google, for instance, uses anonymization to share information about buying trends to marketers and retailers without revealing the identity of the platforms' users. In these examples, anonymization becomes not only vital for security, but a powerful and competitive marketing tool.