On 25 May 2018, the EU enforced the General Data Protection Regulation (GDPR), adding a new twist to its complex regulatory environment. The GDPR compliance rulebook addresses the issue of digital privacy head-on. It places in the hands of EU residents absolute control over who owns and manages their personal data anywhere in the world.
Naturally, financial institutions (FIs), who own and exploit troves of client data, will have to undertake a comprehensive approach to meet the compliance requirements of GDPR.
Financial institutions with international operations need to develop an understanding of how GDPR alters their day-to-day operations organization-wide. It’s not an issue that any organization can afford to ignore. Those that don’t comply with GDPR are exposed to fines of up to 4 percent of their annual global turnover, or a maximum of €20 million, whichever is greater.
The steps FIs will need to take are easier to understand than to comply with. They need to start by forming a dedicated team to ensure that GDPR is operational throughout the organization. This requires a holistic approach that engages all stakeholders, including top management, legal teams, security, marketing, investors, data architects and enterprise system designers. They all need to get on the wagon. In effect, GDPR would require the teams of IT and networks to develop settings that lock personally identifiable information (PII) by default. For most medium sized and big institutions being GDPR compliant is best accomplished by tapping into the knowledge of outside consultants and experts that have the necessary regulatory knowledge. This holistic approach ensures that all employees are dedicated to improving the transparency of any customer data connected to EU citizens.
Furthermore, and per client-product interaction, FIs could also give customers easy access to their personal data to manage privacy more effectively. The easiest approach to empowering customers in a direct access method is an application program interface or API, which a bank can easily develop and offer to clients on their digital customer service platforms.
An organizations will also need to locate and collect all the data it has on its European customers, anywhere it finds it on its servers, and work its way up from there.
If FIs want to go the extra mile in easing GDPR compliance, they could train their call center operators to assess clients in managing their personal data and privacy. Ultimately, GDPR requires all companies handling the personal data of EU citizens to delete personal data, then ensure that each user with EU citizenship has complete control of his or her private data and are aware of these rights.
The availability of intelligent data management systems for FIs makes the road to GDPR compliance much easier to accomplish. Some experts see GDRP bringing the best of institutions and giving them a reason to get their customer data in order and enhance their understanding of customer needs.
The EU has certainly been the first to regulate client-business privacy relationships. In the wake of the user personal data breaches that got Facebook in hot waters recently, internet users are in dire needs for real and effective data protection laws. In the last decade or so, social data has assumed a mighty powerful asset class value. Companies started to increase the methods by which they collect customer data. Data scientist teams then set up the systems that analyze the reams of the collected consumer data to gain specific profitable insights.
GDPR does not work well with Artificial intelligence (AI), which has proliferated in most industries now. AI relies on the availability of massive data sets to function well and GDPR goes counterintuitive where it comes to processing data for better customer understanding and better product design. The impact of GDPR on the digital economy is yet to be analyzed and understood, but future adjustments might follow up to dampen its impact on the technological future of Europe and beyond.
In the current state of the global digital economy, data availability translates to future wealth. GDPR is masterstroke for effectively protecting personal data and it’s already spreading across different jurisdictions. In this age of data driven businesses, the cost of such strict privacy regulations to markets remains to be seen.