Navigating GDPR in fintech companies

Morling Consulting continuously undertakes assignments for fintech companies where we apply GDPR. We are here to provide counseling on issues that require knowledge of how financial regulations and GDPR interact, such as the limitations of what is required under the anti-money laundering regulations.

GDPR (the General Data Protection Regulation) has a significant impact on the fintech sector, where processing of personal data is central to many companies. GDPR, in force since 2018, is a general legislation aimed at strengthening the protection of personal data for all individuals within the EU and EEA. For fintech companies, which often have innovative business models, this means a range of challenges in ensuring compliance, as the requirements are generally designed and often difficult to apply, especially in financial businesses.

All processing of personal data must be carried out according to the seven principles listed in GDPR. These are:

• Personal data shall be processed lawfully, fairly, and transparently in relation to the data subject.
• Personal data shall be collected for specified, explicit, and legitimate purposes and not further processed in a manner that is incompatible with those purposes.
• Personal data shall be adequate, relevant, and limited to what is necessary in relation to the purposes for which they are processed.
• Personal data shall be accurate and kept up to date. Every reasonable step must be taken to ensure that personal data that is inaccurate, having regard to the purposes for which they are processed, are erased or rectified without delay.
• Personal data shall not be stored for a longer period than is necessary for the purposes for which the personal data are processed.
• Personal data shall be processed in a manner that ensures appropriate security of the personal data, including protection against unauthorized or unlawful processing and against accidental loss, destruction, or damage, using appropriate technical or organizational measures.
• The controller shall be responsible for and able to demonstrate compliance with these principles.

For fintech companies, which often collect and processes large amounts of data to offer personalized and automated financial services, these principles are particularly relevant. Companies must ensure that the processing of personal data is in accordance with these principles and other requirements of GDPR. This requires clear communication with users and robust mechanisms to ensure compliance.

The key to user’s trust in fintech services

The GDPR imposes high requirements on data security. Fintech companies often handle sensitive financial information, making them attractive targets for cyberattacks. GDPR requires companies to implement appropriate technical and organizational measures to protect personal data against unauthorized access, loss, or damage. This can include encryption or pseudonymization, regular security audits, and staff training in data protection issues.

GDPR grants individuals the right to access their personal data, correct inaccurate data, and request the erasure of their data, also known as the “right to be forgotten”. These rights are often challenging in operations that handle large amounts personal data and require the correct level of verification of the individual’s identity before disclosing information. Fintech companies need to have effective processes in place to handle such requests and ensure that these rights are respected.

GDPR also has strict rules on data transfers outside the EU/EEA, so-called third-country transfers. Fintech companies operating internationally must ensure that personal data transferred to third countries have an adequate level of protection, which may require the use of standard contractual clauses or other safeguards.

Build your fintech operations for the future

GDPR has a pervasive impact on the fintech sector, requiring companies to carefully consider and adapt their data protection routines. By complying with GDPR, fintech companies can not only avoid potential sanctions but also build trust with their customers by demonstrating that they take their privacy seriously. This trust is crucial for long-term success in a competitive and rapidly changing market.

Feel free to contact Morling Consulting if your business needs hands-on experience in personal data processing in financial operations!