The General Data Protection Regulation (GDPR), implemented May 25, 2018, marked the starting point for significant changes to the way firms and institutions take on the collection, use, sharing, transfer, and storage of personal data across Europe in other regions of the world.
Today, data protection regulations are ever more complex and challenging for financial institutions such as banks or wealth advisory firms.
As mentioned in the survey conducted by Hubbis and Apiax, “The digital age marks the proliferation of data and data compliance protocols that require carefully tuned internal and external processes, increasing demand and use of digital solutions. Investing in internal resources and capabilities is known to drive competitive advantage, innovating compliance with the use of technology can bring compliance to a next level.”
Rising data protection regulations and their challenges
Financial institutions strive to serve a global client base. Among existing and emerging digital client channels, they need to cope with a growing list of ever-changing country-specific regulations and the handling of various types of personal data, such as client personal and sensitive data, internal employee data and more.
Digital channels have become more critical than ever for financial institutions. For many retail banks, online and mobile channels have become almost more important than traditional branches and ATMs.
From new FinTech and RegTech innovations to new ways for clients to consume banking services, the exchange of personal data between organizations and clients has never been more prominent.
In such a fast-paced environment, financial institutions are starting to turn towards digital compliance solutions to leverage competitive advantages and regain confidence when handling personal client data.
Oliver Wyman underlines “data privacy as a top risk, like cyber risk”, urging senior executives to elevate the conversation with their board members.
The challenges of traditional data protection methods
Financial institutions naturally collect and maintain a vast amount of personal data and information related to their clients, prospects and employees.
New technologies significantly increase the amount of data financial institutions can now capture, collect and store. Ensuring regulatory compliance related to these processes has proven to become a fire they are struggling to control.
Digital channels carry considerable benefits in how customers experience financial services. However, they have given rise to an overflowing amount of data, which requires comprehensive compliance checks and procedures.
Financial institutions have been struggling to keep up with the complexity of client-data-related activities. In a data protection study conducted by Apiax, we present and compare how the topic challenges the financial services industry in Europe and APAC.
According to the survey, in the APAC region, the transfer of personal data continues to be a key challenge for many organisations. 70% of survey respondents reported this as their most significant issue in data protection, followed by data transfer challenges (23% of respondents) and inventory of personal data (7% of respondents).
Interestingly, we found that for European countries, data processing seems to be the biggest struggle regarding data protection. 53 % of respondents mentioned this as one of the critical areas they need help with, whereas 27% of respondents explained the transferring of data to be their more significant issue.
Bottom line, the financial services industry is not equipped with the most efficient tools to process data protection-related compliance requirements.
Overcoming the challenges with digital data protection compliance solutions
Undoubtedly, today’s traditional data protection procedures and cumbersome methods of preventing non-compliant scenarios are costing financial institutions an extreme amount of time, money and even clients. Simply stated, traditional frameworks used in the past have become obsolete for the fast-changing digital age we conduct business in today.
Compliance experts need to start to become digitally equipped with tools that allow them to support and advise internal stakeholders on how to spot regulatory requirements and how to tackle such requirements.
Compliance must be part of that digital journey in order to empower businesses most effectively in a compliant environment. Furthermore, compliance experts must involve themselves in the broadest sense to help ensure that technology and software solutions are both fit for purpose and secure.
At the end of the day, digital data protection regulations allow financial institutions to spot business-related data risks more efficiently and empower teams across the company by delivering faster answers to their regulatory questions.
A well-integrated digital compliance solution enables compliant data protection without cumbersome interactions and processes. This allows financial institutions to focus on the customer experience and leverage a next-level competitive advantage.