The fintech industry is evolving at a rapid pace, and fintech SaaS platforms are gathering more data than ever before to provide users with a better experience. As fintech companies leverage data to understand their customers better, as well as making use of new innovative tech tools such as AI, block chain, cloud computing and the internet of things, there is a growing risk of data breaches that can lead to significant financial and reputational harm.
Data privacy is crucial in the competitive fintech industry where companies must differentiate themselves by gathering more customer information to personalize their offerings better. However, with the increasing volume of personal and sensitive information that fintech SaaS companies process and use, data privacy becomes even more critical, and businesses must improve their security and data breach measures to avoid negative consequences.
It is essential to have strong and robust data privacy security measures to avoid losing customer confidence, reputation damage, and facing potential lawsuits from regulators. To simplify the understanding of data privacy concepts, check out our International Data Protection Cheat Sheet here.
Personalized data is becoming increasingly common as fintech businesses seek to enhance the user experience through customization. However, fintech businesses must avoid overzealous pursuit of personalized data to protect the user’s data privacy, as users may feel uncomfortable if their data privacy is invaded. With the increasing use of advanced AI algorithms and extensive data storage required for personalisation, there are now more potential entry points for hackers, with potentially damaging data breaches and significant financial losses.
Furthermore, the issue of specific use can be challenging for FinTech companies. What happens when personalised data is used for an alternative purpose or held for longer than necessary? To address this, businesses can use a ‘pre-emptive notice of an intention,’ which outlines their intent to use data for an alternative purpose and protects against data misuse claims. This notice should be communicated explicitly and clearly, using simple language that the data subject can understand. The notice should also provide options for the data subject to opt-out of the secondary use.
For example, a FinTech company may collect personal information, such as the user’s name, address, and credit card details, to process a loan application. However, they may also want to use this information to promote other financial products to the user. In this case, the company can provide a pre-emptive notice of intention, explaining that they may use the user’s data for marketing purposes. The user can then choose whether to opt-in or opt-out of this secondary use.
Another example could be a FinTech app that collects data about a user’s spending habits to offer them tailored financial advice. The app may also want to use this data to target the user with personalized ads. By providing a pre-emptive notice of intention, the company can inform the user that their data may be used for advertising purposes and give them the option to opt-out.
In today’s fast-paced business world, sharing data with third-party entities is often necessary to achieve greater efficiency and offer personalized customer experiences. Fintech SaaS companies often find themselves as the data processors, collecting, storing, and transferring data in accordance with a controller’s instructions.
It’s crucial to take adequate security measures as both the data controller and data processor can face joint liability for data breaches. In the event that a third party mishandles data that you provided, your business could suffer severe commercial and reputational damage. Therefore, before sharing data, it’s essential to ensure that your commercial arrangements, such as contracts, cover how personal information will be handled. Additionally, if the third party is located offshore, businesses must consider international requirements and obligations that may apply.
Data Breach processes and training
In today’s fast-paced, interconnected world, protecting personal and sensitive data is crucial for fintech SaaS companies. While automated data loss prevention and data breach prevention tools are effective in safeguarding against cyber attacks, they may not always be enough. That’s why providing proper employee training on data theft prevention and personal and sensitive data handling is equally essential.
Hackers and cybercriminals are always on the lookout for new ways to circumvent security measures, so continuous learning and improvement are vital. A good approach is to have a robust incident-response plan in place that has been developed through trial-and-error and iterative learning processes. For example, simulated attacks by in-house cybersecurity experts can help identify gaps in the security system and fine-tune the incident-response plan.
Having a comprehensive security system and trained employees can also help build a positive relationship with regulators and demonstrate your company’s commitment to data security. This, in turn, can help your company meet regulatory requirements and reduce the risk of fines and legal action.
How Biztech Lawyers can help you protect Data Privacy
Protecting data privacy is critical for businesses, especially in the FinTech industry. At Biztech Lawyers, we understand the importance of strategic data management, and we can help you navigate the complex landscape of data protection, cyber risk, system security, reporting, and audit requirements.
We stay up to date with the latest emerging data privacy legislation, including GDPR, and provide you with comprehensive solutions to ensure your business is compliant. Our experienced team has a wealth of background experiences in managing data, privacy, cyber, and information security across all industries and sectors, with a strong focus on FinTech companies.
By partnering with Biztech Lawyers, you can future-proof your business and stay ahead of the competition in the accelerating global landscape. Our goal is to provide you with the peace of mind that comes with knowing you are adhering to the latest regulatory and legislative requirements, enabling you to focus on growing your business.
If you need support with data privacy or cyber risk management, get in touch with us today. We’re here to help you succeed.