Two years have passed since the entry into force of the General Data Protection Regulation (GDPR), which has provoked unrest, misunderstandings and disinformation flows not only in the European Union but also around the world.
If you are planning to register a fintech company or obtain a financial license in Europe, you should be aware of the impact of GDPR on the financial services sector. Data digitization and open banking - these and other innovations have complicated the already difficult privacy situation in the financial sector. And although many concerns have been dispelled to date, confidentiality in digital banking remains an unresolved issue.
Confidentiality as a competitive advantage
When planning to register a fintech company, keep in mind that companies operating in the digital industry value customer trust very much. And one of the best ways to build that trust is to show customers that secure data processing methods are used.
A company that can offer original solutions to privacy issues will be in a better competitive position in the digital financial services market than institutions that do not pay enough attention to this issue.
Security and trust
In today's world, no one will be surprised by data leakage, illegal use of personal information, theft of virtual currencies, etc. In such circumstances, an increasing number of users are interested in their rights and risks of providing personal data. Without exaggeration, confidentiality has become one of the main concerns of the public.
Confidence in digital banking and financial technology has shifted in a positive way, and consumers need to look at banking and related services from a different angle. We mean, the interaction with a financial institution in the modern world is on a different level than even 5 years ago.
Another key part of building and maintaining trust is training. If you set up a cryptocurrency exchange in Switzerland, or, for example, become an e-money provider in Europe, there is always a risk of a hacker attack. This type of attacker is becoming more sophisticated and inventive every day, and most companies and consumers recognize that an attack is not a case of "if" but "when".
Ethical issues are becoming increasingly important when it comes to registering a financial company in Europe. Consumers increasingly want the businesses they interact with to be ethical and to store their customers' data securely. Accordingly, ethics and confidentiality are interrelated, and having the former will allow customers to better understand the importance of confidentiality, and to show confidence in a financial institution.
Open banking is transparency, control in the hands of the client, and secure data exchange - that is, everything that is part of the concept of confidentiality. At the same time, open banking is also something new for users, and society has yet to form an understanding of how this technology works.
Therefore, the task of entrepreneurs who plan to register a company for financial services is to find a balance between the requirements of the GDPR and the principles of open banking, as well as convincing their customers that their money and their transactions are safe.
Consumer trust is crucial for anyone who decides to become a digital financial services provider. And a significant force in building this trust is the client's confidence in how his personal information is processed.
And if decision-makers see the GDPR as an obstacle, innovation will stop. Conversely, the perception of it as a tool for the safe use of customer data will open up new opportunities for creative solutions that promote innovation.
If you still have questions about the subject of the article, legal professionals from IQ Decision UK are ready to provide personal advice, as well as provide legal assistance in registering a company for financial activities in Europe, obtaining licenses and other permits, as well as provide other related services. For more information and to order a consultation on fintech regulation in the EU, please contact us using contacts below.