The GDPR which stands for ‘General Data Protection Regulation’ is a set of laws that are governing the storage and usage of the important customer information and data by businesses operating within Europe.
However, the GDPR compliance requires a lot of transparency from the businesses to their customers regarding the collection, the usage, and the storage of their personal data. Moreover, it also requires the data that is no longer in use to dispose it safely and if there is any data breach then it should be reported to the relevant authorities within 72 hours.
Although, these additional regulations have proven challenging for the businesses to comply with, the Fintech companies are proving to be better positioned for the GDPR compliance in comparison of the more established financial institutions such as banks. However, this blog will highlight the competitive advantages that the FinTech companies will be getting from the GDPR laws.
What are the GDPR Results in a More Privacy-Conscious Customer Base?
The GDPR regulations are a reactive set of laws because prior to the GDPR laws, there had been numerous high-profile data breaches that took place on a global scale and which also resulted in customer data to be fallen into the wrong hands.
In fact, some businesses were also unethical in the terms of how they exploit their customer data in their marketing efforts and as today’s consumer is a tech-savvy consumer and they are aware of the dangers that data breaches can expose them to.
Hence, as a result the more vigilant customer base will more likely trust the brands that are perceived as being tech-savvy. Well, this is the place where the FinTech companies get an advantage over their competitors that are more established and are traditional financial institutions.
With the GDPR compliant Fintech Companies, a consumer can be rest assured about the data security as now they know that the FinTech Company is equipped with the best data handling processes and their entire business model is reliant the latest technology. Moreover,
Being GDPR Compliant is Less Costly for Fintech Companies –
In general, the GDPR compliance is considered to be very costly and time-consuming process. Because to be a GDPR compliant company, an organization needs to –
- Restructure its entire data collection,
- Its data handling, and
- Its storage infrastructure among other things.
Moreover, new data destruction policies have also to be put in place for ensuring that the customer data is safely disposed of.
Therefore, some large established financial institutions such as the multinational banks etc. might require a few months or even years to become the GDPR compliant. Talking about the starters, most of the starters store their data in numerous locations which are governed by the different jurisdictions. And, all of these different jurisdictions might have different data handling laws.
However, this is not a problem faced by the FinTech companies because –
- Most of their businesses are conducted online and they already have their data storage streamlined for serving their customers better.
- Moreover, data destruction is also not a big issue with the FinTech Companies because most of the online servers have the right tools to ensure the GDPR compliance.
- However, when it comes to the destruction of the physical drives, in that case also there are many affordable options such as the degaussing and the physical destruction of the drives.
So, all and all for the FinTech companies, the GDPR compliance is a cheaper and faster process and it gives these companies a competitive advantage.
- Implementing New Policies is More Agile Process with Fintech Companies –
GDPR compliance not just involves a process of replacing the technological infrastructure that a business relies on for handling and storing their customers’ data but it also requires a business to effectively overhaul the entire data management policy of the business. This further involves retraining all the employees especially the ones who come into the contact with the customer data for ensuring that they are well aware of their new duties and responsibilities while their company being GDPR compliant.
However, this is a lengthy and time-consuming process and there are chances that some of the employees might also face some difficulties while transitioning to the new rules. But in case of the FinTech companies, such companies will find it easier to adapt to this new data handling policy.
FinTech companies are used to change because these companies must constantly change the way how they work with the development of the new emerging technologies. Moreover, the FinTech companies also tend to be smaller in terms of the staffing in comparison of their counterparts that are more traditional financial institutions. So, this makes it easier for the FinTech companies to adopt and implement the new policies on a companywide basis.
GDPR Compliance Affects a Brand’s Reputation Positively –
A brand’s reputation could be the determining factor for a company operating in a competitive sector such as the FInTech industry. This has been the problem for the new entrants in the market for decades because they had to compete with the financial institutions that are operating for years and have better brand awareness.
Well, the GDPR laws are making it easier for the new brands, especially the ones that are operating in the FinTech companies to compete with their more established competitors.
GDPR compliance signals your brand’s commitment to the privacy in your target market and it can immediately make your new clients more comfortable at the time of working with a brand that might not have much in terms of the brand awareness in the market.
