In this new post series, we’ll be exploring how data privacy plays out across different industries and why the challenges aren’t one-size-fits-all. In each article, we’ll zoom in on a specific vertical and examine the unique tensions, blind spots, and solutions that shape how user data is handled.

We’re kicking off with the financial sector, arguably one of the most complex and high-stakes privacy arenas out there. Here's what makes data privacy such a crucial issue for banks, credit providers, insurers, and other financial organizations.

‍

Sensitive Information by Definition
Financial data is considered personal by many data privacy laws and is therefore highly protected. Information like income, spending patterns, credit scores, and account activity falls under multiple layers of regulation. Some laws are sector-specific, like the U.S. Personal Financial Data Rights Rule. Others, like GDPR, treat financial data as sensitive personal information by definition.

This is an area where we see both the overlap and the distinction between security and privacy. It’s easy to explain why this data needs to be shielded from hackers: financial organizations are frequent targets and hold the keys to people’s most sensitive personal information. But privacy isn’t just about keeping outsiders out, but also about protecting users from the organization itself. Data privacy restrictions must focus on preventing internal misuse, restricting data access to what's strictly necessary, and ensuring users aren’t profiled, tracked, or monetized without their knowledge and consent.

‍

Keep It Forever, Delete It Now

Here’s where things get contradictory. On one hand, financial institutions are required to retain vast amounts of data for long periods (usually 5 to 10 years) to meet regulatory obligations around fraud detection, anti-money laundering, tax reporting, and audits.

On the other hand, privacy laws urge data minimization and allow users to request deletion or limit use. So what happens when a user wants to invoke their right, but the company is legally obligated to keep their data? Or when authentication processes demand identity verification through stored personal data, but that data shouldn’t be kept unless necessary?

These conflicts force financial companies to walk a fine line between compliance and overreach. Precise data classification, purpose limitation, and retention policies are crucial components in this regulatory balance act.

‍

A Field That Can’t Afford to Get It Wrong

Financial services are built on trust. In fact, a survey across 34 different markets found that customers rank trust as the most important factor in banking. Most users assume their bank or investment firm collects only what’s needed, and that anything shared will be handled responsibly. They’re also less likely to question a request for sensitive information if it comes from a financial institution.

But when that trust breaks, say, through a scandal involving unauthorized data sharing, trading behavior profiling, or misuse of personal information for targeted ads, the damage is hard to undo. Financial companies risk both regulatory fines and permanent reputational damage. Transparency, audit trails, and real-time consent visibility become customer retention tools.

‍

Outdated Systems, Modern Demands

Many financial institutions still run on legacy systems that weren’t built with today’s privacy requirements in mind. More than half of executives stated that they are concerned with their organization’s technology debt. And rightfully so, as inconsistent data formats, siloed databases, and poor audit capabilities make it difficult to respond to Subject Access Requests (SARs) or implement proper permission mechanisms.

In addition to technical capabilities, a new, future-facing mindset is needed, one that prioritizes data privacy and understands the central role it plays in the organization’s business activity. When privacy regulations and market needs evolve, these companies often struggle to keep up. The process of recognizing these issues and addressing them requires rethinking how data is stored, tagged, and tracked across sprawling infrastructures.

‍

One Company with Many Faces

Financial organizations rarely offer just one service. A single brand might provide banking, loans, insurance, and investment products, all through different platforms or partner companies. This raises some challenging questions regarding consent, data sharing, audits, and third-party data practices. 

Regulations like the Gramm-Leach-Bliley Act and GDPR limit how personal financial data can be shared. It’s important for these organizations to understand law requirements on the deepest level and use technology platforms that allow them to separate data flows on the one hand, and track everything for audit and ongoing compliance purposes on the other.

For financial organizations, getting privacy right is existential. As privacy expectations evolve, so must the way financial organizations think about data. They’ll need to go beyond legal checkboxes and embrace a privacy-first strategy that aligns with customer expectations and future regulation.

‍