Do GDPR and PSD2 contradict each other?

To comply to both regulations and satisfy their customers, companies need a granular view of their customer data and use this data according to their customers’ needs.
Since GDPR came into force, businesses are still making mistakes and learning to navigate the EU regulatory waters. PSD2 asks banks to openly share consumer data with their consent, while GDPR requires that consumer data remains private and secure. How can businesses possibly juggle the two seemingly contradictory regulations?
Ultimately, this remains a data issue and relates to how well companies can visualise and use their data. To comply to both regulations and satisfy their customers, companies need a granular view of their customer data and use this data according to their customers’ needs. However, how can businesses accomplish that without a complete IT overhaul with potentially disastrous results?
Not as easy as it seems for Financial Services organisations
Financial Services organisations will need to be able to easily access, share and protect data - a challenge indeed! FinTech competition will not miss the opportunity the new regulations present to punish the old guard and poach the customers from the unprepared organisations.
Sharing customer data with third parties, as directed by PSD2, is a great idea but difficult to carry out for banks. Banks are challenged by legacy systems, operating in silos and current IT practices, which do not facilitate data management. EU GDPR only adds further complexity to data management processes because banks have to know the source of every single bit of data they hold in their systems.
In addition, the right to erasure (article 17 of GDPR) means enterprises are required to have a good handle on customer data in order to be able to delete specific information on request. The right to data portability (article 20 of GDPR) presents the challenge for businesses to move, copy or transfer data easily from one database, storage or IT environment to another.
All Financial Services organisations will need to be able to access and analyse the data of any transaction at any time. As part of regulatory audits, banks will need to be able to summon up specific customer data very quickly and they will have to understand what that data means in the broader context of their payment history.
Data protection and privacy will be particularly difficult for unprepared companies ahead of GDPR. At worse, it could mean an overhaul of the entire IT system. Businesses will have to detect and report data breaches within 72 hours once the breach is found to avoid being fined. This could mean working on weekends for some banks if they detect the breach on a Friday.
These challenges will require some help from technology. Banks and other Financial Services organisations will have to demonstrate true digitalisation. These organisations need to provide context-specific offers to the customer, which is helped further by Open Banking, as they will be able to track data from other banks catering to the customer.
However, this type of opportunity will only be seized by organisations capable of customer-centricity and building their own marketplace economy.
Looking beyond rules towards customer-centricity
Should they want to thrive, banks cannot have a narrow view and see regulations as checkpoints to be ticked off in order to be compliant, neglecting the wider picture.
GDPR and PSD2 do not contradict themselves; they both have the exact same objective. Both regulations want to push organisations towards customer-centricity in order for business to adapt to faster to the digital age and the rise of the platform economy. In the post-GDPR era, efficient data management will be critical in order to provide services as close as possible to their customers’ need.
This requires a system or platform flexible enough to dissect very specific data that is within the scope of client consent, while restricting conditional elements from being shared. This granular level of data management would truly push them toward customer-centricity.
This is crucial, as going beyond simple compliance and handling customer data with efficiency and transparency will go a long way to rebuild customer trust. The benefits of GDPR can be seized when financial organisations can convince not only regulators, but also customers, that their data is in a safe pair of hands. A greater understanding of who the customer is, what the product is and the price point will require better management of tangible and intangible data in order to better meet expectations in a post-GDPR world.
Reviewing data management processes to make them more efficient can directly lead to enhanced customer loyalty, which will come about by creating better deals for customers through the use of all the data held by a bank. This data can help create unique revenue models and pricing solutions adapted to the customer’s needs and spending patterns. These value-added services are sure to generate increased customer satisfaction.
Concerning the data security element of GDPR, organisations need to go beyond simply applying a turnkey cyber security solution. Businesses will need to keep internal records of data protection and show regulators and customers alike what has been done to keep their data safe. An audit log of public, private and personal APIs being accessed will need to be kept in order to keep track of any access to customer data.
The multiplication of RegTech solutions might seem like good news for businesses looking to avoid fines and immediate consequences of non-compliance. However, it often presents a short-term solution to a long-term, more nuanced problem. Banks need to manage their data in a way that puts customers at the centre.
Being customer centric enables these organisations to reap the benefits this year’s new regulations entail.
The benefits of being customer-centricity:
-
Reputational benefits: it will ensure customers their data is well-protected and showing transparency when dealing with customer data will increase trust. Avoiding brand image disasters like Equifax and becoming an example of a company making an effort and caring about the duties that comes with the custody of data could lead to immense reputational benefits.
-
Financial benefits: being customer-centric will improve customer retention and attract new customers. Knowing and tending to the needs of your customers will increase trust and customer satisfaction: while competitors are poorly managing their data and offering customers irrelevant offers, having the reputation of being an efficient, insightful business can bring immediate financial benefits.
-
Preparation for an increasingly customer-centric economy: digital transformation is leading businesses toward an increasingly customer-centric economy. GDPR is an attempt to regulate this wave of change and make sure some businesses are not left behind. Preempting the intent of GDPR and being customer-centric ahead of the curve through impeccable data management could give businesses a competitive edge.
While GDPR and PSD2 may seem to be contradictory in their requirements, they are in fact complementary, as both regulations guide high street banks, new banks and Financial Services organisations alike toward a much needed acceleration of their digital transformation process by placing the customer in the centre.
Source: itproportal

Latest Jobs
-
- Contact 12 month- Security Operations- Crowdstrike Falcon Insight EDR / Analyst.
- United Kingdom
- Dependent on experience
-
Security Operations engineer / Analyst with Crowdstrike Falcon Insight EDR experience for a 12 month contract. Experienced Contractor with Crowdstrike Falcon Insight: Endpoint detection and Response (EDR) experience needed - 12 month rolling project. Implementation, configuration and Analyst experience needed with Crowdstrike Falcon Insight: (EDR) Migration project- relocating capability internationally. technically implementing, configuration of that that migration and then transition to BAU role monitoring. DCL Search exclusive associate Project.
-
- SailPoint Consultant
- London
- Upto £75,000 plus benefits
-
SailPoint Consultant is needed for an expanding Financial Service business, this is an exciting time to join the Business as they are in the Process of deploying both IAM and PAM solutions and this consultant will form a key part of the IAM team Location can be flexible but would require the individual to come into the London office a couple of times a month for team meetings and face to face project reviews Duties include · Engage in the Identity & Access Management project to deliver SailPoint IdentityNow and Privileged Access Management · On-board applications and users into IAM tools and customise or configure integrations as required · Regularly review, secure and recertify privileged roles in applications, databases and operating systems · Implement least privilege, just-in-time access, password rotation and vaulting wherever possible · Migrate application authentication to Single Sign-On through the use of SAML and OAuth · Implement and enforce the use of MFA where possible, focusing on critical applications and risky sign-ins · Provide technical support to Centrify and SailPoint users Key experience required: Previous experience with SailPoint, including integrating and deploying into a business, onboarding users and applications, supporting users and performing manual administration tasks. Experience with SAML and OAuth to migrate applications to Single Sign-on. If you are interested in hearing more please reach out to me for more information
-
- Centrify Consultant
- London
- Upto £75,000 plus benefits
-
A Privileged Access Management Consultant is needed for an expanding Financial Service business, this is an exciting time to join the Business as they are in the Process of deploying a Centrify PAM solution,, this consultant will form a key part of the team Location can be flexible but would require the individual to come into the London office a couple of times a month for team meetings and face to face project reviews Duties include · On-board applications and users into PAM tools and customise or configure integrations as required · Regularly review, secure and recertify privileged roles in applications, databases and operating systems · Implement least privilege, just-in-time access, password rotation and vaulting wherever possible · Migrate application authentication to Single Sign-On through the use of SAML and OAuth · Implement and enforce the use of MFA where possible, focusing on critical applications and risky sign-ins · Provide technical support to Centrify users You would also gain expsoure with the IAM toolset as part of an Identity Access deployment. Key experience required: Previous experience with a PAM tool (Centrify would be an added bonus but not essential) including integrating and deploying into a business, onboarding users and applications, supporting users and performing manual administration tasks. Experience with SAML and OAuth to migrate applications to Single Sign-on. If you are interested in hearing more please reach out to me for more information
-
- SOC team lead- Deputy SOC manager - Managed Security Services, Bradford. Exclusive
- Bradford
- £70,000 +
-
SOC team lead- Deputy SOC Manager - Managed Cyber Security Services, Bradford. Exclusive Identifier project. Technical team lead needed to join a Managed Cyber Security Services business. The role will be a hands on lead role and technical escalation point for the team. You will also be responsible for leading, mentoring, growing and developing the team. You will be the deputy SOC manager and be involved in the strategic growth of the capability. A managed security services background is essential, specifically within a managed security operations capability. Current hands on support experience across Firewall, SIEM, Incident Response is essential.