The impact of the GDPR on the financial sector

Abstract

Purpose: The objective of this study is to analyse the impact of the GDPR on financial institutions. Given that the GDPR is a newly introduced legislation, financial companies are still adapting to it. Financial firms require the collection of large amounts of data, which is then collated and used for several activities such as relationship management and accounting. During these processes, data is exposed to a large number of people at different stages, and this is where the GDPR comes in. In this regard, this study assesses the challenges which may arise with the implementation of the GDPR in practice, given that organisations who do not comply with this legislation face heavy fines. Research Methodology: The data collection methods to obtain the objectives of this study consist of the accumulation of both primary data, where data is collected directly from in-depth interviews, and secondary data, which is gathered from pre-existing publications. Findings: The main findings obtained through primary data collection from the financial institutions interviewed, indicate that small companies give less importance to the implementation of the GDPR than large institutions. However, according to the secondary data, entities which do not comply will be fined the same fine, irrespective of whether the company is big or small. Value of this Study: Sometimes people might have the perception that the financial sector is untrustworthy due to the high amount of distribution of their personal data. This study is important since it points out that the financial sector needs to increase the customer’s awareness and understanding of the company’s processes while following the requirements which may arise by the GDPR in order to build trust. Conclusion: The author concludes that not all the types of financial institutions are following the GDPR in the same way. Given that the GDPR came into effect on 25 May 2018, companies are still continuously improving and updating systems to become fully compliant.