Unlock the Secrets of Digital Data Privacy: What the BFSI Sector Needs to Know About the 2023 Act

The BFSI industry in India is highly regulated, with governing bodies such as the RBI, SEBI, IRDAI, and UIDAI setting requirements. These regulations cover cybersecurity and privacy. Larger organizations operating in multiple regions must also comply with global privacy regulations like GDPR and CCPA, but they will now need to adjust their processes to adhere to the DPDP Act for customers in India. Additionally, this sector has been instrumental in driving the adoption of digital technologies, analytics, and governance methods. The DPDP Act,2023 will require a greater emphasis on meeting local requirements.

Some important privacy considerations include:

Strengthened privacy practices: The need for privacy regulations is driving this sector to increase its investment in comprehensive privacy safeguards. This includes encryption, identity management, secure data storage and routine data security checks to protect customer data from unauthorized access and data breaches.

Protection of customer personal data: Improve companies’ strategies for collecting, storing and processing customer data.

Customer communications and marketing through consent management: The focus is on obtaining informed consent from individuals for the collection, use, updating, disclosure and deletion of their personal information.

Data Processing Practices: Data protection requirements require organizations to align their approach to the collection, storage, processing and updating/deletion of customer personal data. Organizations must ask for consent, provide clear information about the purpose, and give customers access to their privacy, including the ability to access, update, and delete their personal data. These actions would increase transparency and allow customers to control their personal data.

Data sharing and partnerships: Data protection requirements affect how banks work with third parties and form partnerships with customers’ personal data. Institutions must comply with the requirements when they share data for, for example, analytics, risk assessment or cooperation with other financial service units. Consent powers can have an impact on how information is shared.

Breach notification and response: While Cert-In guidance on reporting a data breach within 6 hours of discovery is already in place, the DPDP Act 2023 focuses on personal data breaches, and in the event of such a breach, organizations must have a mechanism to promptly notify the Data Governance Board as well as each data officer, to whom the matter concerns.

Cross-border data transfer: Data protection requirements pose challenges for organizations when transferring customer data across borders. Adequate safeguards must be put in place to ensure compliance with the blacklist provided by the regulator in the future.

Privacy-enhancing technologies: The adoption of comprehensive technologies such as data loss prevention, anonymization technologies, data mapping/cataloging, automation of privacy protection rights, consent and preference management will increase significantly to improve compliance with the law.

Employee training and awareness: We ensure that organizations’ employees have knowledge of data protection requirements and understand their responsibilities under relevant local and global data protection regulations.

Additionally, below are comprehensive steps to consider for an effective privacy program:

Conduct a privacy risk assessment: A comprehensive privacy risk assessment plays a key role in uncovering vulnerabilities in compliance and security initiatives. The purpose of this assessment is to locate the data collected, maintained and processed by the organization, to examine the potential data protection risks associated with this data (such as confidentiality and security aspects), to evaluate the effectiveness of existing measures to address these risks and to reveal any gaps. or remaining risks. This approach helps managers gain an understanding of relevant data protection rules, define compliance responsibilities, and strengthen the organization’s overall data protection framework.

Baseline setup: Baseline setup is an immediate and proactive way to ensure privacy compliance in any organization. It involves thoroughly examining all of the organization’s privacy commitments, finding out what commitments have been made to customers regarding data collection, processing, storage and transfer practices and, most importantly, ensuring that those commitments are followed. Ensuring compliance with these commitments is extremely important. As there is currently no comprehensive privacy legislation in India, it is recommended that organizations adopt a basic approach to create a unified framework. Extending these privacy commitments to contracts, third-party partnerships and employee training can further improve privacy standards.

Implementation of privacy-enhancing technologies: To ensure data protection, organizations should implement privacy-enhancing technologies that provide robust safeguards. These include encryption, DLP tools, anonymization techniques, data protection management tools, data mapping and cataloging, privacy rights management automation, privacy impact assessment/Privacy Impact Assessment automation, consent and preference management tools, third party management tools. parties’ data protection risks, privacy training solutions, identity management platforms and secure data storage solutions. These technological advances help protect sensitive data, reduce the risk of unauthorized access or data breaches, and facilitate structured management of regulatory requirements.

Change Management: Privacy and compliance implications of data protection decisions, service/product changes, and third-party data sharing must be continually evaluated. This is especially challenging for large organizations with rapid changes. Creating a sustainable change management program is crucial. Leaders should make data protection a strategic focus, encourage a compliance-oriented culture, and increase data protection awareness throughout the organization. Effective change management ensures that customers’ data protection commitments are met, which increases trust. It is also essential that top management is clear about privacy and that the board supports privacy initiatives.

Planned documentation and privacy: Creating a successful privacy program requires two key methods of documentation. First, organizations should comprehensively document data protection procedures, processes, risks and controls, which can be a significant but necessary effort. Second, they need to document processes that contain customer or sensitive information, as this helps assess the impact of changes on privacy risks. Maintaining clear, verifiable and readily accessible records of plans and processes is critical to effective program management. It is recommended to designate an employee responsible for document security, compliance and record keeping. In addition, the introduction of Privacy by Design protection and the inclusion of privacy considerations in system, product and service design from the beginning is crucial. Use privacy-enhancing technologies and practices to minimize the collection and retention of personal data while ensuring that data protection measures are applied consistently throughout the data lifecycle. Integrating data protection and data protection into organizational processes requires time, attention and resources. By following these basic steps, companies can create a comprehensive data protection program that maintains customer trust, meets regulatory expectations, and ensures data protection and protection in an ever-evolving environment.

In today’s digital world, protecting personal data and prioritizing privacy are extremely important. Organizations can achieve this by following the principles of privacy by design, securing informed consent, implementing strong security measures, and promoting transparency and accountability. These actions help build trust, reduce risk and protect individuals’ privacy. In summary, India’s data protection environment is evolving, with increasing emphasis on securing individual privacy, strengthening regulatory frameworks and adapting to technological developments. The introduction of the Digital Personal Data Protection Act in 2023 is a significant milestone in aligning India with global data protection standards and creating a privacy-focused environment that supports the goals of the Digital India initiative.

(By Sandeep Gupta, Managing Director, Protiviti Member Company India)