How PSD2 affects your Data Privacy

The true power of a bank is not in its cash or reserves, but in its customers’ data. That’s why data privacy and protection are so important — not just for banks but also for customers.

The flow of data in this age is expanding fast, bringing security concerns with it. Years ago, when I was learning about data privacy, there weren’t many laws to ensure the proper protection of consumer data and measures to control who had access to their data.

The European Union made a mandate (PSD and then PSD2) for banks to allow third parties access to customer data (with their permission) to tackle this problem. This directive was geared towards providing strong customer authentication for payments and increasing overall security.

This makes sense because the more you know about your data (and who has access to it), the better you’ll be able to protect yourself from risks.

And that brings us to an important question…

Does more trusted data sharing help businesses?

Yes, it does. Sharing your data helps businesses better understand your needs to tailor helpful services, meaning you also benefit from sharing your data.

For example, customers often struggle with loan repayment. Sharing your data with third parties has allowed for the innovation of better tech to solve this problem.

Another instance where data sharing has proved helpful is reducing the risk of information monopolies that could hamper public interest. A good example of this is the case between LinkedIn Vs. HiQ, with the former trying to hold onto user data and stop HiQ from using user data to create products that improve employee welfare.

There’s no doubt that data sharing has brought improved transparency in how data is used within apps. For example, multi-factor authentications such as fingerprint, face ID, and passwords came into operation due to PSD2. Now, almost every app or tech platform consumers use requires security authentication for safety.

These developments have reduced security risks and ensured consumers are involved with what happens with their data. This has caused a shift from the entire security process handled by organizations alone to including consumers.

Not only has this helped ensure data privacy but it has also increased more consumer control and empowerment.

It’s exciting to see the increased consumer awareness about data but to sustain this, companies need to keep things simple and learn to adapt to data privacy regulations.

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