For the BSFI (Banking, Financial Services, and Insurance) sector, keeping up with new data privacy laws is not easy. With rules like GDPR, DPDP Act, CCPA, and PIPEDA, Data Subject Requests (DSRs) have become an important part of compliance. However, handling these requests is usually complicated and time-consuming. 

According to a study conducted by EY Law, 62% of organisations surveyed saw a rise in DSRs due to GDPR regulations and individuals being more aware of their rights. The financial impact of DSRs is also becoming crucial in this regard. The average cost of handling a DSR manually is approximately $1,524, while dealing with complex data can cost as much as $28,900. This largely impacts internal costs as staff time is redirected to other tasks, and there is also a risk of facing fines of up to 250 crores for non-compliance, as mentioned in the DPDPA. Taking into consideration the current market size of worldwide data privacy, which is estimated at $4 billion in 2024. It is expected to expand consistently to $45 billion by the year 2032. 

This is not only an increasing regulatory problem but also a big risk to compliance, customer trust, and a company’s reputation. This blog looks at the specific problems BFSI organisations face. It also presents how a privacy automation platform like GoTrust can help them to improve compliance and turn it into a strategic advantage. 

Why Data Visibility Is Still a Challenge in BFSI? 

BFSI companies handle large amounts of personal and financial data. This includes Know Your Customer (KYC) documents, loan applications, biometric IDs, insurance claims, and payment records. Most of this data is stored in different systems like customer relationship management (CRMs), banking software, third-party vendors, cloud services, and paper files. 

This scattered setup makes it hard to stay compliant with privacy laws. When a Data Subject Request comes in, companies must quickly locate all relevant data. If some data is missed, either because of outdated retention policies or data hidden in less obscure systems, the company risks violating privacy compliance. The IAPP Privacy Risk Study 2023 highlights that "inappropriate personal data management", which includes difficulties finding data across systems, is among the top five privacy risks. 

The Operational Limits of Manual DSR Handling 

Many banks and financial firms still handle data requests manually through ad-hoc processes, even with increased regulatory pressure. They often send emails to internal teams, search through spreadsheets, or create IT tickets. These steps take a lot of time and make it hard to find all the necessary data. 

This scattered data makes it very difficult to handle data subject requests. One customer’s complete data might be stored in more than ten systems. Finding all of it can take a lot of time and is prone to errors. The right to have your data erased, as mentioned in GDPR Article 17 and the DPDP Act Section 12, becomes very difficult when organisations don’t know where all the data is stored. Many companies have written down retention policies that exist only on paper, but there is no operational enforcement. This can lead to a direct violation of GDPR's storage limitation principle, which is enshrined under Article 5(1)(e). 

The consequences can be very costly. For example, Openbank was fined €2.5 million after regulators found it hadn’t fully erased a customer's data from 14 different systems. They had a retention policy in place, but it wasn’t followed. Incidents like this show that doing everything manually isn’t enough today. It’s no longer possible to meet new regulations without better systems to manage data. 

Major Challenges for BFSI Organisations 

1. Siloed Data Systems 

Many financial institutions store data in various systems such as CRMs, document management systems, email servers, outsourced vendors, and physical archives.   Unfortunately, these systems do not communicate with each other. This lack of integration means that when a DSR is made, legal and IT teams have to search for data in different departments and formats. This process is usually inefficient, error-prone, and could lead to non-compliance with regulations.  In 2021, the Irish Data Protection Commission fined Bank of Ireland for failing to fully respond to a DSRs due to fragmented records. It is a clear example of how siloed systems become compliance failures. 

2. The Right to Erasure Is Operationally Complex 

The Right to Erasure, listed in GDPR Article 17 and DPDP Section 12(3), requires companies to remove all personal data when asked. However, this can be very difficult in the BFSI sector. Customer data is usually stored in many forms, like PDFs, images, and scanned KYC files. Many of these files are in unorganised formats, which makes them hard to find. Without clear and detailed access to all data, full deletion becomes almost impossible. And partial deletion doesn’t meet the legal standards. 

3. Retention Policies Are Often Poorly Enforced 

GDPR Article 5(1)(e) and DPDP Section 8 both emphasise that data should only be kept as long as necessary. Many BFSI organisations have Retention Policies in place but they are often poorly enforced. 

4. Third-Party Vendor Risks 

Outsourcing is common in BFSI. From KYC vendors to loan processing agents, data frequently moves to third-party environments. Without clear Records of Processing Activities (RoPAs) or active Data Processing Agreements (DPAs), institutions may be held liable for what a vendor mishandles.

5. Audit Trails Are Incomplete or Inaccessible 

Regulatory bodies expect financial institutions to prove how they collect, process, and protect data. Laws like GDPR Article 30 and DPDP Section 10(2) require clear, current records of these processes. However, BFSI companies frequently keep scattered or paper-based audit logs, which makes it hard to produce reports that can be defended during compliance checks. A DSR, breach reporting, or inspection might potentially trigger this accountability gap, which is more than just a procedural error.

The Cost of Overlooking Data Obligations 

Over the years, rules about compliance have become stricter. Now, Financial institutions are expected to adopt proactive measures and not reactive, ad-hoc approaches. If companies cannot locate personal data or show their processing records, they risk violating important laws. These laws include principles like lawfulness (GDPR Article 6, DPDP Section 4), accountability (GDPR Article 5(2), DPDP Section 10), and purpose limitation (GDPR Article 5(1)(b)). These violations don’t just invite fines, but they also damage customer trust and can cause operational disruptions. 

Under the DPDP Act, non-compliance with obligations related to data erasure, access, and retention can cost up to ₹250 crore per violation. Under GDPR, penalties can reach €20 million or 4% of global sales, whichever is higher. 

When data cannot be found, deleted, or the motive for collecting it is unclear, regulators see this as negligence. This can lead to heavy fines, bad publicity, and loss of customers. For industries like banking and finance, where trust is everything, these problems can be very costly for the organisations.  

How GoTrust Enables Compliance with Clarity GoTrust’s privacy automation platform is designed to meet the exact compliance gaps BFSI organisations are struggling with. Here’s how: 

• 360° Data Visibility:  

GoTrust scans across siloed systems (CRMs, legacy databases, cloud apps) to locate all personal data linked to a subject and ensures nothing is missed during DSR fulfilment. 

• DSR Automation Engine:  

From intake to identity verification, redaction, and delivery, GoTrust automates the end-to-end DSR process, cutting average response times by over 75%.  

• Legally Defensible Audit Trails:  

Every DSR is logged with time stamps, action details, and consent status, which enables fast, compliant responses that withstand regulatory scrutiny. 

• Consent Validation Before Disclosure: 

Built-in consent checks make sure that data is only released if valid consent exists, which aligns with DPDP Act Section 5(2) and GDPR Article 7. 

• Secure & Trackable Delivery: 

GoTrust offers encrypted DSR delivery with access expiry controls and receipt confirmations, which helps to reduce the risk of data leaks or unauthorised access.  

The Outcomes You Can Expect  

Here’s what BFSI organisations can expect with GoTrust in place: 

• 75 %+ reduction in DSRs response times 

• 100% visibility into personal data across systems (even legacy and siloed tools) 

• Fewer regulatory risks, thanks to better documentation, retention enforcement, and consent tracking 

• Clean, consistent audit readiness with tracked changes and evidence trails 

• Enhanced vendor oversight and smoother audits from Day 1 

• Lower legal and reputational risk during audits, complaints, or breaches 

• Increased customer trust from faster, transparent responses and stronger privacy posture  

Conclusion 

Institutions in the banking, finance, and insurance sectors face strict compliance when it comes to DSRs. They must follow stringent laws while keeping their operations flexible. But compliance isn’t just about avoiding fines anymore. It’s also about showing customers, partners, and regulators that their data is safe and respected.  

The future of financial services depends on both innovation and integrity. How you handle personal data transparently and accountably play a key role. Data must be kept secure, clear, and managed responsibly. Privacy rules don’t have to be complicated or resource-draining. With platforms like GoTrust, BFSI organisations gain the ability to discover hidden data, automate privacy workflows, and operationalise compliance in real time. 

If you work in BFSI and want to shift from reactive processes to proactive control, now is the time to take action. The longer privacy issues remain unnoticed, the harder and more expensive they are to fix later. Let's look at how having clear data visibility can improve your compliance path that too, in a way that is safe, smart, and sustainable. 

Explore more at www.gotrust.tech  and see how GoTrust helps you stay ahead of regulation while earning the trust your customers truly deserve.