How European Technology Companies Can Meet Financial Services Customer Data Protection Requirements

European technology companies selling to banks, insurers, investment firms, or payment processors face data protection requirements that exceed those imposed on vendors serving other industries. Financial services customers process personal data subject to GDPR, payment data governed by PSD2, trading information regulated by MiFID II, insurance data under IDD, and client information protected by national banking secrecy laws carrying criminal penalties. Technology vendors must demonstrate architectural capabilities satisfying all of these frameworks simultaneously—a compliance matrix that grows more complex with every jurisdiction a financial services customer operates in.

This post maps the layered regulatory requirements European technology vendors face when selling into financial services, explains why customer-managed encryption is the architectural foundation that satisfies them collectively, and addresses the practical implementation decisions that determine whether a vendor can qualify for—and keep—financial services mandates.

Executive Summary

Main Idea: European technology companies serving financial services face layered data protection requirements where GDPR establishes baseline controls, sector-specific regulations impose additional obligations, and national banking secrecy laws create criminal liability for unauthorized disclosure—all of which customer-managed encryption architecture satisfies through a single technical implementation. Banks, insurers, and investment firms require vendors to demonstrate customer-managed encryption, geographic data isolation, and technical architecture preventing cross-border government access.

Why You Should Care: The European Banking Authority reported 68% of banks updated vendor assessments in 2024–2025 to address data sovereignty requirements following DORA implementation, and technology vendors unable to demonstrate compliant architecture face systematic exclusion from financial services opportunities representing 30–40% of European enterprise technology spending.

5 Key Takeaways

1. Financial services data protection requirements layer GDPR baseline controls with sector-specific regulations creating cumulative obligations. A fintech platform processing banking customer data must satisfy GDPR Article 32 encryption, PSD2 authentication standards, national banking secrecy laws, and DORA ICT risk management. Technology vendors must demonstrate architecture satisfying all frameworks simultaneously.
2. Banking secrecy laws create criminal liability for unauthorized customer data disclosure extending to technology vendors. Switzerland’s Banking Act Article 47, Luxembourg’s secrecy provisions, Austria’s Banking Act §38, and comparable German and French protections impose obligations on banks that flow directly to technology providers. When banks use platforms where vendors can access customer financial data, they create potential criminal liability for themselves and their vendors.
3. Payment transaction data under PSD2 requires technical architecture preventing unauthorized access while enabling regulatory reporting. PSD2 Article 94 mandates strong customer authentication, Article 95 requires secure communication, and Article 98 addresses payment account access. Technology companies providing payment services must implement encryption architecture protecting transaction data while maintaining regulatory compliance.
4. MiFID II trading data requirements extend beyond personal data protection to include market abuse prevention and transaction reporting. Investment firms using technology platforms for trade execution or portfolio management must verify vendors implement controls preventing unauthorized trading data access while maintaining audit trails satisfying ESMA standards.
5. Insurance Distribution Directive requirements for policyholder data create obligations flowing to technology vendors. IDD Article 29 requires insurance distributors to implement appropriate measures protecting customer information. When insurers use technology platforms for policy administration, claims processing, or CRM, they must verify vendors satisfy IDD requirements in addition to GDPR obligations.

How GDPR, DORA, and Sector-Specific Regulations Create Layered Requirements

GDPR establishes baseline data protection requirements, but financial services regulations impose additional obligations creating cumulative compliance burdens. Technology vendors must satisfy both horizontal GDPR requirements and vertical sector-specific mandates.

GDPR Establishes the Baseline That Every Other Financial Services Regulation Builds Upon

GDPR Article 32 requires appropriate technical measures including encryption, pseudonymization, and measures ensuring confidentiality, integrity, availability, and resilience. Article 33 mandates breach notification within 72 hours. Articles 44–50 govern international data transfers requiring adequate protection when data flows outside the EU. These baseline requirements apply to every financial services vendor—but for financial services, they are the floor, not the ceiling.

DORA Adds Specific ICT Risk Management and Third-Party Oversight Requirements That Bind Technology Vendors Directly

DORA extends baseline protections with specific requirements for financial entities and ICT service providers. Article 28 requires ICT risk management frameworks including assessment of all third-party providers. Article 30 mandates contractual arrangements ensuring providers implement security measures, address data location controls, and provide exit strategies enabling complete data removal. Critically, DORA places obligations on technology vendors themselves, not just on the financial institutions that use them—making vendor architecture decisions a direct regulatory matter.

PSD2, MiFID II, and IDD Each Add Sector-Specific Requirements That Compound With GDPR and DORA

PSD2 adds payment-specific requirements through Article 94’s strong customer authentication, Article 95’s secure communication standards, and Article 97’s operational risk requirements. MiFID II creates investment services requirements through Article 16’s organizational requirements, Article 25’s transaction reporting, and Article 76’s record-keeping mandates. IDD imposes requirements through Article 29’s data protection obligations. The practical effect creates a compliance matrix where a platform serving banks, insurers, and investment firms must satisfy all of these frameworks through a single technical implementation—making architectural choices that satisfy only one or two of them insufficient.

National Banking Secrecy Laws and Criminal Liability

Banking secrecy laws in major European financial centers create criminal liability for unauthorized disclosure of customer financial information, with obligations that extend explicitly to technology providers. These laws do not treat unauthorized disclosure as a civil matter—they treat it as a crime, and the exposure flows through the contractual chain to vendors.

Swiss Banking Act Article 47 Creates Criminal Liability That Flows Directly to Technology Service Providers

Switzerland’s Banking Act Article 47 imposes criminal penalties up to three years imprisonment and CHF 250,000 fines for unauthorized disclosure. The obligation extends to technology service providers through Swiss banking regulations requiring banks to ensure third-party providers implement equivalent confidentiality protections. When Swiss banks use platforms where non-Swiss entities maintain technical data access, they create potential Article 47 violations. The only architecture that eliminates this risk is one where the vendor physically cannot access plaintext customer data—customer-managed encryption enforced at the key management level.

Luxembourg, Austria, Germany, and France Each Impose Equivalent Secrecy Obligations With Enforcement by National Regulators

Luxembourg’s banking secrecy provisions protect customer financial information through criminal penalties, with the CSSF requiring Luxembourg banks to verify technology vendors implement controls preventing unauthorized access. Luxembourg’s position as a major fund administration center means technology companies serving asset managers face particularly stringent data sovereignty architecture scrutiny. Austria’s Banking Act §38 establishes banking secrecy with criminal penalties, enforced by the Austrian Financial Market Authority. Germany’s banking secrecy derives from §203 StGB and BaFin guidance emphasizing that banks must ensure technology providers prevent foreign government access. France’s banking secrecy arises from Code Monétaire et Financier, with ACPR requiring verification of appropriate confidentiality protections.

Customer-Managed Encryption Is the Only Architecture That Satisfies All National Banking Secrecy Laws Simultaneously

The convergence of these national laws with GDPR and DORA creates a framework where technology vendors must demonstrate architecture preventing unauthorized disclosure under any legal theory. The only technical approach satisfying all frameworks implements customer-managed encryption where financial institutions maintain exclusive decryption key control—ensuring that even if technology vendors face government orders in any jurisdiction, they possess no technical means to access plaintext customer financial data. This transforms compliance from a legal argument into a technical fact.

Payment Data Requirements Under PSD2

PSD2 requirements create specialized obligations for technology companies providing payment processing, account information services, payment initiation services, or supporting infrastructure. PSD2’s regulatory technical standards establish security requirements that exceed GDPR baseline protections and interact with national payment regulator expectations across jurisdictions.

EBA Technical Standards on Strong Customer Authentication Set Specific Architecture Requirements Beyond General Encryption

Article 94 mandates strong customer authentication requiring two independent elements from knowledge, possession, and inherence categories. Technology platforms facilitating payment transactions must implement authentication architecture satisfying these requirements. Article 95 requires secure communication standards with EBA RTS establishing encryption requirements, certificate management, and security protocols. Technology companies providing APIs for account information or payment initiation must implement TLS with specific cipher suites and security monitoring—requirements that interact with customer-managed encryption architecture but do not displace it.

Multi-Jurisdiction Payment Operations Require Geography-Aware Data Residency Architecture

The challenge intensifies for payment processors operating across multiple European jurisdictions. A payment platform serving banks in Germany, France, and the Netherlands must satisfy BaFin, ACPR, and Dutch central bank expectations while implementing PSD2 RTS uniformly. Geographic data residency requirements vary by jurisdiction, creating complex topology where technology vendors must demonstrate payment data for German customers processes within Germany, French customer data remains in France, and Dutch customer data stays in the Netherlands. Customer-managed encryption with jurisdiction-specific key management is the mechanism that makes this geography-aware architecture operationally achievable.

MiFID II Trading Data and Corporate Client Information Protection

Investment services regulations create requirements distinct from retail customer data protection, focusing on market integrity, transaction reporting, and market abuse prevention. Technology companies providing trading platforms, portfolio management systems, or investment research tools must satisfy MiFID II requirements alongside GDPR obligations—and the two frameworks protect different things.

MiFID II Record-Keeping and Transaction Reporting Requirements Demand Audit Trails That Coexist With Encryption

MiFID II Article 16 requires investment firms to maintain organizational arrangements ensuring compliance, with Article 16(6) addressing outsourcing—requiring firms to ensure service providers implement appropriate security measures. Article 25 mandates transaction reporting to competent authorities. Technology platforms must maintain audit trails satisfying ESMA technical standards while implementing controls preventing unauthorized trading data access. Article 76 requires investment firms to maintain records of services and transactions for at least five years, with architecture ensuring data integrity, preventing unauthorized modification, and enabling regulatory access while protecting client confidentiality.

Corporate Client Trading Data Requires Contractual Confidentiality Architecture Beyond GDPR’s Personal Data Protections

Corporate client trading data receives protection distinct from retail customer personal data. When investment firms serve corporate clients—asset managers, pension funds, insurance companies—the trading information represents sensitive business intelligence: trading positions, strategies, and portfolio compositions that reveal competitive advantage. GDPR applies to contact information, but this trading intelligence receives protection under contractual confidentiality and fiduciary duties. Technology vendors must implement architecture recognizing these distinctions, satisfying both GDPR requirements for retail customers and contractual confidentiality for corporate client trading data through separate encryption key hierarchies that enforce different access controls for each data category.

Insurance Data Protection Under IDD

Insurance Distribution Directive requirements create obligations for technology companies serving insurers, insurance intermediaries, and distribution platforms. IDD Article 29’s mandate for appropriate measures protecting customer information extends GDPR baseline requirements with insurance-specific provisions that are particularly demanding for health and claims data.

Health Insurance Data Triggers GDPR Special Category Requirements on Top of IDD Obligations

Policyholder data includes personal information subject to GDPR, policy terms, premium payment records, and claims history. Health information receives special category protection under GDPR Article 9, creating heightened requirements for platforms processing life insurance applications, health insurance claims, or medical underwriting data. Claims data presents particular challenges because claims often include sensitive information—medical records for health insurance, police reports for auto insurance, property damage assessments for homeowners insurance. Platforms processing this data must satisfy both IDD’s insurance-specific requirements and GDPR’s most demanding protection tier simultaneously.

Multi-Insurer Distribution Platforms Require Cryptographic Isolation Between Competitors’ Customer Data

National insurance regulators impose additional requirements beyond IDD baseline protections. Germany’s BaFin, France’s ACPR, and the UK’s FCA require insurers to ensure outsourcing arrangements include appropriate data protection provisions. Insurance distribution platforms serving multiple insurers face complex data segregation requirements: a platform enabling intermediaries to quote and sell policies from multiple carriers must ensure each insurer’s customer data remains segregated, preventing competitors from accessing each other’s information while enabling intermediaries to serve customers efficiently. This requires multi-tenant architecture with cryptographic isolation rather than logical segregation—customer-managed encryption with separate key hierarchies per insurer is the only approach that provides enforceable rather than policy-based separation.

Customer-Managed Encryption Architecture for Financial Services Compliance

The convergence of GDPR, DORA, PSD2, MiFID II, IDD, and national banking secrecy laws creates a compliance framework that customer-managed encryption architecture satisfies through single technical implementation.

Financial Institution Key Control Through HSMs Is the Architectural Foundation That Satisfies Every Framework

Customer-managed encryption begins with key generation under financial institution exclusive control. Keys generate within hardware security modules deployed on-premises or through European HSM services designed for financial services sovereignty. The financial institution controls the key lifecycle without technology vendor involvement. When customer financial data enters technology platforms—payment transactions, trading orders, insurance applications, or account information—encryption occurs immediately using keys from the financial institution’s HSM. Encrypted data can then reside on various infrastructure because technology vendors possess no technical means to decrypt it.

The Same Architecture Satisfies GDPR, DORA, PSD2, MiFID II, IDD, and Banking Secrecy Laws Without Separate Implementations

This unified architecture satisfies the full compliance matrix simultaneously. For payment processors, customer-managed encryption protects payment credentials and transaction data while maintaining PSD2 strong authentication flows. For investment firms using trading platforms, customer-managed encryption protects trading data while maintaining MiFID II transaction reporting capabilities. For insurers using policy administration or claims processing systems, customer-managed encryption protects policyholder data including health information and underwriting decisions. Deployment flexibility enables financial institutions to balance sovereignty requirements with operational needs—banks requiring maximum control deploy on-premises, payment processors seeking cloud economics use private cloud with customer-managed encryption, insurers deploy hardened virtual appliances providing sovereignty with reduced operational complexity.

Implementation Considerations

Technology companies adding financial services compliance capabilities face architectural decisions around encryption key management, deployment models, data residency controls, regulatory reporting, and audit capabilities.

Key Management Architecture Must Support Multiple HSM Options Matching Each Jurisdiction’s Regulatory Expectations

Key management architecture must support multiple HSM options allowing financial institutions to select based on regulatory requirements. Banks in Switzerland, Luxembourg, or Germany may require on-premises HSMs satisfying national banking secrecy. Payment processors may prefer European HSM services balancing sovereignty with PSD2 operational requirements. Insurers may use different approaches for policy administration versus marketing systems. The critical requirement is that the vendor’s platform can integrate with whichever key management infrastructure the financial institution’s regulator expects—a non-negotiable flexibility requirement for any vendor serving multiple European jurisdictions.

Regulatory Reporting Interfaces Must Enable Compliance Without Exposing Plaintext Data to Vendors

Regulatory reporting interfaces require careful design enabling compliance without compromising encryption architecture. MiFID II transaction reporting, PSD2 incident reporting, and insurance regulatory reporting must occur through mechanisms allowing financial institutions to generate reports from encrypted data without exposing plaintext information to technology vendors. This means reporting functionality must operate on the financial institution’s side of the encryption boundary—an architectural requirement that many platform vendors fail to account for until they are deep into financial services sales cycles.

Multi-Tenant Architecture Serving Multiple Financial Institutions Requires Cryptographic Rather Than Logical Isolation

Data residency controls must accommodate jurisdiction-specific requirements while maintaining unified platform operations. German banks may require data processing within Germany satisfying BaFin expectations. French payment institutions may require French data residency satisfying ACPR requirements. Multi-tenancy architecture for platforms serving multiple financial institutions must implement cryptographic isolation rather than logical segregation, ensuring each institution’s customer data remains encrypted under separate keys—preventing cross-institution data access that neither logical access controls nor contractual prohibitions can fully guarantee.

How Kiteworks Enables European Technology Companies to Meet Financial Services Data Protection Requirements

European technology companies serving financial services cannot satisfy the regulatory matrix through any single framework compliance—GDPR alone is insufficient, DORA alone is insufficient, and national banking secrecy compliance alone is insufficient. Customer-managed encryption architecture is the technical foundation that satisfies all of these frameworks simultaneously, because it ensures that technology vendors possess no technical means to access customer financial data regardless of what any government in any jurisdiction may legally demand. Vendors that implement this architecture can qualify for financial services mandates; those that do not face systematic exclusion from a sector representing 30–40% of European enterprise technology spending.

Kiteworks provides European technology companies serving financial services with the customer-managed encryption architecture required to satisfy GDPR, DORA, PSD2, MiFID II, IDD, and national banking secrecy laws. The platform uses customer-controlled encryption keys that never leave financial institution infrastructure, meaning even if Kiteworks receives government orders or faces security incidents, we possess no technical means to access customer financial data.

The platform supports flexible deployment including on-premises installation in financial institution data centers, private cloud deployment in European facilities under customer control, and hardened virtual appliances providing sovereignty benefits with reduced operational complexity. Banks can deploy in Switzerland satisfying Banking Act Article 47 requirements, payment processors can implement PSD2-compliant architectures, insurers can satisfy IDD data protection mandates, and investment firms can meet MiFID II confidentiality obligations through deployment choice matching regulatory requirements.

Kiteworks integrates secure email, file sharing, managed file transfer, and web forms into unified architecture enabling financial institutions to manage sensitive customer data communication through a single sovereign platform. This integration simplifies customer-managed key implementation for payment transactions, trading data, insurance claims, and account information while providing unified audit logging satisfying regulatory requirements across GDPR, DORA, PSD2, MiFID II, and IDD.

For technology companies serving DORA-regulated financial institutions, the platform’s architecture satisfies Article 30 requirements for encryption, data location controls, and exit strategies. Customer-managed encryption keys address data access and deletion mandates, while deployment flexibility satisfies geographic processing requirements. The platform’s exit capabilities enable financial institutions to migrate without Kiteworks cooperation, preventing vendor lock-in while satisfying DORA exit strategy mandates.

To learn more about how Kiteworks supports European technology companies meeting financial services customer data protection requirements, schedule a custom demo today.

Additional Resources

• Blog Post
  Data Sovereignty: a Best Practice or Regulatory Requirement?
• eBook
  Data Sovereignty and GDPR
• Blog Post
  Avoid These Data Sovereignty Pitfalls
• Blog Post
  Data Sovereignty Best Practices
• Blog Post
  Data Sovereignty and GDPR [Understanding Data Security]