Digitalization and data protection – eternal opposites?

Digitalization and data protection are often viewed as antagonistic forces. While digital processes generate floods of data, data protection advocates not for big data, but for a frugal and minimalist approach, especially regarding personal information.

Data minimization is one of the core principles of the General Data Protection Regulation (GDPR) (Art. 5 GDPR). Yet, despite this inherent tension, data protection is more closely linked to digitalization than one might assume. Above all, successful digitalization actually depends on effective data protection concepts. This is based on the idea that data protection has long since moved beyond mere consumer protection.

Corporate Data Protection: Digital and (Inter)national

From the perspective of companies involved in digitalization, data protection was long seen as nothing more than a nuisance that hindered innovation. This was partly because, in Germany, data protection was largely a matter for individual states, each with its own regulations. Internationally, the rules were even more varied and confusing. Since many companies operate not just nationally, but on a European and global scale, the density of (inter)national regulations seemed overwhelming and made processes unnecessarily complicated.

Help arrived with the EU General Data Protection Regulation, which became binding across the EU on May 25, 2018. For the first time, the GDPR provided a directly applicable regulatory framework for data protection at the European level. In some respects, the GDPR responded to the specific demands of digitalization in the context of data protection. While some requirements for companies were tightened and the scope for sanctions in the event of data breaches was significantly increased, the topic of digital data protection for companies became much clearer and was standardized across the EU. Companies are now fully accountable for data protection. Whether it involves digital time tracking or personnel files, the GDPR mandates protection for every instance of personal data processing. 

While this does not eliminate the tension between digitalization and data protection, many companies are now beginning to realize that data protection serves more than just consumer interests.

Digitalization and Data Protection from the User's Perspective

Digital systems have become an indispensable part of everyday life. Smartphones, tablets, innovative smart homes, and cloud solutions have permeated even the most intimate areas of consumers' lives. In this context, and especially due to automated data processing, personal data is often exposed to much greater and more comprehensive risks than would ever have been conceivable with analog systems.

The previously carefree attitude toward personal data on the part of users has shifted, particularly since the GDPR came into effect: more and more users are becoming aware of the importance of data protection and are concerned about their data. These concerns are fueled by major tech companies like Facebook, which for too long maintained a questionable and opaque approach to user data.

The companies and service providers involved in these developments face significant challenges if they want to operate in compliance with data protection laws . Anyone wanting to retain the trust of their customers and consumers cannot avoid developing appropriate data protection concepts. Companies must combine both technical and legal aspects, while naturally ensuring that the usability of digital applications remains intact.

Therefore, in the context of digitalization and data protection, it is no longer enough to focus all efforts solely on data avoidance and minimization. Instead, it is about interacting with users on an equal footing and in a spirit of trust, addressing their concerns regarding personal data while simultaneously enabling the relevant digital application (e.g., in the field of online banking).

Companies are challenged in many ways. Above all, it is about transparency and communication with individual users. Innovative digital applications will only be truly successful in the future if users can trust in valid data protection. But companies benefit from this, too.

Digitalization and Data Protection – Why Companies Benefit from Data Compliance

For companies, the topic of digital data protection is also essential internally, as they must protect themselves against increasingly frequent attacks on internal and confidential data. Digital applications and the use of mobile devices for widespread remote work create high potential risks for internal company data. The increased flexibility of the modern workplace is a typical element of digitalization that offers companies enormous advantages on the one hand, but makes them more vulnerable on the other. 

Although data protection regulations primarily aim to protect user interests, companies also benefit from being data-compliant, as digital data protection ultimately serves to protect company data as well. In this regard, the GDPR contains regulations for the protection of personal data processing, safeguarding the fundamental rights and freedoms of natural persons as well as the free flow of data. Companies must not only comply with these regulations but also document them in a detailed and transparent manner. This includes, for example, technical and organizational measures (TOMs) and data processing agreements (DPAs). Employee training is also an important issue for companies. Digital data protection can only be successfully implemented if all parties involved are sufficiently sensitized. 

A particular challenge for companies in implementing digital data protection is driving digitalization forward despite the numerous requirements of the GDPR. If successful, comprehensive data protection management also creates a certain competitive standing for companies – both at the B2B level and with customers.

The opportunities offered by digital data protection

When digital data protection is implemented transparently and to a high standard within a company, it automatically strengthens the company's trustworthiness and reputation. Companies with a high level of data protection stand out positively from their competitors and can strengthen their market position as a result. Consequently, customers and business contacts are more willing to provide information, which makes work processes run more smoothly and efficiently. Well-structured data protection management therefore saves companies a great deal of time and money. By constantly reviewing data processing, the associated processes within the company are continuously optimized.

The GDPR requires all companies to protect personal data. With data-compliant digitalization, you are protected against GDPR violations and do not have to fear fines.

How to successfully implement digital data protection

To successfully implement digital data protection in your company, a well-thought-out and clear process is necessary. It should include clear points of contact who are responsible for the required steps. All processing of personal data must be documented by means of a record of processing activities. This record of processing activities (ROPA) fulfills the documentation and accountability obligations to which companies are subject under Article 30 of the GDPR. 

If your company uses third parties as data processors, data processing agreements (DPAs) must be concluded with them. These must also be sufficiently documented. In addition, you must demonstrate which technical and organizational measures (TOMs) your company takes to protect personal data. 

Ensure that your employees are sensitized to all relevant data protection regulations and their practical implementation. There are special employee training coursesavailable that cover all important data protection regulations according to the department. At the end of the training, each employee receives a certificate with which they can prove their acquired skills in accordance with the accountability obligations under Art. 5 (2) GDPR.

All these measures can be implemented efficiently and easily with the help of our data protection software, Proliance 360. All documentation and accountability obligations can be verified here. Employees can take part in training courses online and have them confirmed with a certificate. Internal and external data protection officers can use the software to collaborate ideally.

The introduction of the GDPR has undoubtedly made digital data protection more complex, and the associated regulations and documentation requirements pose major challenges for companies. However, if you take the topic of data protection seriously, it brings several advantages. You not only strengthen your credibility and reputation, but also prevent high fines that could be imposed if data protection regulations are violated.

Companies at the forefront of digitalization would do well to finally rid digital data protection of its reputation as a burdensome and obstructive consumer protection tool and not to indulge in the irresponsible handling of personal data in the manner of many large corporations. This change in thinking is indispensable and can contribute significantly to gradually reducing the conflict between digitalization and data protection. After all, they are ultimately the two ends of the same strand of development.

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Author: Kathrin Strauß
Article published: 04/12/2021
Article updated: 04/25/2024