Introduction
FinTech apps make money movement feel effortless, but the moment you sign up they start collecting a lot of personal and financial details. This can include your phone number, bank information, ID proofs, transaction history and even how you use your device. All of this sits behind the smooth buttons and screens you tap every day. Because the data is sensitive and can easily be misused. So, with the implementation of Digital Personal Data Protection Act, 2023 (hereinafter referred to as “DPDPA”) set firm boundaries. They tell these apps what they can collect, how long they can keep it, who they can share it with and what kind of permission they must take from you. Thus, the law treats your data as something valuable that deserves protection, not a free resource for companies to use as they like.
Requirements of Informed Consent
When a FinTech app asks for your data, the DPDPA sets very clear rules on how that consent must be taken. The core idea sits in Section 4 of DPDPA, which says personal data can be processed only for a lawful purpose after getting consent or another valid ground. Section 6 of DPDPA builds on this and explains what “valid consent” really means. It has to be specific, informed and given through a clear action. The app must tell you what data it wants, why it needs it and how it plans to use it. Consent can’t be hidden, bundled or forced on you just because you want to use the app. Section 7 of DPDPA gives you the right to withdraw that consent whenever you want, and the company must make this as easy as giving consent in the first place. The consent if not taken properly, the entire foundation of their data processing becomes unlawful under the DPDPA and makes them accountable if they over-collect, misuse data or hide important details from users. It puts the user at the centre by giving you control and forcing companies to treat your financial information with the seriousness it deserves.
Principles of Security, Purpose Limitation, and Local Storage
The DPDPA expects companies, including FinTech apps, to store personal data with real care. This isn’t about ticking a box. The law wants companies to use strong security measures like encryption, restricted access and regular checks to make sure the data isn’t exposed or tampered with. This sits mainly in Section 8 of DPDPA, which places a duty on every Data Fiduciary to keep data safe and prevent breaches. The idea is simple that if you collect someone’s financial information, you must protect it like something precious, not leave it lying around in a risky system. Section 8(3) of DPDPA makes this clear by limiting retention to what is reasonably required for the purpose for which the data was collected. Once that purpose is over, the data has to be deleted. For example, if a FinTech app has finished verifying your KYC, it cannot hold on to extra copies “just in case”. This protects users from becoming part of huge data banks that companies keep forever without good reason. Cross-border storage is another important point. The DPDPA allows transfers of personal data outside India, but only to countries that are not restricted by the government. In practice, this means FinTech apps can use global cloud servers, but they must still follow the safeguards and security expectations of Indian law.
Enforcement of Data Protection Rights
The DPDPA gives users a clear set of rights so they never feel powerless once their data is in a company’s hands. You have the right to ask a FinTech app what information it has collected about you, how it uses it and who it has shared it with. If something is wrong or outdated, you can ask them to correct it. If you no longer want them to keep your data, you can request deletion, unless the company is required by law to hold on to it for a specific purpose like taxation or audit logs. You also have the right to withdraw consent if you don’t want your data to be used anymore. All these rights sit mainly in Sections 12 and 13 of the DPDPA, which put the user at the centre and make sure companies cannot hide behind complicated processes. FinTech apps work with information that goes much deeper than a simple email or phone number. They handle ID documents, bank details, repayment patterns, risk scores and behavioral data. This kind of information can reveal a lot about your financial habits and personal life.
Regulatory Exceptions and Transparency Norms
FinTech apps handle some of the most sensitive information a person can share. Your bank details, UPI history, income slips, credit scores and even your spending patterns all pass through these platforms. Some apps also rely on biometrics like face scans or fingerprints. and can directly reveal your financial identity and, in many cases, your personal habits. Because of how sensitive this information is, DPDPA treats financial data as high-impact.
High-impact status also changes how breaches are handled. If a FinTech app suffers a leak or any kind of unauthorized access, the company cannot quietly fix things behind the scenes. Under the DPDPA, they must report the breach to the Data Protection Board and, where relevant, inform the user as well. On top of security, the law also expects transparency. A FinTech app must clearly explain what data it collects, why it collects it and what it does with it. This should appear in a privacy notice that you can read without feeling lost in legal jargon. You shouldn’t have to guess what is happening behind the screen or rely on trust alone. The law wants these explanations to be written in plain, understandable language so users don’t feel tricked or misled. Transparency also means control. Apps must show you straightforward settings that let you manage permissions, withdraw consent or adjust what the app can access. If you don’t want the app to use your location, contact list or particular financial details, you should be able to switch that off without feeling like you’re breaking the app. These choices must be easy to find and easy to use. When companies make privacy settings hard to locate or confusing, they weaken user control, and the DPDPA tries to prevent that.
Fiduciary Responsibility and Oversight Obligations
The DPDPA puts the main responsibility on the FinTech company itself, calling it the Data Fiduciary. This means the app cannot blame someone else if your data is mishandled. Even when it works with banks, NBFCs, cloud providers or analytics partners, the FinTech platform stays accountable for how your information is collected, stored, shared and protected. Its partners act as Data Processors, but they operate under the instructions and standards set by the Fiduciary. The law expects the FinTech company to keep a close watch on everyone involved in the data chain. This matters because most FinTech apps rely heavily on outsourcing. Payments move through multiple intermediaries, lending apps partner with NBFCs, and almost every platform uses third-party cloud services. With so many parties touching the data, the risk naturally increases. The DPDPA tries to reduce that risk by requiring strong contracts, regular audits and clear documentation, so every processor follows the same rules. In simple words, the app you interact with is responsible for the entire data journey, not just the part you see on your screen.
AMLEGALS Remarks
DPDPA is built to give people control over their own information. That matters even more in FinTech, where the data involved is deeply personal and directly connected to your financial life. By setting clear rules on consent, storage, sharing and user rights, the Act pushes companies to treat data with the same seriousness they treat money. It reminds FinTech players that trust isn’t automatic. It has to be earned through transparency, security and respect for the user. For the industry, these obligations aren’t a burden, infact they are a baseline. DPDPA gives companies a clear framework to follow so they don’t end up cutting corners or exposing users to unnecessary risks. Whether it’s a small payment app or a large lending platform, everyone is expected to follow the same standards. As FinTech grows and becomes central to daily life in India, the DPDPA acts as a guardrail, making sure innovation doesn’t come at the cost of people’s privacy.
For any queries or feedback, feel free to connect with Hiteashi.desai@amlegals.com