How Regulated Industries Use Privacy-Enhancing Technologies (PETs)
With increasing volume of data and regulatory controls that are only tightening, regulated industries have a hard paradox to deal with: they will need to leverage sensitive data to perform and operate, innovate and compete, and reduce exposure, misuse, and impact of breaches at the same time. Perimeter protection, encryptions are still important traditional security controls, though, they are no longer sufficient to deal with the entire risk environment brought about by the adoption of the cloud, APIs, analytics, and third-party ecosystems.
Here, the Privacy-Enhancing Technologies (PETs) are transforming the security strategies of the enterprise. PETs are not merely data protection at rest or in transit but are engineered to minimize data exposure in use, allowing an organization to comply with its regulatory requirements and significantly decreasing the impacts of the unavoidable breaches.
Table of Content
What Are PETs and Why Regulators Care
Financial Services: Reducing Blast Radius Without Slowing Transactions
Healthcare: Enabling Data Sharing Without Violating Patient Privacy
Government and Critical Infrastructure: Protecting Data Across Trust Boundaries
Why PETs Reduce Compliance Burden, Not Just Risk
CryptoBind: Enabling PETs Through Centralized Cryptographic Control
The Strategic Shift: From Data Protection to Data Neutralization
What Are PETs and Why Regulators Care
Privacy-Enhancing Technologies are a class of cryptographic and architectural techniques that enable data processing without revealing sensitive information in its original form. Common PETs include:
- Format-preserving encryption
- Secure enclaves
- Confidential computing
- Privacy-preserving analytics
- Key-centric data isolation
These techniques are becoming the method of choice among regulators since PETs are consistent with the fundamental tenets of regulation including the minimization of data, purpose limitation, and reduction of breach impact. Legislation, such as GDPR, DPDP, HIPAA, PCI DSS, and local banking laws do not inquire of whether or not the data is encrypted, but how much sensitive data is uncovered, where, and to whom.
PETs change security to be more of a data exposure control, which is precisely what contemporary compliance systems demand.
Financial Services: Reducing Blast Radius Without Slowing Transactions
Banks, payment processors, and fintech platforms manage large amounts of personally identifiable information (PII) and payment data in digital mediums. As much as encryption helps preserve records stored, there is still need to have operational systems that need to be used and this poses an inevitable risk.
Real-world scenario:
A regional bank facilitates the real time detection of fraud in mobile applications, APIs and analytics platforms that are based on third parties. The bank uses tokenization, which is supported by centralized cryptography policy, as an alternative to distributing raw PANs and customer identifiers. Vault-based re-identification is closely regulated and the tokens are analyzed by the fraud systems, rather than actual data.
Attackers will have access to non-sensitive tokens and not usable financial data when a third-party analytics environment is compromised. By ensuring that the regulated data did not exit the scope of the protected trust zones, compliance reporting ensures that the scope of breach notification and regulatory exposure is much lower.
This method enables financial institutions to balance both the transaction speed and reduction of the impact of breaches, something the regulators are demanding more of.
Healthcare: Enabling Data Sharing Without Violating Patient Privacy
The healthcare institutions are required to share data in treating, researching, and billing, but they are faced with stringent laws of patient privacy. Encryption is not effective after data access by the clinicians, researchers, or partners.
Real-world scenario:
A study on the results of the treatment is conducted by a network of hospitals in cooperation with a research institute. Patient identifiers are tokenized with the use of PETs and the data is sent to research systems. Researchers obtain knowledge without having direct access to identifiable patient information, and clinicians retain privileges of re-identification that may be controlled.
In case of breaching research infrastructure it is impossible to recreate identities of patients. The hospital is shown to be adhering to the principles of privacy-by-design and speeding up medical research.
PETs therefore will convert data sharing in healthcare into a risk of compliance as opposed to an auditable process.
Government and Critical Infrastructure: Protecting Data Across Trust Boundaries
Governmental bodies deal with records pertaining to citizens, national identifiers, and sensitive infrastructure information, which in many cases exist on old systems and clouds.
Real-world scenario:
One of the government agencies upgrading their citizen services portal with cloud infrastructure. Rather than sharing bare identifiers of citizens among applications, it adopts data protection which is data-centric data protection, based on PETs. Tokens are used in place of sensitive attributes in day-to-day processes, whereas cryptographic controls are centrally managed.
Even a one system breach is breached, attackers get incomplete data that cannot be used, which seriously restricts national-level risk and enhances regulatory responsibility.
For governments, PETs provide defense-in-depth at the data layer, independent of infrastructure or vendor.
Why PETs Reduce Compliance Burden, Not Just Risk
One of the main strengths of PETs is that they have an effect on reduction of regulatory scope. In case sensitive data is eliminated out of operational settings:
- Not so many systems are under tight compliance audits.
- The requirements of breach notification can be minimized.
- It becomes easier to determine third party risk.
- There is increased compliance evidence.
Regulators increasingly distinguish between encrypted exposure and non-exposed sensitive data. PETs help enterprises demonstrate that compromise does not automatically mean disclosure.
CryptoBind: Enabling PETs Through Centralized Cryptographic Control
The adoption of PETs at scale cannot be limited to point solutions, it needs to be guided by the same cryptography governance at every level. The technology platforms such as CryptoBind have a fundamental role here.
CryptoBind helps companies to deploy PETs, including tokenization and encryption, using central key management, policy enforcement, and crypto-agility. Sensitive data may be neutralized at the point of use and cryptographic controls are independent of applications, users and infrastructure.
By supporting hardware-backed trust, lifecycle-aware key control, and quantum-ready cryptography, CryptoBind helps regulated organizations ensure that PET implementations remain resilient as threats and compliance standards evolve.
Instead of integrating cryptography within applications, CryptoBind manages it as an enterprise service with controlled usage and lowers operational risk coupled with enhancing regulatory stance.
The Strategic Shift: From Data Protection to Data Neutralization
The future of compliance is no longer about the higher walls, but about the lessening of what is to be defended. PETs make this transition possible, since sensitive data is not often exposed, even in the case of a breach in systems.
In the case of regulated industries, this is a shift in attitude:
- It is destined to encrypt everything to inoculate what matters.
- Protecting the perimeter to the protection of data.
- Checkbox compliance to quantifiable breach impact mitigation.
Companies that embrace PETs today are not merely gearing towards creating audit-friendliness but developing trust architectures that will support them in abiding by regulations and threats of tomorrow.
