HIPAA for Fintech: How to Protect PHI and Build Trust

Fintech is no longer limited to payments, lending, or digital banking. It is steadily moving into healthcare through health savings accounts, wellness incentives, and health-focused financial products.

As this overlap grows, Fintech companies are increasingly finding themselves subject to HIPAA. What was once seen as a healthcare-only law now applies to fintech companies that handle Protected Health Information (PHI), and ignoring it can lead to serious risks.

This blog covers the importance and requirements of HIPAA for fintech, the key challenges, and best practices for achieving compliance.

Why HIPAA matters in the Fintech industry?

The Health Insurance Portability and Accountability Act (HIPAA) is a U.S. federal law enacted in 1996 to protect sensitive patient health information from being disclosed without the patient’s consent or knowledge.It mandates strict privacy and security standards for organizations that handle Protected Health Information (PHI).

While HIPAA is traditionally associated with healthcare providers, insurers, and clearinghouses, fintech companies increasingly intersect with health data through embedded finance, wellness-linked insurance products, and partnerships with healthtechs.

HIPAA matters for the fintech industry due to the expanding role fintechs play in healthcare-adjacent financial services. It is becoming a high-stakes security benchmark to:

• Build trust with health-focused partners
• Minimize breach liabilities
• Accelerate entry into regulated markets
• Prove operational maturity to auditors and regulators

Does HIPAA apply to Fintech companies?

Yes, but not always. HIPAA applies to two main groups:

• Covered Entities such as hospitals, health insurers, clinics)
• Business Associates that are vendors or partners who handle PHI on behalf of Covered Entities

Most fintech companies are not Covered Entities, but many become Business Associates when they store, process, or transmit PHI (Protected Health Information) as part of a partnership or integration with a health-focused organization. 

If your fintech product does any of the following, HIPAA requirements will apply:

• Acts as a payment processor for healthcare services
• Provides analytics or dashboards that use health data
• Offers infrastructure or cloud services storing PHI
• Manages wellness incentives
• Helps healthcare apps or websites process payments or offer financing options

HIPAA requirements for fintech companies handling PHI

For fintechs handling Protected Health Information (PHI), HIPAA means embedding security and privacy controls across people, processes, and technology. These are the key requirements they must implement:

1. Risk management

HIPAA requires fintechs to assess and manage risks to PHI regularly. This involves identifying vulnerabilities in systems and vendors, documenting them, assigning owners, and tracking remediation. Since fintech products evolve fast, risk management must be continuous, not one-time. 

2. Administrative safeguards

Administrative safeguards are the policy and governance layer of HIPAA. For fintechs, this means putting structure and accountability around handling health data. Key requirements include:

• Appointing a Privacy Officer and a Security Officer to oversee HIPAA programs
• Providing ongoing workforce training so employees understand their responsibilities
• Maintaining a clear incident response plan to act quickly if PHI is compromised

3. Physical safeguards

Physical safeguards secure the environments and devices where PHI is stored or accessed. HIPAA requires fintechs to prevent unauthorized physical access, while ensuring authorized staff can work securely. This includes:

• Restricting access to servers, offices, and employee devices
• Using access badges and entry logs
• Securing workstations with screen locks and encryption
• Properly disposing of devices and paper records containing PHI

4. Technical safeguards

Technical safeguards are the system-level controls that keep PHI safe from unauthorized access or cyber threats. For fintechs, this means implementing strong security practices within apps, databases, and infrastructure. Core requirements include:

• Encrypting PHI at rest (databases, backups) and in transit (networks, APIs)
• Enforcing role-based access controls and multi-factor authentication
• Maintaining audit logs to track system activity
• Configuring automatic log-off for inactive sessions 

5. Breach notification requirements

If the company is breached and PHI is compromised, fintech companies must follow HIPAA’s strict notification rules. This includes notifying affected individuals within 60 days, reporting the breach to the U.S. Department of Health and Human Services (HHS), and informing the media in the affected region if more than 500 records are involved. 

6. BAA agreements

HIPAA applies not just to your company but also to your broader ecosystem of vendors and partners. Fintechs must sign Business Associate Agreements (BAAs) with any third party that handles PHI on their behalf and ensure those vendors have the proper HIPAA-compliant safeguards in place. 

7. Policies, documentation and proof

HIPAA is not only about implementing safeguards but also being able to prove compliance when regulators or auditors come knocking. Fintech companies must keep thorough records demonstrating their HIPAA program is active, current, and enforced. Key requirements include:

• Keeping written compliance policies updated as systems or laws change
• Documenting workforce training, risk assessments, and system audits
• Retaining detailed records and logs to show audit readiness at any time 

HIPAA compliance challenges in financial technology

From unclear rules to complex integrations, here are the most common challenges fintechs run into, and the practical solutions to overcome them:

1. Ambiguous applicability

Many fintechs are unsure whether they qualify as Business Associates under HIPAA, especially when PHI exposure happens indirectly (e.g., via integrations with healthtech or insurers). This uncertainty often leads to fintechs underestimating their compliance obligations until a partner or regulator raises the issue.

Solution: Conduct a data flow mapping exercise to clarify how PHI moves through your systems and identify where HIPAA obligations apply.

2. Complex integrations

Fintech platforms often use multiple external systems, from payment gateways to CRMs and health record platforms. Each integration increases the attack surface and makes it harder to ensure PHI is consistently protected.

Solution: Use centralized compliance monitoring and enforce vendor risk management with BAAs to close security gaps.

3. Overlapping requirements

Fintechs that already comply with PCI-DSS, GDPR, or SOC 2 often struggle with overlapping but slightly different requirements. This leads to duplicated work and wasted effort.

Solution: Use a compliance automation platform that maps controls across frameworks to reduce redundancy. 

4. Rapid product evolution

Fintech products evolve quickly, adding new features like analytics dashboards, lending options, or embedded health payments. These changes can unknowingly expose PHI and create compliance gaps.

Solution: Build HIPAA impact assessments into your product development lifecycle so risks are flagged before launch.

5. Audit readiness 

Preparing for HIPAA audits often means scrambling to collect evidence from scattered systems, which drains time and creates errors. This can become a growth bottleneck, especially for fintechs with lean teams.

Solution: Automate evidence collection and maintain an auditor-ready dashboard so you’re always prepared. 

HIPAA and PCI overlaps in fintech

For many fintech companies, HIPAA and PCI DSS are the two most relevant compliance frameworks. HIPAA governs Protected Health Information (PHI), while PCI DSS governs payment cardholder data. Although their focus areas differ, there is significant overlap in how fintechs must safeguard sensitive data. 

Key areas of overlap

• Encryption of data: Both frameworks require strong encryption standards to protect sensitive data at rest and in transit. For fintechs, this means applying the same encryption policies across databases, APIs, and payment systems.
• Access controls: HIPAA and PCI mandate strict access management, including role-based permissions, unique user IDs, and multi-factor authentication. This prevents unauthorized staff from accessing PHI or cardholder data.
• Audit trails and monitoring: Both frameworks require activity logging to track who accessed or modified sensitive data. For fintechs, implementing centralized logging solutions can satisfy requirements across both frameworks at once.
• Vendor management: HIPAA expects Business Associate Agreements (BAAs), while PCI requires vendor compliance validation. In both cases, fintechs must assess and monitor third parties with access to sensitive data. 
• Incident response: Both frameworks demand documented processes to detect and respond to security incidents quickly. While HIPAA adds strict notification timelines, the underlying need for tested response plans is shared. 
• Security policies and training: Both frameworks emphasize documented security policies and regular employee training. This ensures the workforce understands compliance obligations and can recognize potential risks. 

HIPAA compliance best practices for fintech firms

To stay HIPAA compliant, fintech companies must go beyond checklists and adopt best practices they can apply every day:

Map and minimize PHI exposure

Fintechs should clearly understand where PHI is collected, stored, and transmitted across their systems. Data mapping exercises help identify every system, integration, and vendor that touches PHI. Once mapped, fintechs should actively reduce their exposure by limiting unnecessary data collection and storage. 

For example, a payment processor linked to a telehealth platform should tokenize or de-identify data wherever possible to reduce compliance scope and breach risk.

Embed compliance into product development

HIPAA compliance should not be an afterthought bolted onto finished products. Fintechs need to integrate compliance checks into their product design and development lifecycle. Before new features or integrations go live, conduct HIPAA impact assessments to evaluate how PHI will be handled. 

Automate control monitoring

Given the pace at which fintech platforms evolve, manual monitoring is not sufficient. Automating the tracking of key HIPAA controls, such as encryption, access management, and system logging, ensures ongoing compliance and enables early detection of potential issues.

Manage vendor relationships

Fintechs depend heavily on third parties including cloud providers, analytics vendors, and payment gateways, many of which may access PHI. Under HIPAA, your compliance is only as strong as your weakest vendor. Fintechs must sign Business Associate Agreements (BAAs) with every vendor that processes PHI, verify that their controls meet HIPAA standards, and re-assess vendors regularly.

Train employees continuously

Compliance requires an informed workforce. Instead of relying solely on annual training, fintechs should provide ongoing, role-specific training that reinforces HIPAA requirements and equips employees to recognize and respond to risks. 

For example, developers need guidance on secure coding practices for PHI, while customer support teams need to know what they can and cannot share over email or chat.

Optimize for breach response

Even with strong safeguards, breaches can occur. Fintechs should develop and test a breach response plan that allows them to act swiftly, notify affected stakeholders within HIPAA’s timelines, and minimize operational and reputational damage.

Expedite HIPAA compliance with Sprinto

HIPAA compliance can feel daunting for fintech companies, especially with evolving products, complex integrations, and the need to meet multiple frameworks like PCI-DSS or GDPR alongside HIPAA. The key is not just achieving compliance once but staying compliant continuously as your business scales. 

This is where Sprinto comes in.

Sprinto simplifies HIPAA compliance for fintechs by combining automation, integrations, and expert support into one platform:

• Automated risk and control mapping: Sprinto integrates with your existing stack and auto-maps risks and controls to HIPAA safeguards, saving months of manual work.
• Continuous monitoring: With 300+ integrations, Sprinto continuously monitors systems, vendors, and controls, alerting you to compliance drift before it becomes an issue.
• Audit-ready evidence collection: Sprinto automatically gathers and organizes evidence in auditor-approved formats, ensuring you’re always prepared for reviews.
• Pre-built HIPAA policies and training modules: Ready-to-use, cloud-aligned templates and role-specific training modules accelerate compliance rollout.
• Vendor risk management: Sprinto centralizes BAA management and vendor monitoring, making third-party compliance easier to track.
• Scalable, multi-framework support: Beyond HIPAA, Sprinto helps fintechs align with PCI-DSS, SOC 2, GDPR, and more — without duplicating work. 

With Sprinto, HIPAA compliance transforms from a costly, reactive burden into a scalable compliance program that supports growth, unlocks healthcare partnerships, and strengthens trust with customers and regulators.

Ready to take the first step? See Sprinto in action. 

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