How Financial Institutions and Data-Sensitive Industries Can Leverage Machine Learning While Keeping Data Private

Jayesh Kenaudekar
Jul 16
3 min read

Updated: Jul 17

In an era where data drives everything—from lending decisions to fraud detection—organizations across finance, healthcare, and telecom face a growing paradox:

"How can we use machine learning on sensitive data without exposing it?"

The answer lies in privacy-preserving machine learning—a new paradigm that enables powerful insights while keeping raw data private.

Why Privacy Matters More Than Ever

Organizations today sit on vast amounts of personal data:

Banks have customer financial histories
Insurers store health and claim records
Telcos collect user mobility and device patterns

This data is gold for AI, but also a liability if leaked, misused, or breached. Regulatory mandates like RBI’s privacy framework, DPDP (India), GDPR (EU), and rising public scrutiny demand one thing:

⚠️ Protect data, even while it is being processed.

The Traditional ML Workflow Is Broken

Traditional ML requires aggregating data in centralized servers or data lakes. This exposes sensitive information to:

Internal misuse
Cross-party leakage
Attacks during training or inference

But what if we could train and infer on encrypted or protected data—without ever revealing it?

Enter: Privacy-Preserving Machine Learning (PPML)

PPML is a set of technologies that allow machine learning on private data without compromising its confidentiality.

Some of the core techniques include:

Homomorphic Encryption (HE)

Encrypts data such that computation can be performed directly on ciphertext, and only results can be decrypted.

Secure Multi-Party Computation (SMPC)

Enables multiple entities to jointly compute a function over their inputs while keeping them private.

Federated Learning

Trains models locally on user devices or servers, sending only model updates—not raw data.

Real Use Cases in Finance

Let’s explore how banks and lenders can put PPML to work today:

1. Loan Default Prediction Without Seeing User Data

Lenders can:

Encrypt a borrower’s financial attributes
Run a prediction model on the encrypted data
Get encrypted risk scores
Decrypt only the final result

This ensures model inference happens privately, even on sensitive financial data.

2. Collaborative Fraud Detection Across Banks

Using SMPC or federated models, banks can:

Share risk indicators of suspicious accounts
Build shared fraud scores
Without revealing PII or internal rules

3. Personalized Wealth Recommendations

Wealth advisors can:

Analyze spending, deposits, and investments
Deliver recommendations
Without accessing raw transaction data

How It Works: A Sample Architecture

Here's how a lender can use Homomorphic Encryption for private ML inference:

Borrower's financial data (from internal systems or Account Aggregator)
Data is encrypted locally using HE
Encrypted data is sent to a model server (e.g., PryvX)
Inference is done on encrypted inputs
Encrypted result is returned
Lender decrypts and gets the risk score

The model never sees raw user data.

Secure, compliant, and private.

Getting Started: Demo App

We built a demo app that predicts loan default:

Takes user input (like age, income, credit score)
Encrypts it using Homomorphic Encryption
Performs logistic regression on encrypted values
Shows a decrypted default probability

🔗 Try the demo

The Business Case

Adopting PPML isn’t just a technical decision—it’s a strategic moat.

Comply with privacy regulations
Build trust with users
Enable smarter decisions with broader collaboration
Avoid risks of central data exposure

In the coming years, AI and privacy will no longer be separate tracks. They’ll be intertwined.

Ready to Collaborate?

At PryvX, we help organizations build privacy-preserving AI pipelines using techniques like HE, SMPC, and federated learning. We work with:

Banks
Fintechs
Telcos

Let’s unlock value from sensitive data—without ever compromising it.

Reach out for a demo or pilot.