Banking Exam Digital Banking and Fintech 2 — Questions and Answers
Question 1: Which regulation requires US banks to share customer financial data with third-party fintech apps when customers request it?
- CFPB Section 1033 (Correct answer)
- Dodd-Frank Section 619
- Bank Secrecy Act
- Regulation E
Correct answer: CFPB Section 1033
CFPB Section 1033 grants consumers the right to access and share their financial data with authorized third parties.
Question 2: What is a 'neobank' in the context of modern financial services?
- A bank that specializes in international wire transfers
- A fully digital bank with no physical branch locations (Correct answer)
- A central bank digital currency issuer
- A bank that exclusively serves cryptocurrency users
Correct answer: A fully digital bank with no physical branch locations
Neobanks are purely digital financial institutions that operate entirely online without traditional brick-and-mortar branches.
Question 3: What does 'screen scraping' refer to in the context of fintech data aggregation?
- Capturing screenshots of fraudulent transactions
- Using customer credentials to log into bank portals and extract data (Correct answer)
- Scanning paper documents into digital format
- Monitoring competitor banking app interfaces
Correct answer: Using customer credentials to log into bank portals and extract data
Screen scraping involves fintechs using a customer's login credentials to access their bank account and extract financial data, a practice increasingly replaced by APIs.
Question 4: Which technology underlies most cryptocurrency transactions and enables decentralized record-keeping?
- Distributed ledger / blockchain (Correct answer)
- Relational database management
- Cloud object storage
- Federated learning
Correct answer: Distributed ledger / blockchain
Blockchain is a distributed ledger technology that records transactions across a network of computers without a central authority.
Question 5: What is 'RegTech' in the banking industry?
- Technology used to build better ATM networks
- Software solutions that help financial institutions comply with regulations efficiently (Correct answer)
- A government agency that regulates technology companies
- Tools for detecting network intrusions in bank systems
Correct answer: Software solutions that help financial institutions comply with regulations efficiently
RegTech refers to technology solutions designed to help financial institutions manage regulatory compliance processes more efficiently and cost-effectively.
Question 6: What is the primary function of a payment gateway in e-commerce transactions?
- Storing cardholder data on the merchant's server
- Transmitting payment data securely between the merchant, acquirer, and card network (Correct answer)
- Issuing credit cards to online shoppers
- Providing fraud insurance to merchants
Correct answer: Transmitting payment data securely between the merchant, acquirer, and card network
A payment gateway securely transmits encrypted payment information between the merchant, acquiring bank, and card payment network to authorize transactions.
Question 7: What does 'interchange fee' refer to in debit and credit card transactions?
- Fee charged by ATM networks for cash withdrawals
- Fee the merchant's bank pays to the cardholder's bank for processing a transaction (Correct answer)
- Annual fee charged to cardholders by issuers
- Fee charged by card networks to process foreign transactions
Correct answer: Fee the merchant's bank pays to the cardholder's bank for processing a transaction
Interchange fees are paid by the acquiring (merchant's) bank to the issuing (cardholder's) bank and are set by card networks like Visa and Mastercard.
Banking Exam Digital Banking and Fintech 2
Which regulation requires US banks to share customer financial data with third-party fintech apps when customers request it?