Banking Exam Digital Banking and Fintech 3

Question 1

Which authentication method uses behavioral biometrics such as typing rhythm and mouse movement patterns?

Accepted Answer

Continuous or passive authentication

Answer

Continuous or passive authentication monitors behavioral biometrics in real time to verify user identity without interrupting the session.

Question 2

What is 'Buy Now, Pay Later' (BNPL) and how is it typically regulated in the US?

Accepted Answer

A short-term installment loan product that largely falls outside traditional consumer credit regulation

Answer

BNPL products typically split purchases into installments and have historically operated in a regulatory gray area, though CFPB has moved to extend TILA protections to them.

Question 3

What is the purpose of a 'sandbox' environment in fintech development and regulatory contexts?

Accepted Answer

A controlled testing environment where fintechs can pilot products with limited regulatory requirements

Answer

Regulatory sandboxes allow fintech companies to test innovative products with real customers under relaxed regulatory oversight within defined parameters.

Question 4

What distinguishes a 'prepaid debit card' from a standard debit card in terms of federal protections?

Accepted Answer

Prepaid cards under the CFPB Prepaid Rule receive protections similar to debit cards including error resolution rights

Answer

The CFPB's Prepaid Rule extended Regulation E error resolution rights and disclosure requirements to prepaid accounts, aligning protections closer to those for debit cards.

Question 5

What is a 'stablecoin' in the cryptocurrency ecosystem?

Accepted Answer

A digital asset designed to maintain a stable value by pegging to a reference asset such as the US dollar

Answer

Stablecoins are cryptocurrencies pegged to stable reference assets (fiat currency, commodities, or algorithms) to minimize price volatility.

Banking Exam Practice Test

Banking Exam Practice Test

Banking Exam Digital Banking and Fintech 3