Banking Digital Banking 2 — Questions and Answers
Question 1: Which regulation primarily governs consumer data privacy for digital banking customers in the United States?
- GDPR
- GLBA (Correct answer)
- PCI DSS
- SOX
Correct answer: GLBA
The Gramm-Leach-Bliley Act (GLBA) requires U.S. financial institutions to explain how they share and protect customers' private information.
Question 2: A customer tries to log into their mobile banking app but receives a one-time passcode via SMS. This security method is called:
- Biometric authentication
- Two-factor authentication (2FA) (Correct answer)
- Single sign-on (SSO)
- OAuth
Correct answer: Two-factor authentication (2FA)
Two-factor authentication combines something you know (password) with something you have (SMS code), adding a second layer of security.
Question 3: What is the primary purpose of a bank's API (Application Programming Interface) in open banking?
- To store customer transaction history offline
- To allow third-party apps to securely access bank data with customer consent (Correct answer)
- To encrypt all ATM transactions
- To process wire transfers between branches
Correct answer: To allow third-party apps to securely access bank data with customer consent
Open banking APIs enable authorized third-party developers to build applications and services that access bank account data with the customer's permission.
Question 4: Which of the following best describes a 'digital wallet'?
- A physical card embedded with NFC chip
- A software application that stores payment credentials for electronic transactions (Correct answer)
- An online savings account with no physical branch
- A prepaid debit card issued by a fintech company
Correct answer: A software application that stores payment credentials for electronic transactions
A digital wallet is a software-based system that securely stores payment information, allowing users to make electronic transactions via smartphones or computers.
Question 5: What does 'KYC' stand for in the context of digital banking onboarding?
- Keep Your Capital
- Know Your Customer (Correct answer)
- Key Yield Control
- Kinetic Year-end Compliance
Correct answer: Know Your Customer
Know Your Customer (KYC) is a regulatory process requiring banks to verify the identity of clients to prevent fraud, money laundering, and terrorist financing.
Question 6: A neobank differs from a traditional bank primarily because it:
- Offers higher interest rates by law
- Operates entirely online with no physical branch network (Correct answer)
- Is insured by a private company instead of the FDIC
- Only serves business customers
Correct answer: Operates entirely online with no physical branch network
Neobanks are digital-only financial institutions with no physical branches, delivering all services through mobile apps and websites.
Question 7: Which technology allows customers to make contactless payments by tapping their phone at a point-of-sale terminal?
- Bluetooth Low Energy (BLE)
- Near Field Communication (NFC) (Correct answer)
- QR code scanning
- RFID long-range
Correct answer: Near Field Communication (NFC)
NFC (Near Field Communication) enables secure, short-range wireless communication between a mobile device and payment terminal for contactless transactions.
Banking Digital Banking 2
Which regulation primarily governs consumer data privacy for digital banking customers in the United States?