Digital Banking and Technology Flashcards

A bank uses machine learning to dynamically adjust credit limits based on real-time spending behavior. What type of system is this?

Answer: Adaptive credit management

Adaptive credit management uses real-time data and machine learning to continuously adjust credit limits and terms based on current customer behavior and risk signals.

What is the role of a 'Banking-as-a-Service' (BaaS) provider?

Answer: A licensed bank that provides its banking infrastructure via APIs to non-bank companies

BaaS providers are licensed financial institutions that expose their banking capabilities (accounts, payments, compliance) through APIs, enabling non-banks to offer financial products.

In the context of US banking regulations, which body has primary oversight authority over cybersecurity standards for nationally chartered banks?

Answer: Office of the Comptroller of the Currency (OCC)

The OCC has primary supervisory authority over national banks and federal savings associations, including establishing cybersecurity expectations and examination standards.

What is 'synthetic identity fraud' in digital banking?

Answer: Creating a fictitious identity by combining real and fabricated personal information to defraud banks

Synthetic identity fraud combines real data (like a valid SSN) with fake information to create a new, fictional identity that can be used to open bank accounts and obtain credit.

Which concept describes the ability of banking systems to continue operating despite component failures, cyberattacks, or disasters?

Answer: Operational resilience

Operational resilience is the broader concept encompassing a bank's ability to prevent, adapt to, respond to, recover from, and learn from operational disruptions of any kind.

What does 'screen scraping' refer to in the context of open banking, and why is it being replaced?

Answer: Third parties accessing customer bank data by logging in with customer credentials; replaced by secure APIs due to security risks

Screen scraping requires customers to share login credentials with third parties, creating serious security risks; secure API-based data sharing eliminates the need to share credentials.

A bank implements a real-time gross settlement (RTGS) system. What is its primary advantage over batch payment systems?

Answer: Immediate finality — each transaction settles individually in real time with no netting

RTGS systems settle each transaction individually and immediately, providing real-time finality and eliminating settlement risk, which is critical for large-value interbank transfers.