Financial Technology & Innovations Flashcards
7 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Technology & Innovations flashcards as text
Which network effect most benefits a two-sided payment platform like Visa or a digital wallet?
Answer: More merchants attract more cardholders, and more cardholders attract more merchants
Two-sided network effects occur when the value of a payment platform increases for both merchants and consumers as participation grows on each side.
What distinguishes a 'neobank' from a traditional bank in operational terms?
Answer: Neobanks operate exclusively through digital channels with no (or minimal) physical branch presence
Neobanks deliver banking services entirely via mobile apps and web platforms, with dramatically lower overhead than branch-based banks.
In the context of fintech lending, what is 'peer-to-peer (P2P) lending'?
Answer: A marketplace connecting individual borrowers directly with individual or institutional investors
P2P lending platforms match borrowers seeking loans with investors seeking returns, bypassing traditional bank intermediaries and often offering better rates for both parties.
What is the significance of 'ISO 20022' in the fintech payments landscape?
Answer: It is a global messaging standard enabling richer, structured data in financial transactions
ISO 20022 is an international standard for financial messaging that carries richer data than legacy formats like SWIFT MT, enabling better reconciliation and compliance screening.
What is 'synthetic identity fraud' and why is it a particular challenge for digital lenders?
Answer: Combining real and fictitious information to create a new identity that can pass basic checks
Synthetic identity fraud blends real data (e.g., a valid SSN) with fabricated information to create a new identity, making it harder to detect than traditional identity theft.
What does 'interchange fee' represent in a card payment transaction?
Answer: The fee the merchant's bank pays to the cardholder's bank for each transaction
The interchange fee is paid by the acquiring bank (merchant's bank) to the issuing bank (cardholder's bank) and typically ranges from 1–3% of the transaction value.
What is the core advantage of 'real-time gross settlement' (RTGS) systems in fintech infrastructure?
Answer: Each transaction is settled individually and immediately, eliminating settlement risk
RTGS systems settle each transaction individually in real time, eliminating the credit exposure that accumulates during batch settlement delays.