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.
