Digital Banking
What this domain tests
Customer-facing digital channels and the controls that make them safe: onboarding, authentication, transaction limits, fraud monitoring, grievance handling and regulatory rules for digital lending and banking units.
Core rules
- Digital onboarding uses Aadhaar-based e-KYC, video KYC or account aggregator data; banks must verify customer identity, obtain consent, and retain audit trails.
- Authentication should be risk-based: device binding, MFA, transaction signing for high value, cooling periods for new beneficiaries, and step-up authentication for unusual behaviour.
- Channel controls include velocity limits, beneficiary whitelisting, real-time alerts, session timeouts, jailbreak/root detection, and mule-account monitoring.
- Customer protection requires clear disclosure, grievance redressal, chargeback/dispute handling and fraud awareness; unauthorised electronic transaction liability follows RBI's zero-liability framework when the bank is at fault and the customer reports promptly.
- Digital lending requires direct disbursal to the borrower's account, no cash, transparent fees, and compliance with the Digital Lending Guidelines; digital banking units are brick-and-mortar outlets with self-service digital infrastructure.
Worked example
A bank launches instant account opening with a video-KYC journey. Correct controls: liveness detection, PAN/Aadhaar validation, geotagging, duplicate-customer checks, risk scoring, account activation limits until full KYC, and monitoring for synthetic identities. Letting a new customer immediately transfer a large amount to a newly added beneficiary is a classic mule-account risk; a cooling period and lower initial limit reduce it.
Traps that cost marks
- Treating SMS OTP as sufficient for all transactions.
- Ignoring social engineering and customer-authorised fraud.
- Assuming digital channels need no reconciliation to CBS.