Question 1

What is digital onboarding and how does it differ from traditional account opening?

Accepted Answer

Digital onboarding is the end-to-end process of opening a bank account remotely through a mobile or web channel, completing KYC and AML checks in minutes rather than days. Modern digital onboarding combines document scanning (passport, driving licence), biometric facial liveness, sanctions and PEP screening, address verification through bureau or open banking lookups, and risk-based identity proofing — orchestrated to meet AMLD requirements without forcing the customer into a branch. Best-in-class implementations target end-to-end completion in under five minutes with abandonment rates below 25%; legacy in-branch processes typically take 3–7 working days.

Question 2

What is the UK FCA Consumer Duty and how does it affect retail banks?

Accepted Answer

The Consumer Duty is the UK Financial Conduct Authority's overarching standard of conduct for retail financial services, in force for new and existing products from 31 July 2023 and for closed-book products from 31 July 2024. It requires firms to deliver "good outcomes" for retail customers across four pillars: products and services, price and value, consumer understanding, and consumer support. For retail banks this translates into product governance documentation, fair-value assessments, vulnerability identification, evidence of customer comprehension at point-of-sale, and Board-level outcome monitoring — all of which must be auditable and reported to the FCA annually.

Question 3

What is DORA and how does it affect personal banking platforms?

Accepted Answer

The Digital Operational Resilience Act (DORA) is an EU regulation that applies from 17 January 2025 to financial entities including banks, payment institutions, and EMIs. It harmonises requirements across five domains: ICT risk management, incident reporting, digital operational resilience testing (including threat-led penetration testing for systemically important firms), ICT third-party risk management with mandatory contract clauses, and information sharing. For personal banking platforms, the practical impact is on cloud and SaaS contracts, incident reporting timelines (initial notification within four hours of classification), and the requirement for a register of all ICT third-party providers including subcontractors.

Question 4

What is Strong Customer Authentication (SCA) and how does it apply to retail banking?

Accepted Answer

Strong Customer Authentication is the two-factor authentication requirement introduced by PSD2 and fully enforced in the UK from 14 March 2022. It applies to electronic payments, account access, and any "remote action" that could imply a fraud risk. In retail banking, SCA is delivered via something the customer has (registered device, hardware token), something they know (PIN, password), and/or something they are (biometrics). PSD3 retains SCA but expands the exemption framework — particularly for low-risk, low-value, and risk-scored transactions — and requires standardised performance and accessibility for SCA across providers.

Question 5

How is GDPR relevant to AI-powered personalisation in retail banking?

Accepted Answer

GDPR — in force since 25 May 2018 — sets the lawful-basis, transparency, and rights framework for any processing of personal data, and Article 22 specifically addresses solely-automated decision-making with significant effects on the data subject. For personal banking this is most relevant to credit and lending decisions, fraud blocking, and personalised pricing or marketing. Banks must establish a clear lawful basis (typically legitimate interest or explicit consent), provide meaningful information about the logic involved, allow the customer to obtain human intervention, and provide a route to challenge automated outcomes. The EU AI Act layers further obligations on high-risk credit-scoring systems from 2026.

Question 6

What's the difference between AIS and PIS in open banking?

Accepted Answer

Account Information Services (AIS) read account data — balances, transactions, identity — from a customer's bank with their consent, enabling personal financial management apps, affordability checks, and cross-bank dashboards. Payment Initiation Services (PIS) initiate payments from the customer's bank account on their behalf, typically used for A2A checkout flows. Both were introduced by PSD2, both require provider authorisation as a Third Party Provider (TPP), and both are accessed through the same ASPSP open banking APIs — but they use different consent scopes, regulatory permissions, and risk profiles.

Question 7

How does APP fraud reimbursement affect retail banks?

Accepted Answer

The UK Payment Systems Regulator's mandatory reimbursement scheme for Authorised Push Payment fraud came into force on 7 October 2024, requiring sending and receiving PSPs to share liability 50/50 for in-scope APP fraud losses up to £85,000 per claim. For retail banks this materially changes the economics of weak fraud controls: at-source detection of mule accounts, scam detection on outbound transfers, and customer education at the point of payment all move from "best practice" to defensive necessity. The EU is consulting on equivalent provisions through the PSD3 / PSR package.

Question 8

What does it take to build a modern mobile banking app?

Accepted Answer

A modern mobile banking app is built around five core capabilities: a secure session layer with device binding and biometric SCA; a transactional core that surfaces account balances, transactions, transfers, and standing orders in real time; payments capability including domestic, international, card payments, and Apple Pay / Google Pay tokenisation; a service layer (chat, in-app messaging, document capture, KYC refresh); and a data and personalisation layer for product recommendations and financial wellness tools. Underpinning all of this: 99.95%+ availability, sub-second responsiveness on most flows, accessibility compliance (WCAG 2.1 AA at minimum), and a security posture that satisfies PCI DSS, SCA, GDPR, DORA, and the relevant national regulator.

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