Technology Risks in Digital Banking

A set of vocabulary flashcards covering the key concepts, risks, and management strategies mentioned in the digital banking technology lecture.

Calculativeness

A rational, purely economic view of trust where people estimate the degree of reliability of an institution based on perception and past experience.

Personal Trust

Trust created between human beings from shared experiences and emotional bonds, which is influenced by culture, geography, and individual attitudes to risk.

Institutional Trust

The social and organisational context, including policies and regulations, that protects individuals within agreements and contracts.

Operational Risk

The risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events.

The Basel Accord

A set of global standards for regulating banks that requires institutions to set aside capital as a buffer based on their risk exposures.

Strategic Risk

The risk that occurs when a specific business strategy fails to deliver the expected objectives, such as entering a market too early or too late.

Competition Risk

The risk of losing market share to new entrants or due to changes in customer demand.

Financial Risk

The risk of losing money or incurring increased expenditure, such as costs for infrastructure and staff training for digital integration.

Contagion Risk

The risk that adverse events affecting one bank are quickly transmitted to other interconnected financial institutions.

Market Volatility Risk

The risk of unpredictable changes in the market, which can increase as technology evolves and requires the recruitment of external talent.

Phishing

A scam relying on social engineering where attackers send emails with bugs or solicit information to gain bank account access.

Vishing

A variant of phishing that is conducted through phone calls rather than emails.

Smishing

A variant of phishing conducted specifically through SMS messaging.

Boiler Rooms

Scams where call centres are used to sell worthless or overpriced securities to investors using high-pressure sales tactics.

Swipe and Snatch

A form of merchant fraud where retail employees copy card details for unauthorized later use.

Bust-out Fraud

The creation of a fake business and merchant account to take payments for services that never materialise.

Transaction Laundering

A scenario where a legitimate merchant is duped into processing payment card transactions for a fake merchant.

Triangulation Fraud

A process where a fake merchant collects credit card details from customers and uses them to make transactions through a legitimate merchant.

Money Laundering

The act of passing funds through various accounts to obscure the criminal source of the funds.

Distributed Denial of Service (DDOS)

An attack where a multitude of hijacked computers overwhelm a website with requests, making it unavailable to actual users.

Ransomware

Malicious software (malware) that takes a computer system hostage by stopping it from working until a payment is made.

Red Teaming

The practice of employing IT consultancies to perform ethical hacking to uncover vulnerabilities in a security system.

White Labelling

A partnership where a bank’s brand is placed on a product or service actually provided by another institution.

Physical Risks (Climate)

The direct impact of extreme weather events on bank operations and their customers.

Transition Risks (Climate)

Risks arising from the societal and economic move toward a greener economy.

Task Force on Climate-related Financial Disclosures (TCFD)

A framework developed for the evaluation and disclosure of climate-related risks by banks and corporations.

Recommender Engines

Systems using machine learning algorithms and statistical models to analyse customer behaviour and provide personalised product recommendations.

Drop-off Rate

A metric measuring how many customers start a digital transaction but fail to complete it, often indicating interface design issues.

Calculativeness Year Reference

The year associated with Oliver Williamson's statement on the three key factors of trust is $1993$.

Operational Risk Reference

The definition of operational risk is grounded in the BIS framework from $2011$.

Climate Change Survey Statistic

According to a $2021$ EY survey, $91\%$ of banks' Chief Risk Officers see climate change as the most important issue for the next five years.