Banking Domain Concepts

Definition of banking domain concepts

Banking domain concepts refers to the various areas or components for which the knowledge is collected to understand how the specific field or banking segments operate around the products and services, sales and distribution, customers, process, technology and people. 

Brief about the Banking Domain Concepts

A bank is a regulated and lawful financial institution that includes deposit services, keep a check of safety and provide withdrawals when required. The investors can deposit their surplus to receive interest in return and withdraw it when needed whereas the firms looking for loans or funds for immediate needs can gain it from banks by paying interest rates.

As a result, it creates liquidity for money which helps in economic development. However, when a group of financial institutions or banks provides services to the public it is termed a banking system. 

Banking Domain Concepts
Banking Domain Concepts

Functions of Banking Domain

The banking domain concepts are widespread and therefore can basically be subcategorized into two sectors or functions performed by banks which are as follows:

  1. Traditional banking sector/ Primary functions
  • Core banking
  • Retail banking 
  • Corporate banking 
  1. Service-based banking sector/ Secondary functions
  • Loan
  • Private banking
  • Front end delivery
  • Consumer finance 
  • Trade finance 

Primary function: This function of the banking domain concepts include transactions related to depositors and borrowers. As a result, the two subparts i.e savings (current account, fixed deposits, recurring deposits etc) and lendings ( cash credit, overdraft, bill discounting etc) maintain the liquidity in the economy and market.

Secondary function: Commonly termed as non-banking functions, the commercial banks offer other services which generate profits or margins. The banking domain concepts include agency functions performed like managing payables, checks collection, portfolio management etc. Also, the other subpart termed as utility function is provided to customers like demand drafts, locker facility, underwriting and reporting etc.

Banking Domain Concepts

Although there are various terms associated with the banking domain concepts, few important categories can be described into types of banks and bank accounts which are important to be known by the customers. These are as follows:

Types of Banks

Savings bank

Most of the commercial bank carries the function of providing savings bank. This type of bank helps customers with saving habit. It suites to low-income groups and salaried people. As a result, the amount that the bank collects from people invests in securities, bonds etc. The postal department also plays a function of the savings bank.

Industrial banks

The Development banks or industrial banks collect cash by issuing debentures and shares or provide long term loans to the industry. The major objective of industrial banks is to provide loans to businesses for modernisation and expansion.

Commercial banks

The main purpose of these banks is to help business people or businessmen. The banks take deposits from the public and aid the businessperson with short term loans via overdrafts, cash credits, etc. Also, the commercial banks perform various functions such as bill of exchange, collecting cheques, remittance money from place to place.

Central/ National/ Federal Bank

Central Banks
Central Banks

Every country in the world holds a central bank known as a non-profit making institution. For example, in India it’s known as the Reserve Bank of India, in the U.K it’s the Bank of England while in the U.S.A it’s Federal Reserve. The central banks act as bankers for other banks because of which it does not deal with the public. The functions performed are specialized like supervising and controlling foreign exchange, issue of paper currency and working as bankers for the government. As a result, the main objective lies with the wholesome control on the currency of the respective country.

Land mortgage banks

Also termed as the Agricultural banks and land development banks due to their formation to serve or finance the agricultural sector. Moreover, as the name suggests it helps in land development as well.

Cooperative banks

These banking domain concepts include banks that provide credit facilities to small-scale industries, salaried employees, small farmers etc. Cooperative banks are present in both urban and rural areas. However, the functions performed as similar to commercial banks.

Consumer banks

Adding up the range of banks, this banking domain concepts is recently added. They are usually found in countries like Germany and U.S.A which are advanced. The consumer banks give loan to customers for the purpose of purchasing durables like television, furniture, motor car, washing machine etc. The customer repays by instalments.

Exchange banks

The exchange banks finance foreign trade and perform different functions. Discounting of foreign bills, helping in export and import trade, buying and selling silver and gold etc are few services among them. 

Types of Accounts 

Savings account 

These type of banking domain concepts include the people who wish to keep their money safe and earn interest on them. Moreover, there is no such requirement of a large amount to open a savings account.

Current accounts

Also termed as checking accounts of the banking domain concepts, they offer convenience and safety. The money is available in the account and the customer can write a check or transfer money if he wants to pay a bill. There can be various ways to keep a current account like one for which fees charges, the other with no-fee checking while with an agreement to maintain minimum balance an interest can also be earned.

Certificates of deposit

Termed as savings deposits where the customer needs to keep a certain amount for a fixed period. Therefore, a penalty also charges for in-between withdrawal. Individual retirement accounts are good for saving deposits for later years.

Money market deposit account

Likewise checking or current accounts that earn interest, these types usually require a higher minimum balance and pay a higher rate of interest.

Banking Domain Knowledge

The banking domain knowledge depicts the components/model of the banking domain concepts framework which is needed to operate the financial service. It includes the distribution and the transaction processes; the method in which customers interact with products, system, services offered and the technology involved.

By compiling all the components above, an operating model can be explained which can be understood as follows: 

Operating Model for Banking Domain
Operating Model for Banking Domain

Segments

Firstly, the banking domain concepts include the niche or the area which a banking institution occupies which can be private banking, retail banking, investment banking etc.

Customers

Secondly, customers describe the individuals and organisations that use the products or services of the bank that promotes its work.

Products and services

Next, banking domain concepts include the reason for which it regulates. This involves all the operations that an organisation charges fees for or the service it sells to its client/individual/firms ( like an investment, a loan, equity training etc).

Distribution and sales 

This point explains the ways or methods by which banks engage with the visitors, sell products to customers etc such as software, branches, mobile outreach or emails.

People, Process and Technology 

Lastly, the banking domain concepts has the broadest component. It refers to the management of employees, responsibilities and their role. Also, there needs to be an outlook on the technology that is used to hit performance benchmarks and workflows for completing the customer’s transactions. 

The financial application testers and developers quite reply on banking domain knowledge components or the model as discussed to find out deviations in performance or areas/ checkpoints that need to be targeted for the same.

Characteristics that Banking Domain is Aware 

In the modern era, financial service providers have to provide technology-reliant options for use and ease of customers like online and mobile banking domain concepts. The new user experience reduced the operating costs as well as built an opportunity for the companies to create a bond with the visitors. 

However, the banking domain concepts applications can face risks through upcoming updations such as faulty transactions, security breaches and increased bounce rates. As a result, a development team gets aware of the characteristics it must have in its banking domain concepts which are as follows:

Characteristics that Banking Domain is Aware
Characteristics that Banking Domain is Aware

Management System with Built-in Account

For smooth account management, the banking domain concepts application developer must provide users with a robust platform. The customer should face no problem while performing transactions or checking balances through the app giving it an error-free mode.

The QA specialists ensure separate database ID to each system user and disable the idle accounts for security purposes after a time frame.

Mechanisms with user authentication

The technology can be easily hampered to get sensitive information like personal documents, credit debit card numbers etc. As a result, the obligatory step for legal compliance i.e GDPR and PAYMENT SERVICE DIRECTIVE 2 needs to be followed.

For security, the banking domain concepts system authentication uses at least two of the three below mechanism:

  • (a PIN or a login-password combination) ‘Something you Know
  • ‘Something you Have
  • (a person’s physical attribute)‘Something you Are

ATM

From the vision of a technical standpoint, ATM locator is not as challenging but still, companies neglect them. This feature also increases the value provided by the app.

An example can be the Royal Bank of Canada implementation of an ATM locator results in a successful case of GPS based technology in finance. The bank’s official data states the up-gradation of 90% of their users with the newer version to get this feature.

QR payment technique

For the modern-day banking domain concepts, QR payment support is no more an optional feature. The efficiency of using code depends upon the placement and speed of QR based transactions. The members of the application development team thoroughly check the functioning before giving it a permanent build. 

As a result, 25-30% of the worldwide population uses QR codes for payments (China, Japan, etc) while a few areas still have it as an emerging trend (the US, Europe etc).

Large scale integrations

For banking domain concepts technology to gain the benefits of the leverage, the financial service providers integrate other payment solutions as well. That’s natural, the wider list of integration options, the greater will the range of features provided by the organisation.

Mentioned below are the common integration platforms for the banking domain concepts:

  • Food order management platforms
  • Movie booking services
  • E-commerce websites

Also, this must be noted by the QA manager that the app behaves properly while the gateway of third part payment.

Batch Processing and Real-Time Payments

The real-time payment adds up to a feature that increases the ease with the clients with heavy dealings. Also, it comes up with a sack of benefits for banking domain concepts app developers like satisfying customer needs 24/7, reduced risks and anti-money laundering, improved efficiency, traceable payments and security. 

By upcoming years it will be considered as the industry standard. Moreover, the company ensures that the company’s app works like clockwork.

Bots 

Hiring managers for 24/7 customer service turns up expensive and challenging for the banking domain concepts. Therefore, service providers use intelligent chatbox to fulfil customer needs. However, it neither gets irritated and is easy to manage in the long run.

The best-quoted example can be Wells Fargo, the banking domain concepts company that used the Facebook messenger bot for customer assistance. This innovation helped them to successfully answer around 5000 questions.

Finance Domain Knowledge 

The act of gathering information by the QA testing expert or the concepts under the finance domain is known as finance domain knowledge. The finance domain refers to the economic services offered by the finance industry for organisations that manage money.

The professionals of the finance domain knowledge look after the technology expectations and requirements of the finance domain before testing software programs and financial apps.

Types of Finance Domain 

There is an extensive range of industries and companies that require finance domain knowledge like credit unions, credit card companies, banks, insurance, investment funds, and customer finance businesses. 

The following types of finance domain businesses are worked upon by the finance domain projects who have an understanding of the financial industry.

Types of Finance Domain
Types of Finance Domain

Insurance 

In the insurance domain, there are two people in the contract i.e the insured and the insurer or the insurance company. The company agrees to take the risk of the person in contract on happening of specifies loss or future event. Moreover, in return, the protected person provides payment to the insurance company as a premium.

Banking 

Acting as the subpart of finance domain knowledge, the banking domain concepts accepts deposits and manages accounts for the customers. However, the deposits convert into indirect capital markets or lending loans.

Investment 

This type of finance domain knowledge indulges in selling, managing, and marketing funds to the public. Investment companies own either publicly or privately a pool of investors in financial securities through an open-end fund or closed-end fund( termed as a mutual fund). Also, the investment services can be record-keeping, portfolio management and tax management.

Leave a Comment