Chapter 55: Banking Ethics: Changing Dynamics (JAIIB – Paper 2)
1. Which of the following best describes the ethical challenge in using technology in banking?
A. Cost reduction through automation
B. Faster customer service delivery
C. Balancing customer convenience with data privacy
D. Introduction of new digital products
Ethical issues arise when technology improves services but also increases risks to customer privacy and data security.
2. A bank uses Artificial Intelligence (AI) to evaluate loan applications. Which ethical concern is most relevant?
A. Faster credit delivery
B. Bias and discrimination in algorithms
C. High processing cost
D. Customer preference for manual approval
AI systems may unintentionally discriminate based on data patterns, raising ethical concerns about fairness and transparency.
3. As per RBI guidelines, banks must obtain customer consent before sharing their data with third parties. This principle ensures:
A. Technological innovation
B. Profitability of banks
C. Faster service delivery
D. Data privacy and protection
Data sharing without customer consent violates privacy norms. RBI mandates explicit consent to protect customer information.
4. A hacker gains unauthorized access to customer data in a bank’s server. Which ethical and legal issue does this represent?
A. Breach of data security
B. Product innovation issue
C. Cost-benefit mismatch
D. Customer service delay
Unauthorized access to customer data compromises confidentiality, a critical breach of both ethics and data security law.
5. Which of the following is NOT a principle of data privacy in banking?
A. Customer consent
B. Confidentiality
C. Revenue maximization
D. Limited data usage
Data privacy is about protecting customer information, not about maximizing revenue.
6. A customer receives a fake email appearing to be from their bank asking for login details. This is an example of:
A. Identity theft
B. Phishing
C. Ransomware
D. Spyware attack
Phishing involves fraudulent emails or websites that trick customers into revealing confidential information.
7. Intellectual Property Rights (IPR) primarily protect:
A. Creations of the human mind such as inventions, literary works, and symbols
B. Tangible physical assets only
C. Cash reserves held by a company
D. All kinds of real estate
IPR protects intangible creations such as inventions, designs, brand names, and artistic works—not physical assets like land or cash.
8. In banking, the software used for Core Banking Solutions (CBS) is usually protected under which type of IPR?
A. Trademark
B. Patent
C. Copyright
D. Geographical Indication
Software code is considered a literary work and is protected under Copyright laws.
9. A bank develops a unique mobile banking application. To protect its innovative technical process, the bank should rely on:
A. Copyright
B. Patent
C. Trademark
D. Trade Secret
Patents protect new inventions or technical processes, making them suitable for safeguarding innovative banking technology.
10. The logo of a bank, which distinguishes it from other banks, is protected under:
A. Patent
B. Copyright
C. Industrial Design
D. Trademark
Logos and brand symbols are protected under Trademark law as they identify the source of goods or services.
11. Unauthorized use of another bank’s proprietary software by copying its source code is an example of:
A. Patent infringement
B. Trademark violation
C. Copyright infringement
D. Trade secret misappropriation
Software source code is protected by copyright. Copying or unauthorized use is copyright infringement.
12. Which type of IPR protection is most suitable for safeguarding a bank’s unique customer data analytics model that is kept confidential internally?
A. Trade Secret
B. Trademark
C. Copyright
D. Industrial Design
Confidential business processes and analytics models are protected as trade secrets if reasonable measures are taken to keep them secure.
13. Which of the following is a condition for an invention to be granted a patent?
A. The invention must be published in newspapers
B. The invention must be a trade secret
C. The invention must already be in commercial use
D. The invention must be novel, useful, and non-obvious
To qualify for a patent, an invention must be new (novel), have utility, and must not be obvious to experts in the field.
14. In the banking sector, proprietary rights over a newly designed fraud detection algorithm can be best protected through:
A. Trademark
B. Patent
C. Copyright
D. Geographical Indication
Patents protect innovative technical processes or inventions like algorithms and fraud detection models if they meet patentability criteria.
15. Which of the following is NOT protected under patent law?
A. A new ATM security mechanism
B. A unique mobile payment system
C. Mathematical formulas and abstract ideas
D. A biometric-based authentication system
Patents protect practical applications but not abstract theories, mathematical methods, or ideas without industrial application.
16. A bank employee develops a new process for securing mobile banking transactions while working for the bank. Who owns the proprietary rights?
A. The bank, as the invention was created in the course of employment
B. The employee, irrespective of employment conditions
C. Shared equally between employee and customer
D. The regulator, as per banking law
In most employment contracts, inventions created in the course of employment belong to the employer unless stated otherwise.
17. How long does a patent remain valid in India from the date of filing?
A. 10 years
B. 15 years
C. 25 years
D. 20 years
In India, a patent is granted for 20 years from the date of filing of the application, after which it falls into the public domain.
18. Proprietary rights of a bank over its customer database are best categorized under:
A. Patent
B. Trade Secret
C. Trademark
D. Industrial Design
Customer databases are proprietary confidential information, usually protected under trade secret laws and confidentiality agreements.
19. Which of the following is the primary ethical principle in information security for banks?
A. Maximizing operational profits
B. Promoting digital marketing
C. Ensuring confidentiality, integrity, and availability of information
D. Increasing system complexity
Information security is guided by the CIA triad — Confidentiality, Integrity, and Availability — which form the ethical basis of data protection in banking.
20. A bank employee intentionally accesses a customer’s account information without authorization. This act violates which ethical principle of information security?
A. Confidentiality
B. Availability
C. Non-repudiation
D. Transparency
Unauthorized access breaches the principle of confidentiality, which requires that information be accessed only by those with proper authorization.
