In your case, "Banking Domain" means: Common functionalities and terminologies used in Banks. That knowledge is need if we are developing a software for bank.
IT Service companies (who provide IT services to others) like Capgemini, Accenture, Infosys, TCS etc. develop software for various other organizations/industry. So before coding we must understand the requirements of our client. Lets say, Biggest bank in India, SBI, wants to get a online portal, so it goes to Infosys. Now to understand the business logic and requirements in precise manner what SBI wants, software developers/business analyst must aware about how bank works. That is banking domain knowledge for us.
We have many other domains too like: Manufacturing domain(automobile and machinery manufacturing organizations), Retail Domain(Online shopping or retailers), Education Domain(Universities and colleges), Healthcare domain(Hospitals)
For More, Please go through following links:
http://en.wikipedia.org/wiki/Domain_knowledge[
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https://in.answers.yahoo.com/question/index?qid=20070514225434AAT0ym1[
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http://www.project-skills.com/essential-bank-domain-knowledge-for-it-professionals.html[
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