Business analysis glossary
Functional Requirement
What it is
A functional requirement describes something the system must do: a behaviour, calculation, rule or interaction. It is usually written as an observable action with inputs and expected results. Examples include validation rules, calculations, workflows, notifications and who is allowed to perform which action.
Why it matters
Developers build and testers verify behaviour. Functional requirements give them the specific rules to implement and check, rather than a general wish. They are also what testers use to design test cases, so each statement should be precise enough that two testers would reach the same verdict.
Example
At Kestrel Bank: "When a customer submits a transfer above their available balance, the system shall reject it and display the message 'Insufficient funds' without changing either account balance." Notice it names the trigger, the system's response, the message shown and what must stay unchanged, so every part can be checked by a tester.