Home Glossary – FinTech

Glossary – FinTech

 

Anti-Money Laundering (AML

Refers to policies and legislation designed to require that financial institutions monitor their clients in order to prevent money laundering and corruption. AML laws also usually require that financial institutions report any uncovered financial crimes and do everything to stop them.

 

Application Programming Interface (API)

Represents a set of routines, protocols, and tools for building software applications. functionalities of a certain program. These are important because they enable other programmers to use components of existing software

 

Amazon Web Services (AWS)     

An Amazon subsidiary providing an on-demand cloud computing subscription service for individuals, businesses and governments.

 

Biometrics

Technology that enables someone to be authenticated based on a set of unique and specific recognizable identifiers. Such identifiers are usually biological or physical characteristics that enable biometric technology to be used, including fingerprint mapping, facial recognition, and retina scans.

 

Bitcoin 

The world’s first cryptocurrency (created in 2009), and remains the market leader, invariably accounting for over half of total cryptocurrency market capitalization.

 

Blockchain        

A decentralized, distributed ledger that exists on a network of computers and comprises digitally recorded data grouped into blocks. Using cryptography, each block is sequentially linked to the next block to form a chain of blocks that make up the ledger.

 

Bootstrap         

A new business venture that has a minimal level of seed capital. The entrepreneur / group of co-founders is said to be bootstrapping when they develop a new company mainly from personal finances or from operating revenues.

 

Chatbot

AI software that simulates conversation with users via messaging applications, websites and phone calls. Chatbots are becoming common for helping users with customer service enquiries, as well as more advanced requests.

 

Cloud Computing          

The delivery of hosted computing services (such as storage, computing power and intelligence) over the Internet (“the cloud”) to offer faster, more efficient and more flexible solutions. Cloud computing services are often divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS).

 

Collaborative Consumption      

The shared use of a good or service by a group. Often associated with the “Sharing Economy,” collaborative consumption can be found in FinTech solutions such as peer-to-peer lending and crowdfunding.

 

Crowdfunding  

A method of raising capital by tapping into a network of investors, friends, family and other individuals. Crowdfunding is usually carried out online using tailored platforms (eg Kickstarter), and often leverages social media to expand the network’s reach of potential investors.

 

Cryptocurrency

A digital currency that uses cryptographic techniques to securely verify the transfer of currency units between users. Bitcoin was the first cryptocurrency and remains the most valuable today, despite the emergence of thousands of alternative projects. Most cryptocurrencies operate using blockchain technology in a decentralized network. This network ensures cryptocurrency does not need to be controlled by any single authority, making it impervious to manipulation by a government or central bank.

 

Digital Bank    

A bank that predominantly offers its services to customers through digital means. Although a digital bank may have many channels in which to serve customers, including physicla branches and call centres, its core aim is to provide a comprehensive digital infrastructure to improve the customer experience compared with the traditional banking model.

 

Digital Native   

A person who has been raised during the era of digital technology. Digital natives represent a young demographic that is seen as being a crucial driver of the growth of FinTech, as their exposure to digital solutions from an early age means they are more familiar with this technology than older generations.

 

Disruptive Innovation  

A new technology whose introduction significantly impacts the existing functioning of a market or industry.

 

Disaster-Recovery-as-a-Service (DRAAS)             

The use of a third party to replicate and host physical and/or virtual servers in order to protect applications and data in the event of a unforeseen natural disaster.

 

Due Diligence   

The appropriate care that a business or individual should take before entering into an agreement or contract with another party. This is usually done on a voluntary basis, but can also be a legal requirement in some instances.

 

E-Commerce    

Short for “electronic commerce”, refers to business transactions that take place on the internet, such as online buying and selling on Amazon.

 

Encryption        

The process of encoding communication for the purpose of security. This is normally done by using algorithms to turn information into a code, which itself requires a key to unlock and convert back to data.

 

FinTech

A portmanteau of “Financial Technology”. Refers to the use of technology to deliver new and innovative financial products and services that aim to compete with traditional financial methods and make financial systems more efficient.

 

Hackathon        

An event in which people come together to solve problems. Those people often include computer programmers, developers, designers and project managers, all collaborating on specific software projects. Hackathons also usually have an end goal of creating a functioning product, and include workshops to achieve this goal.

 

High Speed Networks   

Networks that transfer data almost instantaneously, in a matter of milliseconds.

 

Hosting

A service that runs online servers that enable content to be served across the internet (web hosting is one example).

 

Incubator          

A business that helps to develop new and startup companies through specific stages and by providing specific services (for example, management training)

 

Infrastructure-as-a-Service (IaaS)           

A form of cloud computing in which a cloud provider hosts the infrastructure components typically found in an on-premises data center, including servers, storage and networking hardware. The provider also provides accompanying services such as billing, log access, security and clustering.

 

InsurTech

Refers to the use of technology to improve the cost and efficiency of the current insurance industry model.

 

Internet of Things         

Refers to a system in which billions of physical devices around the world are connected to the internet, and therefore communicating and sharing real-time data without requiring human interaction. Each device is provided with a unique identifier (UIDs), and can include computing devices, mechanical and digital machines, objects and living beings.

 

Knowledge-Based Authentication (KBA)            

Often used in fraud prevention, Knowledge-Based Authentication is an authentication scheme in which the user must answer one or more “secret” questions. Often used as one stage of the multifactor authentication (MFA) process.

 

Know Your Customer (KYC)       

The authentication process a business undertakes to verify the identity of its clients, usually before they formally commence their business activity. Seen increasingly as a crucial anti-fraud measure, KYC involves strict identification checks and due diligence checks.

 

Mobile Banking

A service offered by financial institutions enabling their customers to remotely conduct banking tasks such as payments and other financial transactions using their mobile devices

 

Online Banking

A banking service that allows customers to conduct various financial transactions through the bank’s website. Also known as “internet banking”.

 

Online Lending

Peer-to-peer online loan services that don’t require a bank.

 

Payments         

The transfer of one form of good, service or asset for another, executed according to terms previously agreed by all parties involved. From a FinTech perspective, this process is being transformed by innovative technology startups that are improving the speed, cost and accuracy of transfers being made across the world.

 

Payment Gateway        

A service provider that facilitates credit card transactions as an intermediary for online businesses.

 

Payment Card Industry Compliance (PCI Compliance)   

A data security standard designed to protect credit card information during and after financial transactions in order to reduce credit card fraud.

 

Peer-to-Peer (P2P) Lending     

Mostly online, this activity involves lending and borrowing without the use of traditional banks. Borrowers typically visit the websites of P2P lenders to obtain loans at more favorable terms than what they would receive from traditional financial institutions.

 

Personal Finance

Managing the financial matters related to an individual or family, such as budgeting, investing and retirement planning. FinTech companies are implementing innovative technology to improve this management process. For example, they are allowing customers to create budgets, and using AI to connect users with appropriate companies for their needs.

 

Platform-as-a-Service (PaaS)     

A type of cloud computing model where the hosting provider delivers software and hardware development tools to users over the internet, thus freeing them up from having to install the tools themselves

 

Point-of-Sale (POS)       

The stage at which a merchant takes the customer’s payment information during a transaction at a physical location. In the FinTech era, startups have improved the speed, security and efficiency of this process. Point-of-sale loans – where merchants can offer customers the option of taking a loan during this stage of payment – have become popular recently.

 

Predictive Analytics      

The process of using data, statistical algorithms and machine learning techniques to predict future outcomes based on historical data. By knowing what has already happened, predictive analytics allows us to provide the best assessment of what will happen in the future.

 

Quantum Computing   

Applying the properties of quantum physics –  such as superposition and entanglement – to process information.

 

RegTech            

Using technology (such as AI, biometrics and blockchain) to facilitate and improve the delivery of regulatory requirements.

 

Robo-Advisory  

Automated investment advice, usually in the form of an online service that employs algorithms to build an investment portfolio. Robo-advisers have a varying level of input from humans, depending on the type of firm and the preferences of customers.

 

Smart Contracts            

Contracts that are represented by computer code, and stored and executed on a computing system, such as a distributed network like the blockchain.

 

Software-as-a-Service (SaaS)      

A type of cloud computing service whereby the hosting provider delivers applications – often called web-based software, on-demand software or hosted software – over the Internet to users. This means users can access the software through the internet, rather than having to install and manage it themselves.

 

SupTech            

The use of technology to address challenges faced by supervisory authorities. Often known as “”RegTech for supervisors,” SupTech is helping supervisors automate administrative and operational procedures, digitize working tools, and improve data analytics.”

 

Unbanked        

Refers to those people who do not use banks in any capacity. Unbanked persons tend to pay using cash, and include those who mistrust the banking system, poor people who can’t maintain minimum balances and criminals who want to avoid being tracked.

 

Underbanked   

People who don’t have access to proper banking or services offered by retail banks. They might have a banking account

 

Virtual Asset    

Refers to those who may use limited banking services, such as a checking or savings account, but tend to prefer alternatives to banking products to fund their purchases and manage their finances.

 

WealthTech

The FinTech segment that focuses on using technology such as AI and Big Data to improve wealth management and the retail investment process, as well as offer an alternative to traditional wealth management firms. For example, robo-advisors.

 

Web Hosting    

The service that allows web pages to be posted onto the Internet. A web hosting provider provides the technology and service required to for the web page to be viewed online.

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