There are some definitions in the FinTech industry that may not seem so clear or easy to capture. The glossary below is to simplify some meanings for you.
Click on a letter to jump to the relevant section of the alphabet.
acquirer: it can be either corporate or merchant. While the first one is a business that obtains the rights to another company by a deal, the second, is a merchant bank which is used by a merchant to process online payments for customers.
algorithms: a set of instructions for solving an issue or accomplishing a task. All of the computerised devices use algorithms to perform its functions. It trims the time it takes to manually do things on computers, making workers be more proficient and focused.
angel investor: a private investor, and it is an individual who provides financial backing for small startups or entrepreneurs, usually in exchange for ownership equity in the company.
artificial intelligence (AI): it refers to the stimulation of human intelligence in machines which includes goals such as learning, reasoning, and perception.
application programming interface (API): a set of programming code that often acts as a mediator that enables a software program to interact with other software. It is a way to establish a connection between coded algorithms and a broker’s platform. If there is any automated trading strategy, then, API is essential.
bitcoin: a digital currency, created in 2009, following the housing market crash. It offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralised authority, unlike government-issued currencies.
blockchain: a new technology that allows information to be distributed in a peer-to-peer format. Cryptography is essential to protect data and avoid sensitive information to be exposed. If we say "block" and "chain" in the current context, we are talking about digital information ("block") stored in a public database ("chain"). "Blocks" are made up of digital pieces of information. It is also a public ledger that records all Bitcoin transactions, eliminating the need for a third party to process payments.
big data: it refers to the large amount of data that organisations must deal with on a daily basis. The data can be analysed to help business with insights and help with the decision-making process. It often comes from multiple sources and arrives in various formats. It can be structured when it is often numeric, easy formatted and stored while the unstructured it is more free-form and less quantifiable.
biometrics: a group of digital security methods that rely on biological or physiological attributes used to prevent data breaches such as credit card hacks or unauthorised log-ins. It uses criteria that are physically unique to an individual that can prove their identity, such as a fingerprint or voice pattern, rather than relying on passwords or PIN codes that can be more easily hacked or stolen.
cloud computing: the delivery of different services - private or public - on external data centres and without direct management by the user. While private services are hosted on a network to a specific client, the public ones are provided online for a fee. Some tools and applications that can be included are data, storage, servers, database, networking and software.
cryptocurrency: digital or virtual currency can be used for payment, secured by cryptography, making it nearly impossible to counterfeit or double-spend. They are also not issued by any central authority, being immune to government interference or manipulation and payment transactions are made using blockchain technology.
crowdfunding: when there are small amounts of capital coming from a large group of people to finance a new business venture, it allows investors to select among many projects and invest as little as $10.
cybersecurity: the protection of internet-connected systems, including hardware, software and data from cyberattacks. Some measures are password protection and disk encryption.
data breach: unauthorised access and retrieval of sensitive information by an individual, group, or software system. It is a cybersecurity mishap which happens when data, intentionally or unintentionally, falls into the wrong hands without the knowledge of the user or owner.
deep learning: an Artificial Intelligence function that mimics the human brain workings in processing data for use in detecting objects, recognising speech, translating languages, and making decisions. This deep learning can learn without human supervision, drawing from data that is both unstructured and unlabeled. It can also be used to help detect fraud or money laundering, for instance.
disruptive innovation: a new development that dramatically changes the way a structure or industry functions. One example of this is the internet, which turned the business world on its head, forcing companies to either adapt or lose out.
distributed ledger: a database which is synchronised and accessible across different sites and geographies by multiple participants. The use of distributed ledgers reduces cyber-attacks and financial fraud.
electronic signature: a suitable tool for online banking since it contributes to a higher level of security in online transactions without losing speed throughout the process.
encryption: secures data using an algorithm and a password or key. It translates information using an algorithm that turns plain text unreadable. When an authorised user needs to read the data, they may decrypt the data using a binary key. Encryption is an important way for individuals and companies to protect sensitive information from hacking. For example, websites that transmit credit card and bank account numbers should always encrypt this information to prevent identity theft and fraud.
ethereum: a decentralised software platform that enables smart contracts and distributed applications to be built and run without any downtime, fraud, control or interference from a third party. The platform is also the basis for its virtual currency, Ether. Ethereum is not just a platform but also a programming language (Turing complete) running on a blockchain, helping developers to build and publish distributed applications.
fintech: it means Financial Technology, a mix of two industries that once unified. It focuses on the application of digital technologies to the provision of financial services.
financial innovation: the process of creating new financial or investment products, services, or processes including updated technology, risk management, risk transfer, credit and equity generation. Some examples of recent financial innovations are crowdfunding and mobile banking technology.
fintech ecosystem: an ecosystem is formed by governments, financial services companies and FinTech startups. From an innovation perspective, one’s efforts help another’s. Companies see what the other is doing and make similar adjustments to their product offerings. There is also increased acceptance of new technologies, as one's addition of a particular technology helps fuel adoption. The people with the financial expertise needed to inform FinTech projects and those with the technological abilities to make those suggestions come to life often move between companies, either through mergers, a consulting basis, or employment.
fraud detection: a set of activities undertaken to prevent money or property from being obtained through pretences. Fraud detection is applied to many industries, such as banking or insurance. In banking, fraud may include forging checks or using stolen credit cards.
hash: a function that meets the encrypted demands needed to solve for a blockchain computation.
litecoin: an alternative cryptocurrency based on Bitcoin’s model. The difference is that Litecoins have faster block generation rate and use script as a proof of work scheme.
machine learning: an area of AI (Artificial Intelligence) with a concept that a computer program can learn and adapt to new data without human intervention. It can be applied in a variety of areas like investing, advertising, lending, organising news, fraud detection, and much more.
mobile wallet: a virtual wallet that stores payment cards information on a mobile device, being a convenient way for a user to make in-store payments and can be used at merchants listed with the mobile wallet service provider.
namecoin: "an experimental open-source technology which improves decentralisation, security, censorship resistance, privacy, and speed of certain components of the internet infrastructure such as DNS and identities." DNS, the domain naming system, is the mechanism by which domain identities are linked with numerical IP addresses around the world. In this sense, namecoin is a cryptocurrency based on the bitcoin protocol that also aims to enhance internet-related security and privacy.
online security: it is a process to create rules and actions to take to protect against cyberattacks.
payment gateway: the technology that reads payment cards and sends customer information to the merchant acquiring bank for processing. In physical stores, it consists of the point of sale (POS) terminals used to accept payments by card or by phone, while in online stores, they are the “checkout” portals used to enter credit card information or credentials for services such as PayPal.
peer-to-peer (P2P) lending: it enables individuals to obtain loans directly from other individuals, without the need for a financial institution, which may not have a better rate. It is also known as crowdlending.
regtech: the management of regulatory processes within the financial industry through technology and consists of a group of companies that help businesses comply with regulations efficiently and less expensively. The main functions include regulatory monitoring, reporting, and compliance.
risk management: the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions.
sharing economy: it involves short-term peer-to-peer transactions to share the use of idle assets and services or to facilitate collaboration.
smart contracts: self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralised blockchain network. Also, smart contracts render transactions traceable, transparent, and irreversible.
sub-soreveign obligation (SSO): a form of a debt obligation issued by hierarchical tiers below the ultimate governing body of a nation, country, or territory. This form of debt comes from bond issues made by states, provinces, cities, or towns to fund municipal and local projects.
startup unicorn: a privately held startup company with a value of over $1 billion.
venture capita: financing that investors provide to startup companies and small businesses that are believed to have growth potential. It generally comes from well-off investors, investment banks and any other financial institutions.
zcash: a cryptocurrency with a decentralised blockchain that seeks to provide anonymity for its users and their transactions.