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Fintech Glossary: A Guide to Fintech Terminology

Written by Bethany Pegram-Mills | Dec 2, 2022 2:42:25 PM

On the hunt for a fintech definition? We’ve got you covered! Whether you’re a thought leader in the fintech space or just getting started, welcome to our comprehensive guide to all things fintech.

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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Accelerators

Cohort-based programmes where an enterprise financial institution offers expertise and guidance to help fintech start-ups develop their company and product and/or service offering.

Accounts Payable (AP)

Money a company owes to its creditors. 

Accounts Receivable (AR)

Money that is owed to a company by its debtors, for goods or services delivered but not yet paid.

Account-to-Account (A2A) Payments

This payment type involves moving money directly from one account to another, without the need for credit or debit cards.

Account Information Service Provider (AISP)

An institution that is authorised to provide access to read-only financial information of the user on the accounts.

ACH Authorisation

An authorisation that gives a lender permission to take money from your account when the payment is due.

ACH Credit/Debit

This credit/debit payment occurs when the ACH network instructs the transfer of money from one account to another.

ACH Return

This happens when the ACH Network cannot collect sufficient funds from an account. The ACH Operator will typically send out a notification.

ACH Reversal

A payment that the original sender requests to take back.

Acquirers

A company that processes credit and debit card payment transactions on the behalf of a card issuer.

Address Verification Service (AVS)

A tool that allows merchants to detect suspicious card transactions to prevent fraud using verification of the cardholder’s billing address.

Advanced Encryption Standard (AES)

An encryption method that uses the same key to encrypt and decrypt data.

Altcoin

An alternative cryptocurrency to Bitcoin. These include Ethereum, Dogecoin, and Litecoin.

Alternative Finance

This refers to financial channels and processes that have surfaced outside of the legacy financial system.

Anti-Money Laundering (AML)

The set of rules, laws, and regulations financial institutions perform to monitor and report suspicious activities.

Application Programming Interface (API)

A software that allows two applications to communicate with one another.

API Banking

The digitisation of a banks service to better serve customers who prefer online banking or aren’t located near a physical branch.

Artificial Intelligence (AI)

Human intelligence performed by machines, such as speech recognition and decision-making.

Association for Financial Markets in Europe (AFME)

An association that advocates for Europe’s financial markets, providing information across regulatory and capital market issues.

Automated Clearing House (ACH)

A system used for the transfer of electronic transactions.

B

Bank Identification Number (BIN)

The initial 4-6 numbers on a payment card that identifies the issuer.

Banking as a Service (BaaS)

A service model that provides banking products to non-bank third parties, typically through APIs.

Banking Licence

When a company has a banking license it meets all financial government regulations. A company can only call itself a bank when it has a banking license.

Big Data

This refers to data that is extremely large or too big for a traditional data-processing application software to handle.

Biometric Authentication

Used as a form of identification and access control using unique biological characteristics of the user.

It can include recognition systems that rely on fingerprint, retinal, facial or other physical markers. Integrating biometrics is an increasingly important way to speed up access to apps and payments.

Bitcoin

A cryptocurrency that can be transferred on the Bitcoin network.

Bitcoin Address

An individual identifier serving a virtual location where a cryptocurrency is being held.

Blockchain

A system that keeps a record of digital transactions; it is duplicated and distributed across all computer systems on a network without being edited.

Blockchain EFT

Investors in companies that use blockchain technology for their operations.

Blockchain Operating System

A software that captures commands and transactions from a device on the blockchain.

Blockchain Wallet

A digital wallet that allows the management and storage of cryptocurrencies.

Business Incubators

An organisation that helps to scale start-ups.

Business-to-Business (B2B)

Business conducted between one business and another.

Business-to-Consumer (B2C)

A model where products and/or services are sold directly to the consumer.

Buy Now, Pay Later (BNPL)

A short-term financing option that allows a customer to purchase goods and pay for them at a later date.

C

Card-Not-Present (CNP) Fraud

A type of fraud where the card isn’t physically present, this includes online or telephone transactions.

Challenger Banks

A bank that is set up to compete with traditional legacy banks.

Chargeback

This is initiated when a customer creates a dispute against a merchant or returns a purchased item. The issuing bank returns the money to the cardholder.

Cloud Computing

The delivery of on-demand computing services over the Internet that works to provide innovation and flexible resources.

Cloud Provider

A third-party IT company that offers cloud-based platforms, applications, and storage services.

Cloud Sourcing

When a company pays a cloud provider to deliver and support IT services.

Collaborative Economy

An economy where consumers are reliant on one another to meet their needs rather than enterprise companies.

Collaborative Finance

A transaction that happens between individuals without being mediated by a financial institution.

Consumer Lending

Financing for personal purposes.

Consumer-to-Business (C2B)

A business model that allows consumers and businesses to have a mutually beneficial relationship.

Consumer-to-Consumer (C2C)

A model where customers can trade with one another via a third-party platform.

Core Banking

A network of bank branches that allows customers to access their bank account and complete transactions from any of the featured branches.

Counter-Terrorist Financing

A regime that prevents illegal cash flow to terrorist organisations.

Credit Bureau

An agency that gathers information relating to an individual’s credit ratings and makes it available to financial institutions.

Credit Score

A numerical score that rates a consumer’s worthiness of credit.

Cross-Border Payments

International financial transactions in which the payer and the recipient are located in different countries.

Crowdfunding

Raising money from a large number of individuals to fund a project or business venture.

Crowd Sourcing

The practice of turning to a group of people to gain knowledge, goods, or services.

Cryptocurrency

A digital currency that uses cryptography to secure transactions.

Crypto Asset

A representation of value that you can store or trade electronically.

Cryptocurrency Exchange

A company that allows customers to trade cryptocurrencies.

Crypto Token

A digital currency token.

CVC (Card Verification Code)

Also known as a Card Security Code (CSC), it is a three-digit security code printed on the front or back of a payment card.

Cybercriminal

Someone who engages in criminal activity on the Internet.

Cybersecurity

The protection against the criminal use of electronic data.

D

Data Breach

A security violation where information is stolen from a system without the authorisation of the owner.

Data Management Platform (DMP)

A software that is used to collect and manage data.

Data Mining

The process of analysing large sets of data.

Decentralised Finance (DeFi)

It allows consumers, merchants, and businesses to complete financial transactions through smart contracts on a blockchain.

Deep Data

This refers to big data that is relevant and of high quality.

Digital Banks (Neobank)

A bank that’s presence is solely online, with no physical branch.

Digital Fingerprint

A unique digital identifier that allows computers to identify and track Internet users online.

Digital Native

A person born in the digital age, who has a familiarity with technology from a young age.

Digital Wallet (eWallet)

An application that runs on mobile to complete financial transactions.

Disbursed Funds

The transfer of funds from one bank account to another.

Distributed Ledger Technology (DLT)

A digital peer-to-peer system that records transactions between peers.

E

eCommerce

Commerce transactions conducted online.

ePayment

The electronic transfer of funds.

EMV (Europay, Mastercard, Visa)

This type of payment card stores the cardholder’s information on a chip.

Encryption

The conversion of information or data into code, typically preventing unauthorised access.

Electronic Identity Verification

A verification tool that provides banks and financial institutions with identifying client information such as name, address, and date of birth.

Embedded Finance

The integration of financial services into non-financial products or services.

Embedded Payments

Enabling users to pay directly on a non-financial product or services site or app.

Embedded Lending

When lending is offered through non-financial services or products.

Equity Crowdfunding

This is where people invest in an unlisted company in exchange for shares in the business.

ESG (Environmental, Social, and Governance)

A framework that establishes criteria for a company’s behaviour in several areas.

The standards encompass a company’s environmental impact and its relationships with consumers, suppliers, and shareholders.

European Banking Authority

A European authority that strives for regulation and supervision across the banking sector.

F

Facial Recognition

A biometric method of verifying identity using a person’s face.

Fiat Currency

A currency that has been declared a legal tender but has no fixed value.

Financial Conduct Authority (FCA)

A financial body in the UK that regulates the financial services industry.

Financial Inclusion

Financial products and services that meet the needs of the customer whilst being delivered in a sustainable and responsible way.

Fintech

Financial institutions that use new technologies to compete with legacy banks when delivering financial services.

It has technically existed as a concept for over a century, but as a term it became popularised in the late 90's and early 2000s.

Fintech Sandboxes

An environment in which fintech innovators can experiment with new technologies in a live monitored environment.

FIX Protocol

The Financial Information eXchange (FIX) is a communication protocol implemented in 1992 for the real-time exchange of transaction information.

Fork

When a blockchain splits into two or more paths forward, this usually occurs due to a change in protocol.

Freemium

A business model where services are provided free of charge, but more advanced features need to be paid for.

G

Gazelle Company

A high-growth business that has increased its revenue by at least 20% every year for four or more years.

GDPR (General Data Protection Regulation)

A regulation in European law that sets guidelines for collecting and processing personal information.

Geolocation

The identification of a person’s geographical location through digital information processed on the Internet.

Good Funds

Funds that become immediately available to a company upon deposit.

Green Investing

Investing in a company that supports and/or provides environmentally friendly products and/or practices.

Global Financial Markets Associations (GFMA)

A financial body that provides a voice on matters that support the global financial markets.

I

Identity Verification

The authorisation of a person’s identity by comparing the provided credentials to those previously given.

Infrastructure as a Service (IaaS)

A cloud computing service offering computing, storage, and networking services on demand.

Initial Public Offering (IPO)

When a company sells shares of stock to the public for the first time.

Insurtech

The use of innovative technologies in the insurance industry.

Interchange Fee

A fee paid between banks to accept payment card transactions.

Interest-Free Loans

A loan that charges no interest.

International Bank Account Number (IBAN)

A global numbering system to identify bank accounts overseas.

Issuer/Issuing Bank

A bank that issues credit and debit cards to customers.

J

JSON (JavaScript Object Notation)

An open standard file and data interchange format that uses text readable to a human to store and transmit data.

K

Knowledge Based Authentication

An authorisation method that proves a person’s identity by answering a previously decided question.

KYC (Know Your Customer)

A set of standards designed to protect financial institutions against fraud and money laundering.

L

Last-Mile Disbursements

Transferring money to its destination.

Loan Origination Software

An automated system that manages the steps in a loan process.

M

Mass Payment

Simultaneously paying multiple recipients, typically online.

Merchant

A person who sells commodities for financial gain and profit.

Merchant Aggregator

When a merchant signs up with a third-party payment provider to streamline and process transactions through a single account.

Micropayment

A small payment, usually made online.

Middle Office

Employees working in a financial institution.

Multi-factor Authentication (MFA)

Completing two or more authentication methods to be granted access to a website.

Multi-sided Business Model

A business model that allows customers to have direct interactions.

N

Non-bank Brands

A financial institution that doesn’t have a banking license.

O

Open Banking

The secure enabling of third-party payment providers to access banking transactions and data from other financial institutions.

P

Payment Card Industry Data Security Standard (PCI DSS)

A standard for financial organisations that ensures that payment card data is secure and protected.

Payment Gateway

Technology that allows online merchants to accept card purchases from customers.

Peer-to-Peer Platform Lending

Lending money to an individual or a business.

Peer-to-Peer Transactions

An electronic money transfer made from one person to another.

Peer-to-Peer Transfer Apps

An app that allows you to send money to another person.

Personal Identification Number (PIN)

An individual’s identification number assigned by a bank for validating card transactions.

Point of Sale (POS)

Where a retail transaction is carried out.

Point of Sale Financing

A method that gives shoppers the flexibility to pay-over-time through instalments.

PSD2 (Second Payment Service Directive)

A legislation implemented to govern digital payments, whilst improving customer authentication processes and applying new regulations around third-party involvement. PSR1 is set to replace PSD2 with specific regulations on areas including API Performance, authentication rules and risk-based fraud prevention.

PSD3 (Third Payment Service Directive)

A new directive launched in June 2023 that specifically addresses the licensing and authorisation of payment and eMoney institutions.

Q

QR Codes

A quick response code is read by a machine that consists of a pattern of black and white squares. They are typically used for storing URLs, location or identification information.

R

Real-time Lending

This is when a bank can receive a loan application, assess any risk factors, and give an answer straight away.

RegTech

The use of innovative technologies to enhance regulatory and compliance processes.

Repurchase Agreements

A binding contract where a vendor agrees to repurchase from the buyer at a set price.

Robo Advisor

A digital application that provides financial services and guidance, minimising the need for human intervention.

S

Secular Market

A large expansion in the economy, profits, as well as technological advances.

Security Token

A device that provides two-factor authentication to prove a user’s identity during the login process.

Seed Money

This refers to money that has been raised by a business in its early stages.

Series A Funding

A type of funding designed to help a new company grow.

Series B Funding

This is the next stage of funding after Series A. It is the second round of funding for when a company has achieved milestones and is in the scale-up stage.

Service-level Agreement

Expectations set between a customer and a service provider, detailing the services being delivered.

Sharing Economy

An economic system that allows peers to share resources.

Single Sign-on

A method of authentication that enables the secure login of multiple portals through one set of credentials.

Smart Contracts

Programmes that are stored on a blockchain that run when conditions are met.

Social Finance

An initiative that leverages private capital to solve areas of environmental and social need.

Software-as-a-Service (SaaS)

A service that delivers applications across the Internet.

Specialist Banks

This type of bank focuses on financing specialised activities.

Split Payment

This type of payment involves settling the cost of a transaction through multiple payment sources.

Start-up Company

A new company that is typically financially backed due to demand for its product and/or service.

Strong Customer Authentication (SCA)

A regulatory requirement in Europe set to reduce fraud and to make online and offline payments more secure.

SWIFT

The Society for Worldwide Interbank Financial Telecommunications is an association that provides services related to financial transactions and payments between banks across the globe.

T

Terminal Value

The value of an asset or business beyond the forecasted period.

Tokenisation

When a sensitive piece of data is replaced with a value.

U

Unbanked

An individual who does not have a bank account.

Underbanked

A person that has a bank account but has decided to use other financial services rather than their bank to help.

Underwriter

A financial expert who assesses your finances and what the risk would be if a lender gave you a loan.

Underwriting

When a lender verifies your financial history to approve you for a loan.

Unicorn

A privately owned company, that is backed by venture capital, and is valued at over $1 billion.

Unit Investment Trust

An investment company that offers a fixed set of stocks and bonds as redeemable units over a certain period of time.

V

Vendor

A business that has something for sale.

Venture Capital

A type of financing in which capital is invested in exchange for equity.

Virtual Card

A digital payment card with a unique 16-digit number, expiry date, and CVC that is stored electronically.

W

Whale

An individual that owns large amounts of cryptocurrency.

Wholesale Banking

This is when a banking service is sold to a large client, such as another bank.