FinTech is easy to get wrapped up in. It’s an exciting field that’s taking power away from traditional, bloated banks and giving the industry a much needed facelift. It’s helping the underbanked (as any FinTech enthusiast will tell you a hundred times), and many popular FinTech technologies are becoming integrated into everyday life. But what’s with all the lingo? Despite the excitement, understanding exactly what’s happening in the field can be hard. There’s banking terms, tech lingo, and pure FinTech jargon. Here’s a primer to get you ready for the next time you encounter FinTech.
AML: Anti-Money Laundering (AML) refers to existing laws or procedures meant to reduce illegally obtained income.
API: Application Programming Interface (API) represents the functionalities of a certain program. These are important because they enable other programmers to use components of existing software, allowing for faster and more reliable software development—a major component of the FinTech movement!
Cryptocurrency: A digital currency using cryptography for regulation and security. It’s a decentralized system, meaning no central entity exists to oversee the processes. Instead, it uses a blockchain. There are several different kinds of cryptocurrency, including Bitcoin, Ethereum, and Ripple.
Bitcoin: The most popular cryptocurrency, generally deemed the first of its kind. The open source software comes with an elusive and mysterious history. No one is really sure who made it.
Blockchain: Where cryptocurrency transactions get recorded. It operates like a public ledger where information, once entered, can’t be altered. Blockchain technology also has several non-cryptocurrency applications including smart contracts and the recording of digital assets.
Collaborative Consumption: An economic model based on the sharing, swapping, and renting of services. The “Sharing Economy” or “Collaborative Economy” can be seen in platforms like Airbnb or Kickstarter and is growing in FinTech solutions via solutions like peer-to-peer lending.
Digital Native: A person raised in the age of digital technology. This demographic is vital to the growth of FinTech as they are more likely to expect their banking services to be technologically advanced and always online.
DRAAS: Disaster-Recovery-as-a-Service, the hosting of servers by a third party in case of a disaster. This means all that vital data can stay safe no matter what happens to us.
EMV: Represents the global standard for credit and debit cards. The title comes from its original developers, Europay, MasterCard, and Visa. Many cards already feature the EMV chip designed to fight card fraud.
Encryption: The process of encoding messages. Encryption is vital to FinTech, the blockchain, and anything else that needs to be secure. Data, like names and numbers, is turned into a code using algorithms (mathematical formulas). A key is required to turn that code back into useful data.
FinTech: Financial Technology, an industry known for championing software and technology in the financial sector. They’re also popular for generally challenging traditional banking and incumbent institutions.
FinServ: An abbreviation that appears largely on Twitter, referring to anything in the Financial Services industry.
KBA: Knowledge-Based Authentication aids is used for fraud prevention.