Accelerator / Incubator
A centre or programme where FinTech start-ups are given mentorship and/or funds to accelerate them through the research, validation, development and launch phases.
Access to Accounts / XSTA
Allows financial institutions and regulated FinTechs to access the bank accounts of EU consumers as part of PSD2. Such organisations are positioned between the customer and their bank and act as third party Payment Service Providers (PSPs).
Account Information Service Provider / AISP
AISPs offer solutions that allow companies and consumers to have a consolidated view of their financial situation. Under PSD2, AISPs can access their customers data at other financial institutions and use it to offer services and solutions.
Financial institution which buys the rights to a merchant account, allowing them to service and manage the merchant’s bank account.
Account Servicing Payment Service Provider / ASPSP
All financial institutions that offer payments, current accounts, credit cards, etc with online access are classed as ASPSPs. Under PSD2 they are obliged to provide an interface to allow authorised third parties to access account information and initiate payments.
A Bitcoin address is a unique string of 27-34 alphanumeric characters. An address can be created freely with the use of a Wallet and always starts with a 1 or a 3.
A series of instructions which tell a computer what to do. These can be highly complex and include multiple options (and, or, not) based on multiple data and scenarios but are based on simple rationale.
Alternative cryptocurrencies to mainstream coins such Bitcoin or Ethereum. Multiple forms exist serving funding, investment or utility purposes.
Alternative Finance / AltFi
Lenders and instruments which have emerged and exist outside of the traditional finance system of regulated capital markets, such as P2P or Crowdfunding. Sometimes referred to as AltFi or the shadow banking system.
Application Programming Interface / API
A set of commands, functions and procedures which allows two pieces of software to talk to each other instantly and seamlessly, making it easier to exchange data and execute tasks. An essential element of Open Banking.
Application Specific Integrated Circuit / ASIC
Technology used in Bitcoin mining, ASIC is able to generate orders of magnitude more Hashes per watt of power than the next best technology.
ArtificiaI Intelligence / A.I.
Artificial intelligence is when a system can replicate human thought or is inspired by human reasoning but at higher degrees of volume or complexity. IBM Watson studies thousands of data points, validates data at certain levels of confidence and recognises patterns in data.
The analysis of large, complex, unstructured or rapidly changing data sets to identify linkages or trends that would not be apparent through traditional data processing methods.
The major technology companies such as Apple, Google, Amazon and Facebook, may ultimately become the natural owners of FinTech.
Cyber security technology that aims to prevent data breaches or fraud by using physically unique data about an individual to prove their identity e.g. eye or fingerprint, rather than password or PIN code.
A cryptocurrency which is manufactured, stored and exchanged without reference to a central bank or authority. Value is based on supply and demand. Bitcoin transactions are recorded using Blockchain technology and user identity is encrypted. As at April 2020 Bitcoin had a market cap of USD 117bn, making it the largest cryptocurrency.
A cryptocurrency created in August 2017 from a fork of Bitcoin Classic. Bitcoin Cash increases the size of blocks, allowing more transactions to be processed.
A block is a unit of the code which comprises the Blockchain. It is the record of transactions that have occurred since the last block was created and a confirmation to previous transactions. Each block links to the block before it, thus creating a full chain back to the original Genesis Block.
A digital ledger which records transactions as a chain of data and stores them on a decentralised peer-to-peer network. Each peer then maintains a shared append-only ledger which are kept synchronised through a Consensus Protocol. Theoretically impossible to change and allows participants to see the same version of the truth at the same time. Best known for cryptocurrency transactions but a range of Public and Private Blockchains exist for different purposes.
A new financial institution which has been granted a banking license and uses FinTech to engage clients better, create an efficient back office, agile business model, etc. UK examples include Atom Bank, Mondo, Starling and Tandem.
A charge returned to a payment card after a customer successfully disputes an item on their account transactions report.
A computer program capable of holding textual or auditory conversations with humans, uses A.I. to understand context and improve responses.
When software or services are provided over the internet, aka the cloud. Data is hosted on servers at a remote data centre but can be utilised on local computers. Versions include private, public and government cloud. Allows buyers to leverage the economies of scale and expertise of the provider while offer their solutions in a SaaS format. Requires good cyber security, back-up and disaster recovery procedures.
A slow growing but resilient FinTech, the opposite of a Unicorn.
A self-learning computer system which attempts to mimic human thinking using data mining, pattern recognition and natural language processing.
The process of moving cryptocurrencies to an offline Wallet, reducing the potential for hackers to steal private keys.
When private persons or organisations share, swap, rent and trade products and services, such as P2P.
The consensus protocol is an algorithm which sets the rules and procedures among the participant nodes. Allows network members to agree on the value of a piece of data or a proposed transaction such as trading of cryptocurrency, which then updates the ledger such as a Blockchain.
Core Banking System
A system supporting ‘core’ functions such as client records and messaging, transaction management, configuration, reporting and general ledger. Distinction must be made between new breed ‘digital core’ systems with architecture which is open to API and Cloud hosting, and legacy core systems which may be closed, on-premise and not real-time.
Transactions occurring between persons and companies via a marketplace. Includes debt, invoices and equity in return for interest, shares and rewards. Provides liquidity to companies who might otherwise be excluded from the market and a new (often unregulated) asset class for investors.
A digital, decentralised currency used for payment or investment purposes. Exist as an alternative to fiat currencies and operate independently of a central bank. Cryptocurrencies are stored in Wallets and registered on a Blockchain.
Wallet provider who takes custody of their clients cryptocurrencies or digital assets by controlling the private keys, opposite of self-hosted wallet.
Processes and technologies used to keep data, devices, software, systems and hardware secure from damage, theft, hijack and misuse.
A cryptocurrency offering instant, private payments using a secure, Open Source platform.
Decentralized Autonomous Organisation / DAO
Organisation who's technology operates autonomously and who's by-laws are coded into Ethereum, making them immutable.
Digital Bank (Neobank)
The provision of financial services solely through mobile apps and internet banking channels. Often have a limited product range or partner with other providers.
A person who has grown up using digital technology, including Millennials and Generation Y.
The journey businesses undergo to implement technology in their organisation to achieve greater automation or create new capabilities. Requires not only new technology but new skills, processes and business change. Often part of a wider business model change including use of shared services and business process outsourcing.
A technology which radically alters consumer behaviours and/or business models, such as FinTech, the Sharing Economy or Platformication.
Distributed Ledger Technology / DLT
A digital system for recording data in multiple places at the same time. Unlike traditional databases, distributed ledgers have no centralised database or controller but use nodes (independent computers spread across multiple locations) to replicate, share and synchronise transactions in their digital ledgers. The most common distributed ledger is the Blockchain, however not all DLTs use the Blockchain system.
Dual Interface Chip Card
Dual interface chip cards are credit or debit cards with a single embedded chip that are able to process transactions via contact and contactless methods.
Identity in a digital format. Often involves an identity card with embedded chip, certification, separate signatures and Multi-stage Authentication. eID is legally binding (eIDAS legislation in EU) in many countries and used to sign Smart Contracts.
The process of encoding sensitive data using algorithms to secure it, for example between browsers or parties to a transaction. To access or activate the data a key is usually required.
The native cryptocurrency of the Ethereum platform.
A digital network, similar to Blockchain, which can be used build decentralised applications.
Fiat currency is government-issued money that is not backed by a physical commodity, such as gold or silver.
Financial products or services aimed at providing access to more affordable and mainstream options for the Underbanked and Unbanked.
FinTech / Financial Technology
A fast-growing industry using modern software, infrastructure and methodologies to deliver financial services to a broad range of personal, corporate and capital market segments. Often highly automated or available solely through digital channels. FinTech may also be a start-up providing financial services via digital channels.
Foreign Exchange / FX
The conversion of one currency to another. A number of large FinTech’s such as Revolut and Transferwise focus on this segment. Large corporates and banks have used algorithmic trading in FX for over 20 years.
The process of spinning off or splitting a cryptocurrency. Creates an alternate version of the Blockchain, leaving the two versions to run simultaneously on different parts of the network. There are two types: Soft Forks and Hard Forks.
Freemium (free + premium) is a pricing tactic which offers a limited version of a product or service for free, with the option to access additional features for a fee.
General Data Protection Regulation / GDPR
An EU policy aimed at strengthening and unifying data protection for individuals within the European Union and governing the export of personal data outside of the EU.
The very first block created at the beginning of a Blockchain.
Related to Bitcoin, the reduction in reward for miners that occurs after every 210,000 blocks mined, thus affecting the rate at which they are mined and inflate.
The process of spinning off or splitting a cryptocurrency. Hard forks involve a radical change to the protocol, making previously blocks/transactions invalid (or vice-versa) in the Blockchain. Requires all nodes to upgrade to the latest version of the software and creates a permanent divergence from the previous version.
A hash is the output of a hash function and, as it relates to Bitcoin, the hash rate is the speed at which a computer completes an operation in the Bitcoin code. The higher the hash rate the higher the opportunity of finding the next block and receiving the reward when mining.
An incumbent is an established Bank or player who has built substantial market share over time but may not necessarily have the best products, technology, etc as their business model is difficult to transform.
Infrastructure as a Service / IaaS
IaaS is a type of Cloud Computing where hardware resources such as servers are owned and managed by a 3rd party and delivered over the internet as a subscription (therefore no software or capex is required by the client).
Initial Coin Offering / ICO
An event where funds are raised, say to develop a new Cryptocurrency business, by offering a new Cryptocurrency who's business proposal is detailed in a White Paper. Investors can subscribe using Fiat Currency or other Cryptocurrencies.
FinTech firms focusing on the insurance segment, including the delivery of sales and broking by digital channels. InsureTech is leading to many innovations such as crowd insuring, social insurance, ultra-customised or on-demand policies, and the use of Big Data to deliver better underwriting or dynamic pricing.
Short for cryptographic keys, which use algorithms to transform data to allow secure communication. A private key will be known only to the recipient. In Cryptocurrency the private key effectively generates a signature required to unlock the funds. The private key is used to mathematically derive the public key, which is effectively the address where funds are received.
Know Your Client / KYC
A set of checks which must be made by financial services providers to identify clients and their source of funds. Typically used during onboarding, KYC helps fulfil the anti-money laundering (AML) and combat financing of terrorism (CFT) requirement of regulators. The digitalisation of KYC is leading to a boom in RegTech solutions.
Unlike conventional computer programs, machine-learning algorithms modify themselves to better perform their assigned tasks. Increasingly used to improve credit analysis.
An acquirer is a financial institution that processes credit or debit card payments on behalf of a merchant (e.g. retailer).
Financial transactions typically involving a very small amount of money.
An architectural style that structures an application as a collection of services that are independently deployable but are also lightweight thus easy to maintain, reliable, can support frequent transactions quickly, etc.
Software that connects network-based requests generated at the front-end (client) to the back-end data or service that the client is requesting.
The process by which new blocks are created and all Bitcoin transactions are verified. Examples include Self Mining using own equipment, Cloud Mining where you rent hashing power or Mining Pool where multiple participants share resources and rewards. Over the years the mathematical difficulty of discovering Bitcoin has grown beyond what a regular individual can achieve at home, leading large scale operations using industrial hardware to prevail.
Payment services performed from a mobile device.
A mechanism to split control over an address among multiple Private Keys, with a specified number of keys required to unlock the funds stored.
Minimum Viable Product / MVP
A version of a new product with sufficient features to be usable but not the full solution. Allows FinTechs to validate markets and client needs relatively quickly and cheaply, allowing them to pivot or build out the final product.
Multi Factor Authentication
A safeguard by which a user is granted access, or has a transaction approved, only after successfully presenting two or more pieces of evidence to an authentication mechanism.
Near Field Communication / NFC
High frequency technology which facilitates the exchange of data over a short distance, such as between the chip in a card or smartphone and a payment reader.
A retail finance model where service is delivered to customers using different channels such as branch, mobile, web, retail POS and 3rd party partners connected by API.
An Open (or Public) API is a free-to-use, publicly available application programming interface that provides access to a software application.
Open banking is a new approach to delivering financial services enabled by PSD2. APIs enable 3rd party partners to deliver services or data to a financial institution, which in turn offers or integrates these to provide complimentary new products and services. The financial institution defines the product and technical standards and maintains the API layer or Middleware. Utilised by Challenger Banks, Digital Banks and FinTechs in order to grow fast or offer specialist solutions.
Software which is made freely available to anyone who has the skills and applications to apply it.
Facilitates the online payment for goods and services using a card, linking the buyer, merchant and acquiring bank. Prominent example includes PayPal.
Payment (Initiation) Service Provider / PSP / PISP
An organisation that offers companies, retailers, merchants, etc an online solution is for accepting electronic payments. PSPs often also handle data security compliance, fraud protection, etc.
Category of Payment Service Provider. Offer customers services such as executing payment transactions, issuing of payment instruments, card processing, money remittance, foreign exchange services and sometimes short-term credit.
Payment Services Directive 2 / PSD2
A revised policy aimed at standardising and making inter-operable payments and services within the EU. Expected to reduce barriers to entry for 3rd party providers and FinTechs by allowing them to make payments and debit the customers bank account via API, offer services on top of bank’s data and infrastructure, etc. Should result in greater competition and collaboration.
Peer-to-Peer / P2P
Transactions occurring between persons via a marketplace, typically short-term personal lending. Provides liquidity to borrowers who might otherwise be excluded from market, and potentially high returns for investors.
Platform as a Service / PaaS
PaaS is a type of Cloud Computing where a 3rd party supplier provides its client with a platform and an environment which allows them to build applications and services over the internet. PaaS therefore avoid the capex, opex and complexity of building and maintaining the platform themselves.
An emerging plug and play business model that allows multiple participants to connect, interact with each other via API or other mechanisms to create value.
Point of Sale / POS
POS is a critical stage to engage clients, such as offering them credit or payment solutions to complete a purchase.
A Blockchain network where permission in required to participate. The invitation must be validated either by the network starter or by the protocols set by the network starter.
Proof of Concept / POC
POC is a trial designed to illustrate that a product or service is viable from a commercial or technical perspective. Having completed a POC a FinTech may develop an MVP or full product solution.
Property Technology, or PropTech, is the use of technology in the real estate industry, such as delivering a new service or problem solving.
A Public Blockchain is completely open and anyone can join and participate in the network, execute the consensus protocol and maintain the shared digital ledger. The network typically has an incentivising mechanism to encourage more participants to join. To achieve consensus each node in a network must solve a complex cryptographic problem called a Proof of Work to ensure all are in sync (thus computation power is required).
Quick Response (QR) codes
A 2D bar code used to provide easy access to information or initiative payments through a smartphone.
FinTech firms focusing regulatory activities, including management of AML, KYC, fraud, compliance and regulatory reporting.
Return on Investment / ROI
Measuring the benefit created by a solution relative to the Total Cost of Ownership.
Automated solution which provides advice and/or allocates assets based on the prevailing market conditions relative to the pre-defined risk:reward strategy. In essence an algorithm replaces a human. Growing fast for personal financial management and standardised asset management services due to cost and speed advantages.
The process of extracting data from text so that it can be displayed on another device, such as account data. Screen scraping increasingly has an evaluation purpose in analytics or credit scoring.
A portable device that authenticates a person's identity electronically by storing some sort of personal information. The owner plugs the security token into a system, with access granted if Security Token Services (STS) authenticate the person's identity.
Owner of Cryptocurrency controls the private keys, as opposed to a Custodial Wallet.
A developing economic model where the acquisition and provision of goods and services is shared amongst a community of peers, such as peer-to-peer (P2P) lending.
Digital contracts automatically prepared based on specific inputs and signed using an Electronic Identity. Such contracts have been commonplace in advanced countries such as Estonia for years but will see mainstream with the approval of legislation such as eIDAS.
The process of spinning off or splitting a Cryptocurrency. A change to the protocol requires a majority of miners to upgrade for blocks/transactions to be valid (as opposed to a Hard Fork that requires all to agree and upgrade).
Software-as-a-Service / SaaS
SaaS is a type software licensing model whereby the application is hosted by the vendor in the Cloud and accessed by users in return for a subscription fee.
A payment method that allows goods or services to be paid for using more than one payment method, for example a card and cash.
Straight Through Processing / STP
Automating an entire process from end-to-end. Increasingly used in onboarding and lending due to its speed, efficiency and effectiveness.
Third Party Payment Service Providers / TPP/ TPPSP
Together, the Account Information Service Provider (AISPs) and Payment Initiation Service Providers (PISPs) that work alongside the customer and the banks in the payment process.
Where elements of sensitive data are replaced by a token in order that it can be securely transferred. The token itself has no intrinsic value of its own and the recipient uses software to convert it back to its original data form.
Total Cost of Ownership / TCO
The total of customisation, license and service throughout the life of an IT contract.
People or businesses with no access to mainstream financial services. Financial Inclusion initiatives are improving the provision of services and affordability of this segment.
People or businesses with poor access to mainstream financial services. Access to credit continues to be a problem for many in the low income bracket.
A start-up or scale-up with a valuation in excess of USD 1bn, typically based on growth assumptions rather than actual profitability. Opposite of a Cockroach.
An application which allows you to check balances, make financial transactions, hold assets and collect rewards on a mobile device. Typically linked to a real money account or with a virtual card, thus becoming an alternative to traditional payment methods. In the case of Bitcoin Wallets, these do not hold the asset but the Private Key for every Bitcoin address that is saved in the Bitcoin wallet. The wallet facilitates sending and receiving Bitcoins and gives ownership of the Bitcoin balance to the user.
FinTech firms focusing on the wealth management segment, including investing, portfolio management and Robo-advisory.
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