FinTech Lingo

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A B C D E F G H I J K L M

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A

Account - A record for each customer or entity that details financial transactions and balances in a financial institution or payment system.
API - A set of rules and protocols for building and interacting with software applications, crucial for integrating various financial services and systems.
Asset - Any resource owned by an individual or corporation that has economic value or an expectation of yielding benefits in the future.
Audit - A systematic review and assessment of information or documents by a third party to ensure accuracy, legality, and efficiency in financial contexts.
Amortization - The process of spreading out a loan into a series of fixed payments over time, often used in the context of mortgage and asset financing.
AML - A set of laws, regulations, and procedures aimed at preventing criminals from disguising illegally obtained funds as legitimate income through financial systems.
Acquirer - A financial institution or bank that processes credit or debit card payments on behalf of a merchant.
Authentication - The process of verifying the identity of a user or device, commonly used in fintech for securing transactions and accessing financial accounts.
Arbitrage - The practice of taking advantage of price differences between markets to make a profit by buying low in one market and selling high in another.
Algorithmic Trading - The use of algorithms to execute trades at speeds and frequencies that are impossible for human traders, often based on predefined criteria such as timing, price, or quantity.
Acquisition Cost - The cost associated with obtaining a new customer or asset, including marketing, advertising, and promotional expenses.
APR - The annual rate charged for borrowing or earned through an investment, expressed as a percentage, which includes interest as well as fees or additional costs.
Acquisition - The process of one company purchasing most or all of another company’s shares to gain control of that company, often used to expand operations or market reach.
Annuity - A financial product that provides a series of payments made at equal intervals, often used as a steady income stream for retirees.
Arrears - The status of payments that are overdue after missing one or more required payments, often referring to unpaid debts or late mortgage payments.
Assets Under Management (AUM) - The total market value of assets that an investment company or financial institution manages on behalf of clients.
APM (Alternative Payment Method) - Payment options that differ from traditional credit or debit card payments. APMs include digital wallets, bank transfers, mobile payments, and Buy Now, Pay Later (BNPL) services, providing consumers with more choices when making transactions. Example: A customer shopping on an online store might choose to pay using PayPal (a digital wallet) instead of entering their credit card information, or use Klarna’s BNPL service to pay for the purchase over time
Asset-Backed Security (ABS) - A financial security backed by a pool of assets, such as loans, leases, or receivables, which is used to generate interest payments to investors.

B

Blockchain - A decentralized digital ledger that records transactions across multiple computers, ensuring that the record is secure and cannot be altered retroactively
Bitcoin - A type of digital currency or cryptocurrency that operates on a decentralized network using blockchain technology, allowing peer-to-peer transactions without the need for a central authority.
Banking-as-a-Service (BaaS) - A model where banks integrate their digital banking services directly into the products of other non-bank businesses through APIs, enabling them to offer financial services under their brand.
Biometrics - The use of unique physical or behavioral characteristics, such as fingerprints or facial recognition, to authenticate individuals for access to financial services.
Buy Now, Pay Later (BNPL) - A payment option that allows consumers to purchase goods and services and pay for them over time, typically without interest if payments are made on time.
Benchmark - A standard or point of reference against which financial performance, investments, or other metrics are compared or assessed.
Balance Sheet - A financial statement that summarizes an organization’s assets, liabilities, and shareholders' equity at a specific point in time, providing insights into its financial health.
Broker - An individual or firm that acts as an intermediary between buyers and sellers of financial securities, typically charging a commission for their services.
Budget - A financial plan that estimates income and expenses over a specific period, used to allocate resources, control spending, and ensure financial stability.
Bankruptcy - A legal process in which an individual or business declares the inability to repay outstanding debts, leading to the liquidation of assets or a repayment plan under court supervision
Basel III - A set of international banking regulations developed by the Basel Committee on Banking Supervision, aimed at strengthening bank capital requirements and improving risk management and liquidity.
Bond - A fixed income instrument representing a loan made by an investor to a borrower, typically corporate or governmental, with a promise to pay back the principal along with interest at a later date.
Burn Rate - The rate at which a company spends its capital or cash over a certain period, often used in the context of startups to measure how long they can operate before needing additional funding.
Basis Point (bps) - A unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, with one basis point equal to 0.01%.
Buyout - The purchase of a company or a controlling interest in a company, often financed through a combination of debt and equity.
Bank Run - A situation where a large number of bank customers withdraw their deposits simultaneously due to fears of the bank's insolvency.
Bearer Bond - A fixed-income security that is owned by the holder (bearer) rather than a registered owner, making it anonymous but susceptible to theft or loss.
Biometric Security - The use of unique biological characteristics, such as fingerprints, facial recognition, or voice patterns, to authenticate a user's identity and grant access to financial services or secure systems. Example: Many banking apps now use fingerprint or facial recognition to allow users to log in securely without entering a password.
Bank Charter - A legal document that grants a financial institution the authority to operate as a bank, outlining its powers, responsibilities, and regulatory framework. Example: A fintech company that wants to offer traditional banking services like accepting deposits and providing loans may apply for a bank charter to operate under a regulatory framework.
Behavioral Finance - A field of study that examines how psychological influences and biases affect the financial behaviors of individuals and markets, often leading to irrational decision-making. Example: Behavioral finance explores why investors sometimes make decisions based on emotions, such as selling stocks during a market panic, even when it may not be in their best financial interest.
Blockchain Explorer - An online tool that allows users to search and view detailed information about transactions, blocks, and addresses on a blockchain network. Example: Users can use a blockchain explorer like Etherscan to track Ethereum transactions and view the history of specific wallet addresses.
Business-to-Business (B2B) - A type of transaction or business model where one business sells products or services directly to another business, as opposed to consumers. Example: A fintech company providing payment gateway solutions to e-commerce platforms operates in a B2B model.

V

VASP (Virtual Asset Service Provider) - A business or entity that provides services related to the transfer, exchange, or safekeeping of virtual assets, such as cryptocurrencies. VASPs must comply with regulations, including anti-money laundering (AML) laws, to ensure the secure and legal operation of their services.

P

PCI DSS (Payment Card Industry Data Security Standard) - A set of security standards established to ensure that all entities that process, store, or transmit credit card information maintain a secure environment. Compliance with PCI DSS helps protect cardholder data from theft and fraud. Example: An e-commerce site like Amazon must comply with PCI DSS by encrypting payment information, maintaining secure servers, and implementing strong access control measures to protect customers' credit card data.

G

Gpay (Google Pay) - A digital wallet and online payment system developed by Google that enables users to make payments using their mobile devices, online, in apps, and in-store through contactless payment technology. Example: A user can link their bank card to Google Pay and then use their smartphone to tap and pay for groceries at a supermarket, or make in-app purchases on platforms like Google Play.

M

MoMo (Mobile Money) - A service that allows users to store, send, and receive money using their mobile phones, often without the need for a traditional bank account. Mobile money is widely used in developing regions where access to banking services is limited. Example: In Kenya, many people use M-Pesa, a popular mobile money service, to pay bills, transfer money to friends and family, or purchase goods and services without needing a bank account.

I

Interac - A Canadian interbank network that enables electronic financial transactions, including debit card payments, money transfers, and online banking. Interac is known for providing secure, real-time payment processing across Canada. Example: A Canadian resident can use Interac e-Transfer to send money directly from their bank account to another person’s bank account, instantly and securely, using only the recipient’s email address or mobile number.

F

FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) - Canada’s financial intelligence unit responsible for detecting, preventing, and deterring money laundering, terrorist financing, and other threats to the integrity of Canada’s financial system. FINTRAC collects and analyzes financial transaction reports to support law enforcement agencies. Example: A Canadian bank is required to report any large cash transactions or suspicious activities to FINTRAC, which then analyzes the data to identify potential money laundering activities and supports law enforcement investigations.