Fintech terminology that CEOs and business leaders need to know

The financial services industry is undergoing some of the most significant changes in its history as applied technology is reinventing many aspects of the financial system.

With these innovations comes a new set of lingo and terminology to describe new ways of doing old things. Because it can get confusing out there, we’ve compiled a list of key terms and definitions directed to business leaders, as technology talk in financial services is no longer something that can be relegated only to the IT department.

We’d love to hear from you if you think we’ve missed any terms.


API

An application programming interface (API) is a set of requirements that governs how one software application can talk to another. APIs are not new: they are the basis of what allows you to move data between software applications. (Source: ReadWrite.com)

Big data

Big data is an increasingly popular buzzword for referring to any collection of data sets so large and complex that it becomes difficult to process them using traditional data processing applications. Big data can also refer to a new attitude within business, governments and non-profit organizations that combining data from multiple sources could lead to better knowledge-based decision-making. (Source:  Forbes.com)

Bitcoin

Bitcoin is a consensus-based network that enables a new payment system and completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users via blockchain technology with no central, sovereign authority or middlemen. Bitcoin is the leading functioning example of a cryptocurrency, but there are others. (Source: Bitcoin.org)

Blockchain 

A blockchain is a public ledger of all Bitcoin transactions that have ever been executed. It is constantly growing as ‘completed’ blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order. (Source: Investopedia.com)

Crowdfunding

Crowdfunding is a method of raising capital in small amounts from a large group of people using the Internet and social media. Unlike funds from venture capitalists or angel investors, the money raised through crowdfunding does not provide an equity stake, but often includes early buy-in incentives. This is quite distinct from crowd investing (also called equity crowdfunding), which allows direct investment in the Exempt Market. (Source: Techopedia.com)

Cryptocurrency

Cryptocurrency is a type of digital currency that uses encryption for security and anti-counterfeiting measures. Public and private encryption keys are often used to transfer cryptocurrency between individuals. Bitcoin is the leading functioning example of a cryptocurrency. (Source: Techopedia.com)

Data Aggregation

Data aggregation is a type of data and information mining process where data is searched, gathered and presented in a report-based, summarized format to achieve specific business objectives or processes and/or conduct human analysis. (Source: Techopedia.com)

Digital native

A digital native is an individual who was born after the widespread adoption of digital technology. The term digital native doesn't refer to a particular generation. Instead, it is a catch-all category for children who have grown up using technology like the Internet, computers and mobile devices. (Source: Techopedia.com)

Disaster Recovery Site

A disaster recovery site is an alternative backup facility that is used when a primary location becomes unusable due to failure or disaster. It contains equipment and infrastructure that can be temporarily used to manage business processes until the main site's functionality is fully restored. (Source: Techopedia.com)

Encryption

Encryption is the most effective way to achieve data security. To read an encrypted file, you must have access to a secret key or password that enables you to decrypt it. Advanced Encryption Standard (AES) encryption is the current industry standard, which allows for up to 256-bit keys, providing a virtually unbreakable level of encryption using current technology. (Source: Webopedia.com and Wikipedia.org)

Fintech

A contraction of the words ‘financial’ and ‘technology’, fintech has become a ubiquitous term for any technology applied to financial services, typically where a technology is sold into the financial services sector working for the back office functions of these customers. The hashtag #fintech is widely used on Twitter. (Source: NDRC)

Finserv

A contraction of the words ‘financial’ and ‘services’, #finserv is often used on Twitter as a hashtag to denote a topic related to the financial services industry.

Hacker

Hackers use alternative methods to gain access to computer systems and networks, which may include technical or social methods. They may also work with networks of affiliates (or other computers co-opted by the hackers) to perform denial of service attacks, which are brute force attempts to overwhelm a company’s web portal with access requests, crippling it and preventing access by authorized users. Hacking actions are differentiated as illegal and unacceptable (black or grey hat hacking) or legal and acceptable (white hat hacking). (Source: Techopedia.com)

Internet of Things

The Internet of Things (IoT) is a computing concept that describes a future where all or most everyday physical objects will be connected to the Internet and be able to identify themselves to other devices. Early stages of the IoT exist today in the form of TVs, blu-ray players, refrigerators, thermostats, fire detectors, and even cars that can interact with other devices. (Source: Techopedia.com)

P2P lending

Peer-to-peer or person-to-person lending is often abbreviated to ‘P2P’ lending and is the action of loaning money to individuals while avoiding the systems and processes put in place by traditional financial institutions.  P2P lending is often central to the debate about the future of banking innovation. (Source: Sentronex)

Payment Gateway

A payment gateway is an e-commerce application service provider service that authorizes credit card payments for e-businesses or online retailers. It is the equivalent of a physical point of sale terminal located in most retail outlets. (Source: Wikipedia.org)

SaaS

Software as a Service (SaaS) is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the Internet. (Source: Techtarget.com)

Screen Scraping

Screen scraping is the process of collecting screen display data  from one application and translating it so that another application can display it. This is normally done to capture data from a legacy application in order to display it using a more modern user interface. (Source: Techopedia.com)

Sharing economy

An economic model in which individuals are able to borrow or rent assets owned by someone else. The sharing economy model is most likely to be used when the price of a particular asset is high and the asset is not fully utilized all the time. (Source: Investopedia.com)

Single sign-on (SSO)

Single sign-on (SSO) is an authentication process that allows a user to access multiple application with one set of login credentials. SSO is a common procedure in enterprises, where a client accesses multiple resources connected to a local area network (LAN). (Source: Techopedia.com)

Web portal

A Web portal is a specially designed website that often serves as the single point of access for information. A Web portal helps in search navigation, personalization, notification and information integration, and often provides features like task management, collaboration, business intelligence and application integration. Web portals are also known simply as portals. (Source: Techopedia.com)