Fintech Dictionary

Welcome to the Fintech Market's Fintech Dictionary - your go-to source for understanding the key terms and concepts in the rapidly evolving world of financial technology.

A-Z

A/B testing	A/B testing, also called split testing, is a way to compare multiple versions of a variable, model, or application by dividing them randomly between selected groups to determine which one performs better, for example by testing a subject's response to variant A against variant B.
Alternative financing	Financing options that fall outside of the traditional product stack offered by traditional banks.
Amortization	The process of gradually paying off a loan through regular payments that include both principal and interest and show the breakdown of each payment over the lifecycle of the loan.
Analytical database	A type of database designed to store, organize, and analyze large amounts of data for business intelligence or decision-making purposes.
API (application programming interface)	A set of protocols and tools for building software applications that enables different systems to communicate with each other.
Artificial intelligence (AI)	The simulation of human intelligence in machines that are programmed to learn, reason, and make decisions based on data and algorithms.
Authentication	Electronic authentication is the process of establishing confidence in user identities electronically presented to an information system. Digital authentication, or e-authentication, may be used synonymously when referring to the authentication process that confirms or certifies a person's identity and works.
Bank transfers	Electronic transfers of funds between different banks or financial institutions, often used for paying bills or making purchases.
Batch testing	Batch testing is an economical way to test large amount of data at once with a CSV file, rather than each item individually.
Big data	Extremely large sets of data that can be analyzed to reveal patterns, trends, and associations.
Biometric authentication	The use of unique biological characteristics, such as fingerprints, facial recognition, or iris scans, to verify the identity of a user.
Blockchain	A digital ledger of transactions that is distributed across a network of computers and is used to record and verify transactions.
Branch	A branch is an extension of the parent company operating under the laws of another jurisdiction and is not a separate legal entity, as a subsidiary which has separate legal liability although typically being owned and run by the parent organization. In the Fintech Market system however, the branch functionality can be used also for subsidiaries which belong to the same organization.
Capital markets	A digital ledger of transactions that is distributed across a network of computers to record and verify transactions in a secure and decentralized way. It is a chain of digital blocks that contains information about transactions, where each block is connected to the previous one, forming a continuous chain.
Challenger bank	A type of digital bank that is often mobile-first and offers more innovative and flexible banking services than traditional banks.
Champion challenger testing	The champion-challenger strategy, also known as the test-and-learn approach, is a business strategy used to drive innovation, improve performance, and identify the most effective strategies or solutions within an organization. It involves testing and comparing multiple options or variations (challengers) against an existing or established option (champion) to determine which one yields the best results.
Change history	A record of modifications or updates made to a particular system, application, or process over time, typically used for audit or compliance purposes.
Chatbot	A computer program that uses natural language processing (NLP) and machine learning to simulate human conversation, typically used for customer service or support.
Client management	The process of acquiring, retaining, and servicing customers, often involving tasks such as sales, marketing, and customer support.
Cloud computing	The delivery of computing services, such as storage, processing, or software applications, over the internet on a pay-per-use basis.
Collateral	Assets or property that are pledged as security for a loan, which the lender can seize and sell if the borrower defaults on the loan.
Communication gateway	A software that facilitates digital communication of text messages, emails, push notifications, it is used in telecommunications' networks to allow data to flow from one discrete network to another.
Contactless payments	A method of payment that allows customers to make transactions without physically swiping or inserting their payment card into a terminal. Instead, the payment card or mobile device communicates with the terminal via NFC (near field communication) technology.
Credit scoring	The use of statistical models and algorithms to assess a borrower's credit risk based on their credit history, income, and other factors.
Crowdfunding	The practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the internet.
Cryptocurrency	A digital currency that uses encryption techniques to regulate the generation of units of currency and verify the transfer of funds.
Cryptography	The use of mathematical algorithms to encrypt and protect sensitive information such as financial transactions and personal data.
Customer groups	Segments or categories of customers with similar characteristics or needs, often used in marketing or sales strategies.
Customer Relationship Management (CRM)	The combination of practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle.
Data contribution	The practice of financial institutions and lenders submitting borrower-related data to credit bureaus or credit reporting agencies, with the aim of creating comprehensive credit reports and credit scores that facilitate informed lending decisions with options to create positive and negative lists.
Debt-to-income ratio	A measure of a person's debt burden, calculated by dividing their monthly debt payments by their gross monthly income.
Decentralized finance (DeFi)	A type of financial system that operates on a decentralized blockchain network, enabling peer-to-peer transactions without intermediaries.
Digital assets	A term used to describe any type of digital content, such as tokens, cryptocurrencies, or digital certificates, that can be owned or exchanged.
Digital identity	A digital representation of an individual's identity, including personal information, biometric data, and credentials, that can be used to authenticate their identity online.
Digital lending	The process of providing loans to customers through online platforms, using digital data to assess creditworthiness and automate the loan approval process.
Digital onboarding	The process of opening a new account with a financial institution entirely online, without the need for any in-person interactions or paper-based forms.
Digital signature	An electronic signature that is used to verify the authenticity and integrity of a digital document or message, typically using encryption techniques.
Digital wallet	A software application that stores payment information and allows users to make electronic transactions, such as purchases or transfers, through a mobile device or computer.
Direct deposit	The electronic transfer of a payment directly from the account of the payer to the recipient's account.
Disbursement	The release of funds by a lender to a borrower. Disbursement occurs when all loan requirements have been met, and the lender has approved the borrower's application.
Embedded finance	The integration of financial services and products into non-financial platforms or applications, such as e-commerce sites, social media platforms, or mobile apps.
Embedded insurance	The integration of insurance products and services into other products and services, such as car insurance embedded in a car purchase or travel insurance embedded in a flight booking.
Encryption	The technique of scrambling sensitive data automatically in a terminal or computer before transmission for security purposes using an algorithm and key.
Equity financing	A method of raising capital by selling ownership shares in a company to investors, typically in exchange for a percentage of future profits.
EU sanction list	A list of countries, entities, and individuals targeted by the European Union with economic and trade sanctions.
Factoring	A type of financing where a business sells its accounts receivable to a third-party at a discount in exchange for immediate cash.
Fees	Charges or costs associated with a particular product or service, often imposed by a financial institution or other provider.
Financial inclusion	The effort to provide access to financial services, such as banking, insurance, or credit, to individuals and communities that are underserved or excluded from traditional financial systems.
Financial literacy	The knowledge and skills needed to make informed and effective decisions regarding personal finances, such as budgeting, saving, investing, or debt management.
Financial planning software	Software that helps individuals and businesses manage their finances by providing budgeting, forecasting, investment tracking, and other financial planning tools.
Financial technology accelerator	A program or organization that provides mentoring, resources, and funding to early-stage fintech startups to help them grow and succeed.
FinReg	A shorthand term for financial regulation, which refers to the laws and regulations that govern the financial industry and protect consumers and investors.
Fintech	Fintech refers to the integration of technology into offerings by financial services companies to improve their use and delivery to consumers
Fintech application	A fintech application is a type of software application designed to automate and digitize financial services.
Flowcharts	A flowchart is a picture of the separate steps of a process in sequential order. It is a generic tool that can be adapted for a wide variety of purposes, and can be used to describe various processes, such as a manufacturing process, an administrative or service process, or a project plan.
Grace period	A period of time after a loan payment is due during which the borrower can make the payment without penalty.
High-frequency trading (HFT)	A type of algorithmic trading that uses complex algorithms to analyze and execute trades at high speeds, often with the goal of taking advantage of small price movements in financial markets.
Installment loan	An installment loan provides a borrower with a fixed amount of money that must be repaid with regularly scheduled payments. Each payment on an installment debt includes the repayment of a portion of the principal amount borrowed and the payment of interest on the debt.
Insurtech	A subcategory of fintech that focuses on using technology to improve and streamline the insurance industry, including underwriting, claims processing, and customer service.
Interest rate	The percentage of a loan or investment that is charged as interest, typically expressed as an annual percentage rate (APR).
Investment crowdfunding	A form of crowdfunding that allows investors to invest in startups, early-stage companies, and other private ventures in exchange for equity or a share of future profits.
Invoice financing	A form of alternative financing in which a lender provides funds to a business based on its outstanding invoices.
Know Your Transaction (KYT)	A compliance process used by financial institutions to monitor and identify suspicious or fraudulent transactions in real-time.
KYC (know your customer)	The processes conducted to verify the identity of a customer and assess the risk of the business relationship with them.
Legacy systems	Outdated and often obsolete computer systems or software applications that are still in use by some financial institutions.
Machine learning	A subset of AI that enables machines to learn from data and improve their performance without being explicitly programmed.
Marketplace lending	The use of online platforms to match borrowers with investors who are willing to lend money, often bypassing traditional banks and financial institutions.
Mobile banking	Banking services that can be accessed through a mobile device, such as a smartphone or tablet, including account management, money transfers, and bill payments.
No-code software platform	A no-code product is essentially a platform that allows users to visually automate processes and workflows and bundle it as custom applications without involving any code.
Open banking	A banking practice that provides third-party access to financial data through the use of application programming interfaces.
Open-source software	Software that is made available with its source code and can be freely used, modified, and distributed by anyone.
Overdraft	Occurs when a customer withdraws more money than is available in their account, resulting in a negative balance. Banks may charge overdraft fees and interest on the overdrawn amount.
Payment gateway	A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. The term includes not only the physical card-reading devices found in brick-and-mortar retail stores but also the payment processing portals found in online stores.
Peer-to-peer (P2P) lending	A method of lending money to individuals or businesses through an online platform that matches borrowers with lenders.
Principal	The amount of money borrowed in a loan, excluding interest and fees.
Refinance	The process of replacing an existing loan or debt obligation with a new one, typically with different terms or interest rates.
Refinancing	The process of replacing an existing loan or debt with a new loan or debt, typically with better terms or a lower interest rate.
Regulator sandbox	A regulatory sandbox is a controlled environment where fintech startups can test their products and services under the supervision of regulatory authorities.
Repayments	The process of returning money or assets borrowed from a lender, often with interest or other charges.
Robo-advisor	A digital platform that uses algorithms to provide investment advice and manage investment portfolios.
Savings account	A bank account designed for individuals to save money and earn interest on the deposited funds.
Schedule types	The various options or configurations available for setting payment schedules, loan terms, or other financial obligations.
Secured loan	A loan that is backed by collateral, such as a house or a car, which the lender can seize and sell if the borrower defaults on the loan.
Smart contract	A computer program that automatically executes the terms of a contract when certain conditions are met, typically using blockchain technology.
SME loan	SME stands for Small and Medium-sized Enterprise, a company whose size falls below a certain limit. SME loans are loans that are tailored to match the needs for the innovation, flexibility, creativity, efficiency, and locality of those companies.
Software as a Service (SaaS)	A software licensing and delivery model in which software is licensed on a subscription basis and centrally hosted.
Split testing	Split testing, also called A/B testing, is a way to compare multiple versions of a variable, model, or application by dividing them randomly between selected groups to determine which one performs better, for example by testing a subject's response to variant A against variant B.
Swift code	An international bank code that identifies particular banks worldwide. It is used for international money transfers between banks.
Templates	Predefined or customizable formats for documents, messages, or other communications, often used to streamline repetitive tasks or ensure consistency.
Third-party integrations	API integrations are when two separate websites or applications connect their application programming interfaces (APIs) to allow them to access data from the other through their own applications.
Unsecured loan	A loan that is not backed by collateral, which typically has higher interest rates and stricter credit requirements than secured loans.
Verification	Verification is the process of testing or finding out if something is true, real, accurate, like in the case of phone number verification, a token sent by the same number must be provided.
Visual charts	Graphical representations of data or information that use visual elements such as bars, lines, or pie slices to convey meaning or patterns.
White-label platform	A software platform that can be rebranded by a third party, allowing a financial services provider to put their stamp on a platform developed by a third-party Fintech company.
Write-off	The cancellation or removal of a debt or obligation from a financial statement or balance sheet, typically due to nonpayment or other factors.