Banking and Fintech: The Ultimate A-Z Glossary
3D Secure: An additional layer of security for online credit and debit card transactions.
ACH (Automated Clearing House): An electronic network used for financial transactions in the United States, handling direct deposits, payroll, and consumer bills.
Algorithmic Trading: The use of algorithms and computer programs to execute high-speed trades in financial markets.
API (Application Programming Interface): A set of protocols that allows different software applications to communicate with each other.
API (Open Banking): Open banking APIs allow third-party developers to access financial institutions’ data to enhance their products, fostering innovation and competition.
Asset Management: The management of a client’s investments by a financial services company, often involving portfolio management and financial analysis.
ATM (Automated Teller Machine): A machine that allows users to perform basic banking transactions, such as withdrawing cash or checking balances.
BaaS (Banking as a Service): A model that allows non-financial companies to offer banking services.
Bank: A financial institution that provides various financial services, including deposits and lending.
Bank Account: A financial account held at a bank, allowing customers to deposit and withdraw funds.
Biometrics: Authentication methods based on unique physical or behavioral characteristics, such as fingerprints or facial recognition.
BNPL (Buy Now, Pay Later): A financing option that allows consumers to make purchases and pay for them in installments.
Bacs Payments: An electronic payment system used in the UK for transferring funds.
Bulk Payments: The process of making multiple payments in a single transaction.
CHAPS Payments: Clearing House Automated Payment System, a same-day sterling fund transfer system.
Compliance: Adherence to legal and regulatory standards in the financial industry.
Contactless Payments: Transactions made with a contactless card or mobile device.
Credit Score: A numerical representation of a person’s creditworthiness, based on their credit history and other financial behavior.
Cryptocurrency: Digital or virtual currencies that use cryptography for security and operate independently from any central bank.
Cryptographic Hash Function: A mathematical algorithm that transforms data into a fixed-size string of characters, often used for data integrity and security.
Currency: The money in circulation within a country, including coins and banknotes.
Currency Exchange: The process of converting one currency into another at an agreed-upon exchange rate.
CVV (Card Verification Value): A three or four-digit code on credit and debit cards, providing an additional layer of security in card-not-present transactions by verifying that the person making the purchase is the card owner.
DeFi (Decentralized Finance): Financial services built on blockchain technology, aiming to recreate and improve traditional financial systems without centralized control.
Digital Wallet: A software-based system that securely stores user payment information for online transactions.
DLT (Distributed Ledger Technology): A decentralized database shared across multiple participants, often used in blockchain applications.
EFT (Electronic Funds Transfer): The electronic exchange or transfer of money from one account to another.
EMI (Electronic Money Institution): A financial institution that provides electronic money services, including electronic wallets and payment cards.
Exchange Rate: Represents the relative value of one currency when compared to another, establishing the rate at which these currencies can be traded or converted.
Faster Payments: A UK banking initiative that enables near real-time electronic fund transfers.
Fees: Charges applied by financial institutions for various services.
Fiat Currency: Government-issued currency backed not by a physical commodity, but by the government’s declaration and trust.
Financial Institution: Refers to companies that provide financial services to customers, including banks, credit unions, EMIs, and investment firms.
Fintech (Financial Technology): The use of technology to provide innovative financial services, including mobile banking, robo-advisors, and peer-to-peer lending.
Freelancer Account: A specialized bank account for freelancers and independent contractors.
Gamification: Incorporating game elements, such as rewards or competition, into financial products or services to enhance user engagement and experience.
IBAN (International Bank Account Number): An internationally recognized and standardized system designed for identifying bank accounts on a global scale through unique codes.
Insurtech: A comprehensive integration of cutting-edge technologies to optimize and revolutionize various facets of the insurance industry, ranging from customer experience and underwriting processes to risk management and claims handling.
Initial Coin Offering (ICO): A fundraising method for cryptocurrency projects, where new tokens are offered to investors in exchange for funding.
Joint Account: An account owned by two or more individuals who share equal access and responsibility for the account.
KYC (Know Your Customer): The process of verifying customer identity to prevent fraud and ensure compliance with regulations.
Lending Platforms: Online platforms that connect borrowers with lenders, facilitating peer-to-peer lending or crowdfunding.
Liquidity: A financial concept referring to the degree of ease and efficiency with which an asset can be bought or sold in the market without causing significant fluctuations in its price.
Loan: A sum of money borrowed from a financial institution with an agreement to repay it, typically with interest.
Market Capitalization (or Market Cap): The total value of a company’s outstanding shares of stock, calculated by multiplying the share price by the number of shares.
Microfinance: Financial services, such as loans and savings accounts, tailored to the needs of individuals in low-income or disadvantaged communities.
Merchant Account: A business account that allows merchants to accept payments, especially for online transactions.
Mobile Banking: A comprehensive financial service delivery mechanism facilitated through mobile devices, enabling users to access a diverse array of banking functionalities.
Money Transfer: The electronic transfer of funds from one person or entity to another.
Neobank: A digital-only bank that operates exclusively online, often offering innovative features and services.
Open Source Software: Software for which the original source code is made freely available and may be redistributed and modified.
Overdraft: A deficit in a bank account caused by withdrawing more money than is available.
PAYE (Pay As You Earn): A system for withholding taxes from an employee’s income throughout the year.
Payment Account: An account used for receiving and sending payments and managing transactions and balances.
Payment Cards: Cards, both plastic and virtual, used for making transactions, including debit, credit and prepaid cards.
Payment Gateway: A service that facilitates online payments by securely processing transactions between merchants and customers.
Payroll Program: Software used for managing and processing employee payroll.
Peer-to-Peer (P2P) Payments: Direct digital transactions between individuals, bypassing traditional intermediaries like banks, often facilitated by fintech platforms such as Satchel.
Peer-to-Peer (P2P) Lending: The practice of lending money to individuals or businesses through online platforms that match lenders with borrowers.
Quantitative Easing: A monetary policy in which a central bank purchases financial assets to increase the money supply and stimulate economic activity.
QR Code Payments: Fast and convenient payments made by scanning Quick Response codes.
Robo-Advisor: Automated, algorithm-driven financial planning services that provide investment advice and portfolio management.
Rollover: The process of reinvesting funds from a mature security or investment into a new one.
Savings Account: A bank account that accrues interest on deposited funds, typically used for storing money in a secure and easily accessible way.
SEPA (Single Euro Payments Area): A comprehensive and harmonized payment framework designed to streamline euro transactions across Europe.
Security Token Offering (STO): A fundraising method in which tokenized securities are issued on a blockchain.
SWIFT (Society for Worldwide Interbank Financial Telecommunication): A messaging network used for streamlining cross-border financial transactions on a global scale.
Tax Haven: A jurisdiction with favorable tax laws that attract individuals and businesses seeking to minimize their tax liability.
Tokenization: The process of converting assets or rights into digital tokens on a blockchain.
Two-Factor Authentication (2FA): A security process that requires users to provide two different authentication factors.
Underbanked: Individuals or businesses with limited access to traditional banking services, such as loans and credit.
Underwriting: The process of evaluating and assuming risk in insurance or lending.
Virtual Banking: Banking services offered exclusively through digital channels, without physical branch locations.
Venture Capital: Financing provided by investors to startups and small businesses with high growth potential in exchange for equity.
White Label Cards: Payment cards that originate from financial institutions but undergo rebranding by an external entity.
Wire Transfer: An electronic transfer of funds between financial institutions.
Yield: The return on an investment, typically expressed as a percentage of the asset’s value.
Zero-Coupon Bond: A bond that pays no interest but is sold at a discount and redeemed at face value at maturity.
