The FINTECH Alphabet (3/3)

When it comes to FinTech and Financial Services in general, the list of buzzwords can feel endless, especially with innovations popping up every few months or so.

To get you started on your jargon-busting catalogue of lingo, here's my own FinTech Alphabet; breaking down the jargon for easy understanding and easy application.

In case you missed it, you can catch up with Part 1 here and Part 2 here.

Q

Quality Assurance (QA).

QA refers to verifying that a product or service has met stated specifications.

Quick response (QR) codes.

A type of 2D barcode that is used to provide easy access to information through a smartphone.

R

RegTech.

Regulatory technology, sometimes known as RegTech, is the use of information technology within the financial services industry to enhance regulatory processes. Within RegTech, the main functions include compliance, reporting, and regulatory monitoring amongst others. RegTech largely consists of companies using cloud computing technology to help comply with financial regulations more efficiently and cost-effectively.

Robo Advisor.

Robo advisors are a new class of financial advisor that helps provide financial assistance and advice or investment management using computer algorithms and advanced software. Normally, these robo advisors require little to no human intervention and are typically used to collect information from clients about their financial situation and future goals through an online survey, and then use the data to offer advice and/or automatically invest client assets.

S

Single sign-on (SSO).

Single sign-on (SSO) is an authentication process that allows a user to access multiple applications with one set of login credentials. This service authenticates the actions of the end user for all the applications to which the user has been granted rights, eliminating further prompts when the user switches applications during the same session. Some great SSO applications include OneLogin and LastPass.

Smart Contract.

A smart contract is a self-executing piece of code that allows the processing and verification of a transaction. Typically, a smart contract runs on a decentralised ledger such as a blockchain, which monitors and enforces the contract.

T

Tokenisation.

Tokenisation is the method of replacing sensitive data with unique identification symbols, phrases or words, referred to as tokens. This process retains all of the sensitive information without compromising the security of the data. It can be used to enhance e-commerce transaction security without needing to incur additional costs for compliance and government regulation.

Turnover.

A business’ turnover is its total sales over a set period of time. It’s otherwise known as ‘income’ or ‘gross revenue. To not be confused with Profit; Profit on the other hand, is how much it makes after taxes and expenses have been accounted for.

U

Unicorn.

The term 'unicorn' was popularised by venture capitalist Aileen Lee and is used to define a start-up company with a valuation of over $1 billion. It refers to the rarity of a company reaching this valuation, similarly to the mythological creature. Recently the term 'super-unicorn' has been used to describe companies with a valuation of more than $100 billion.

Underbanked.

Individuals that manage their finances through cash transactions instead of established financial services such as current accounts, savings accounts, credit cards and loans.

V

Venture Capital (VC).

Venture Capital (VC) is a cash injection provided to start-up companies and small businesses that appear to have high growth potential. Venture capital typically comes from investors, investment banks or other financial institutions in exchange for equity in the company.

Vendor.

Vendors, also known as suppliers, are simply companies that sell things to another company. Retail outliers, for instance, usually have a number of vendors they purchase goods from at wholesale prices before selling them on at retail prices to customers. This term is used to describe fintech service providers as they work with financial service firms.

W

Whale.

Individuals or entities that hold large amounts of bitcoin in the cryptocurrency world.

Wholesale banking.

Wholesale banking is the service between merchant banks and other financial institutions. These types of banking deals are with larger clients, such as large corporations and other banks, whereas retail banking focuses more on the individual or small business. Wholesale banking services include currency conversion, working capital financing, large trade transactions and other types of services.

War Room.

Instead of reacting to obstacles, a war room gives banks and fintechs the tools to be proactive, spotting issues or delays before they actually happen. This is where they strategise and map out their battle plan to attract and onboard new customers, whilst creating speedy and secure experiences for existing ones. That’s not to mention everything that needs improving behind the scenes to ensure they can deliver.

X

XRP.

The cryptocurrency used by the Ripple payment network. Built for enterprise use, XRP aims to be a fast, cost-efficient cryptocurrency for cross-border payments.

eXtensible Business Reporting Language (XBRL).

XBRL is a standard that was developed to improve the way in which financial data is communicated, making it easier to compile and share data. eXtensible Business Reporting Language (XBRL) is a type of XML (extensible markup language), which is a specification that is used for organising and defining data. XBRL uses tags to identify each piece of financial data, which then allows it to be used programmatically by an XBRL-compatible program. XBRL also allows for easy transmission of data between businesses.

Y

In a financial context, yield is the earnings that an investment accumulates over a set period of time. It’s usually written as a percentage based on the amount invested, present market value or the security’s face value. It incorporates interest and dividends earned.

Yo-Yo.

Yo-yo is a slang word for a market which is very competitive. The name derives from a yo-yo's movements, where security prices swing from high to low over a given period of time, making it difficult for investors to buy and hold on to income during a yo-yo market.

Z

Zero Interest Rates (ZIRP).

A zero interest rate policy, or ZIRP, is established when a bank sets its target short-term interest rate at 0% or thereabouts. It’s designed to encourage more borrowing by providing cheaper access to personal and business finance.

Zombies.

Zombies refer to companies which earn enough profits and have the funds to continue their operations and pay interest on their debts. Such companies are, however, unable to pay their debts. In other words, these companies are able to continue operations whilst they await merger or closure, even though they are insolvent and bankrupt.

-

If you would like to join an ever-growing network of Financial Technologists, to be kept up to date with current and ongoing news, events and opportunities within the industry, you can register your interest here!

Liz. #FTWL