FinTech buzzwords glossary
Whether you’re new to the world of financial services technology or not, it can be hard to keep up with the emerging tech buzzwords and acronyms. That’s why we decided to create our glossary - a one stop shop that demystifies the most popular and trending terms that the world of fintech can’t live without.
Alternative finance
Alternative finance refers to a range of finance solutions that sit outside of traditional forms (stocks, bonds, cash). It’s a term used to describe financial products, instruments and tools that have been developed outside of the traditional financial services system, with peer-to-peer lending and crowdfunding as examples.
Alternative lending refers to the various loan options beyond a traditional bank loan. Generally, these forms of loan are more flexible in terms of repayment and approval, but often have higher interested rates. Alternative lending may be necessary for either an established business or start-up as they can exceed the maximum loan amount of a bank and do not necessarily require an established credit history.
Angel investors
An angel investor (also known sometimes referred to as a business angel, informal investor, angel funder, private investor, or seed investor) is an affluent individual person who provides funding capital for to a business start-up business, usually in exchange for a stake in the business – often in the form of shares or equity, convertible debt or ownership equity.
Application programming interface (API)
An application programming interface (API) is a set of routines, protocols, and tools for building software applications that essentially allows multiple systems or applications to ‘speak’ to one another. This allows customisation of applications, depending on the needs of the user and can streamline day-to-day processes.
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Business Intelligence (BI)
Business Intelligence, sometimes shortened to BI, refers to analysis of business-related data to gain important insights. This may refer to strategies or technologies that help you and your company analyze quantitative and qualitative data about your business, and in most cases includes past, present, and even future views of business operations. The point of all of this strategic data analysis is to help make better decisions!
Most BI softwares have the same or similar components. TRUPOINT Analytics is a BI software, so we will use it to illustrate some of the key elements of a BI technology:
Database: This is all the data used in the analysis. It can include many different data sources; in Analytics, this is private financial institution data and publicly available data from sources like the Census Bureau and the annual HMDA LAR.
Portal: This is the interface through which users and administrators can access and analyze the data. As a TRUPOINT Analytics customer, your digital experience happens entirely within the portal.
Dashboard(s) and/or Report(s): These are the tables, charts, maps, graphics, and reports that help you understand the story your data tells. A BI software doesn't need to be interactive, but TRUPOINT Analytics is. We tend to refer more to \"dashboards\" than \"reports\" - we feel that \"reports\" implies a static, paper analysis, while \"dashboards\" helps express the multi-dimensional and interactive nature of Analytics better.
Portal: This is the interface through which users and administrators can access and analyze the data. As a TRUPOINT Analytics customer, your digital experience happens entirely within the portal.
You may have heard us use the phrase \"data discovery\" in connection with BI - this refers to the act of analyzing data from multiple sources from multiple angle to discover more sophisticated insights.
In combining the census data with public and proprietary data sets in TRUPOINT Analytics, and then looking at it from many different perspectives (for Fair Lending, those perspectives include underwriting and pricing), we are helping you with data discovery. The dashboards and graphics you see in Analytics are designed to help with the data discovery process.
FinTech
FinTech is a portmanteau that stands for Financial Technology. FinTech refers to a sector of the financial and technology industries that is focused on providing financial services through technology. It's a fast-growing industry, in North America particularly.
Today, FinTech can refer to any new financial technology, for anything from education to retail banking. It also includes innovations like cryptocurrency, which we will discuss in a little more detail later.
RegTech
RegTech is another blended word, this time combining \"regulatory\" and \"technology.\" RegTech refers to any technologies that help companies comply with regulations. It very frequently refers to software that helps financial companies comply with financial regulations, even though it doesn't necessarily have to refer to that.
Fair Lending, HMDA, CRA and Redlining Analytics are all examples of FinTech, but more specifically, RegTech software.
Note: We have also started hearing the phrase \"BankTech,\" but usage is limited. In general, BankTech refers to technology used in banking. The practical meaning of this term is still evolving (i.e. does it refer to technologies used to facilitate banking by end-consumers? Does it refer to operational technologies used by traditional banks? Can non-traditional banks be considered BankTech?) We will keep an eye on that trend, and update this post as needed.
Cryptocurrency and Blockchain
This is another portmanteau of \"cryptographic\" and \"currency.\" It's used to refer to digital currency that are secured and decentralized; that is, it doesn't have a central bank or anything like that. The way it is controlled is that every single data point and change in the digital ledgers have to be verified by every other member of the network - it requires an \"absolute consensus\" in the network.
The technology that enables this \"absolute consensus\" is called \"blockchain.\" We talked about what blockchain could mean for banks in this post a few weeks ago.