8 Fintech buzzwords for beginners: Fintech Jargon
Fintech uses technology that improves and automates financial services.
Fintech is an amalgamation of “finance” and “tech.” It’s an umbrella term that covers a broad range of technology that improves and automates financial services.
Here are several basic terms to better understand Fintech:
AISP: Account Information Service Provider
Account Information Service Providers are authorized to connect with your bank and use your account information to provide you with a service, but they cannot instigate payments or transfer money on behalf of their customers. AISP services include money management tools, price comparisons, quick and accurate access to financial products, and speeding up mortgage applications and loan reviews.
XS2A: Access to Account
Unlike Account Information Service Providers, Access to Account allows third-party service providers to access a client’s banking information and use it to make payments instead of using a credit/ debit card. However, a customer must give access to the said service provider.
APIs: Application Programming Interfaces
The application programming interface enables two applications to communicate on the back end. Each time you use Facebook or Instagram or send an instant message, you use an API.
When you use any app on your phone, the app sends information to a server on the Internet, which interprets the information and replies back to your phone. The app then shows the reply legibly. APIs essentially make it easier for applications to share information in real-time.
Challenger banks
As the name suggests, challenger banks have entered the finance market to challenge mainstream, traditional banks. Although they hold a bank license, they often function primarily online.
These smaller banks provide services through an app or website, allowing you to conduct all your banking digitally. According to a recent report from Cornerstone Advisors, 14.2 million Americans consider a digital bank their primary banking relationship. This is a 67% increase from January 2020. Banks like Chime, Dave, Varo, BankMobile, and Oxygen are some of the more popular challenger banks in the US.
Cloud banking
Cloud banking allows banks to move their infrastructure to a virtual cloud environment. The move allows access to scalable technology that reduces IT hardware, maintenance, and development costs. It also allows greater flexibility and the ability to store larger amounts of data more easily, with faster integration into new applications, allowing services to be launched faster.
MFA: Multi-factor authentication
MFA, or “Multi-factor Authentication,” requires proof of authentication more than once. For example, when you walk into an ATM with MFA, you’ll need to swipe your debit card as your first form of authentication and then type in a 4-digit passcode as your second form of authentication. It’s a way of protecting against cybercrime.
Multi-factor authentications usually fall under 3 categories:
- Something you know: password, passphrase or personal identification number (PIN)
- Something you have: token or smart card
- Something you are: biometric like a fingerprint or eye scanning
PISP: Payment Initiation Service Providers
When a customer orders through a PISP service provider, the provider will access the customer’s online banking account and initiate the requested transaction. In addition, PISPs are obligated to provide clear information on the nature of their services, how they will use your information, and whether this data will be shared with any other third party. For example, Amazon uses PISP to make your payment experience smooth.
RegTech: Regulatory Technology
RegTech is a technology that helps ensure regulatory compliance in the securities industry. It also helps prevent fraud and money laundering and automate due diligence.
RegTech reduces the cost of compliance processes and makes them more reliable, reducing customers' hassle and the risk of costly compliance failures.
Bright is leading Fintech
Bright is leading the way in Fintech by automating smarter financial services. Bright is built on a new patented system of 34 algorithms developed by experts worldwide. We call it MoneyScience™.
Bright’s MoneyScience™ enables faster and more informed credits and automated transactions.