9 FinTech Buzzwords that You Need to Know in 2019
You’re probably aware by now of the exploding FinTech movement. The incorporation of technology into banking has seen more progress in the last ten years than in the last one hundred. Now the news comes that some of the fastest growing companies in the world are FinTech companies, including Goldman Sachs, JP Morgan and CitiGroup. These industry disruptors are investing heavily in blockchain, cryptocurrency, machine learning and artificial intelligence technology to safeguard their future and stay ahead of the curve.
Goldman Sachs estimate that FinTech is worth $4.7 trillion globally, and there are more than 12,000 FinTech startups hoping to earn their slice of the pie. The biggest FinTech company in the world is Ant Financial, a Chinese firm worth over $60 billion and employing over 10,000 people.
These incredible statistics are clear evidence that FinTech is the future and that there is serious money to be made in this sector. The problem is that it’s an industry weighed down with buzzwords and jargon that can make it difficult for people to penetrate. But don’t worry, we’re here to break down the barriers and get you up to speed with FinTech language.
To keep yourself ahead of the crowd, check out our handy list of 2019’s most important FinTech buzzwords.
Banking as a Service – BaaS
In the FinTech world, you have the traditional banks on one hand, who are rushing to update their systems but facing challenges as they have so much past data and old technology, known as ‘legacy systems.’ On the other hand, FinTech startups face none of those challenges but they struggle with regulations and large capital requirements which may hold them back.
The solution to both problems is the middleware Bank-as-a-Service which allows API integration. This is allowing startups and licensed banks to integrate seamlessly and offer improved services to customers.
You will have heard of Revolut, N26, Monzo and Moneze – new mobile banking services that are disrupting the industry. Clients love the easy to use apps and instant results. Revolut now has more than 2 million users and are bringing on 9000 new users every day.
This area is guaranteed to grow as the younger generations who value convenience and low fees take over. This generation lives online, and can’t imagine walking into a branch and standing in a queue to conduct their banking. The SFC in Hong Kong even recognises digital signatures, a real sign that times are changing.
If you’re already using Paypal, Google Pay, Apple Pay, Amazon Pay, WeChat Pay or Alipay you’re ahead of the FinTech curve. Now banks are having to learn how to sell financial services using these new platforms.
In China, society is heading entirely cashless. More than half a billion people are already using mobile payment apps and paying with cash is already considered odd in big cities.
Peer-to-peer lending is out and algorithmic lending is in. Allocating the lending portfolio and pricing loans will now be done using information from new data models and machine learning making it more efficient, more effective and safer.
RegTech is the development of technologies for regulatory bodies to use when monitoring FinTech businesses to ensure they are observing the rules.
Again, China is ahead of the game here. The People’s Bank of China uses a system called Wanglian to keep a record of every transaction made through Alipay and WeChat Pay.
Seamless end-to-end processing
As immortalised in the TV show ‘Silicon Valley’ in a joke about tech startups, this much-overused phrase is an important one to understand if you move in FinTech circles or want to.
All the phrase ‘seamless end-to-end processing’ really means is that the product is working efficiently to accomplish the task at hand without errors. It’s a clever way for FinTech companies to boast that a piece of technology is working where perhaps it wasn’t before.
This buzzword is regularly used to market a new product. By claiming an app or piece of technology is an ‘all-in-one’ solution, developers are placing their product above every other offer in the market by claiming that theirs should be the go-to product.
The true meaning of machine learning is when a computer can perform a task without the need for a human to programme instructions on how to complete the task. Many FinTech professionals misuse this phrase to mean a piece of technology that can make predictions.
A seemingly simple word that has many divergent meanings amongst FinTech professionals. At its most simple, it means that products can connect and work together efficiently and in real time. However, depending on which FinTech professional you speak to, it could be referring to a single sign-on: being logged into multiple accounts with one click. Or maybe it refers to bi-directional data flow: the movement of data between two different technologies.
A recent report amongst traditional banks showed that 82% of them plan to increase their collaboration with FinTech companies in the next three to five years. Given this growth and the enormous amounts of money involved in the FinTech industry, it would be wise to brush up on this glossary of words that indicate the trends and direction FinTech is moving in for 2019 as well as some of the words it is important to use correctly to ensure you can converse with industry insiders.