Fintech glossary

The London Institute of Banking & Finance:

Centre for Digital Banking and Finance

1
digital.libf.ac.uk
LIBF 2023
Fintech, short for financial technology, describes the emerging
industry that leverages new technologies to improve financial
services and products for consumers and business.

Whether you’re new to the fintech sector or you’re a financial

services veteran, keeping up with the latest buzzwords and
acronyms can be a challenge. That’s why we’ve created a fintech
glossary to support those working – or aspiring to work – in this
space.

You can use this document to look up fintech jargon or demystify

trending terms with our concise explanations of tech-lingo. Of
course, in the ever-evolving fintech landscape new expressions
appear all the time. So, if you think this document could do with
an additional entry, please email us: content@libf.ac.uk.

Learn more about how we’re supporting those working in the

fintech and digital banking space.

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Accelerator
Accelerator programmes provide
mentoring, support, and funding to start-up
businesses for certain periods of time, often
in exchange for an equity share.
Automated clearing house (ACH)
The Automated Clearing House is a US
electronic network designed to process
payments between financial institutions. In
2020, it processed 26.8 billion payments
totalling over US $61.9 trillion in value. The
ACH is used for a variety of payments that
are often relatively low value, including
payroll, tax payments, and refunds and
direct debits.
Advanced encryption standard
The Advanced Encryption Standard (AES) is
a symmetric key algorithm used to secure
data. ‘Symmetric’ means that the same key
can both encrypt and decrypt. Based on the
Rijndael block cipher, this digital ‘key’ is used
to scramble information into ciphertext and
to turn it back into the original plaintext.
The AES is approved by the US National
Institute of Standards and Technology.
AES makes relatively low computational
demands, which means it can be used on
consumer devices and to encrypt large
volumes of data quickly. It’s also (currently)
considered to be resistant to being broken
by quantum computers as it doesn’t rely on
factoring prime numbers.
Artificial intelligence
Artificial intelligence is the simulation of
human intelligence by machines. For
example, so-called machine learning
mimics the way in which people acquire
new knowledge. One of the first machine
learning achievements, at IBM in 1962,
was a programme to play checkers. Now
computers can beat humans at Go, a game
that is 10 to the hundredth power (a googol)
more complex than chess. AlphaGo was
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trained using deep learning, another field
in AI. AI has many applications in banking
and finance. For example, it could be used
to assess credit risks or detect fraudulent
behaviour or transactions.
Account information services
An Account Information Service (AIS)
can extract data from all the payments
accounts that an account holder has and
provide a consolidated online view. AIS is a
cornerstone of open banking. It is facilitated
by application programming interfaces
and requires the permission of the account
holder.
Altcoin
Altcoin refers to any ‘alternative’ digital
currency to Bitcoin. Some widen the term
slightly and consider an altcoin to be any
digital currency other than Bitcoin or
Ethereum.
Alternative finance
Alternative finance is a catch-all term for
the new retail financial services that digital
services make possible. These include
peer-to-peer lending, crowdfunding, and
payment initiation payment provision, which
facilitates account to account payment via
open banking.
Alternative lending
Alternative lending is non-bank credit. This
can include crowdfunding or peer to peer
loans, as well as more traditional options
that do not rely on digital connectivity, like
invoice financing. Alternative lending can be
a good option, but interest rates are often
higher.
AML (Anti-money laundering)
Money-laundering is the process of making
the funds of criminal activity, such as
illegal arms sales, or people trafficking, look
as though they come from a legitimate
source. Financial institutions are required to
comply with anti-money laundering (AML)
regulations to help combat that. Fines are
levied for breaches of AML regulations.
Angel investors
Angel investors are private individuals who
invest in a business, typically start-ups. Their
financial backing is often essential in the
early stages of a business, when the high
risk associated with a new enterprise can
make it difficult to raise capital. In exchange
for their funding, angel investors usually
receive a stake in a business as equity or
convertible debt.
Account servicing payment
service providers (ASPSPs)
Account Servicing Payment Service
Providers in the UK are the nine banks
required by open banking to publish read/
write application programming interfaces
(APIs) that make it possible to share data
from payment accounts with third parties
and that enable payments initiated by third
party providers. There are also voluntary
ASPSPs.
Assets under management (AUM)
Assets Under Management refers to the
market value of investments managed on
behalf of investors.
Amazon web services (AWS)
Amazon Web Services is an Amazon
subsidiary that offers cloud computing
services to clients. Those clients include
financial services specialists in banking,
capital markets, insurance, payments,
alongside many other sectors. Cloud
computing lets clients use servers and
associated infrastructure and software
operated by the cloud provider, rather
than running that in-house. The extent
of the outsourcing can range from just
infrastructure (IaaS) to full-stack software
provision (SaaS).
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BNPL (buy now, pay later)
Buy now, pay later (BNPL) allows customers
to make payments for goods, generally
interest free, over a specified time period,
rather than upfront. Retailers pay the
providers a commission for the service. As
of February 2023, BNPL was unregulated
in the UK as it was treated as a form of
informal credit arrangement, like paying the
newsagent at the end of the week.
Bancor
The Bancor platform is a cryptocurrency
token exchange that aims to be a leader in
decentralised finance (DeFi). (It was named
after a proposed supranational currency
conceived by the economists John Maynard
Keynes and E F Schumacher.)
Users who deposit their crypto tokens on
the platform are promised a passive income
from the lending and exchange of tokens.
The platform runs on the Bancor Protocol,
which is a network of smart contracts that
automatically carries out the trades and
the pooling of liquidity. Bancor is aimed
at ‘thousands of unaffiliated users’ rather
than a small number of professional market
makers. However, the value of tokens can be
volatile. Bancor users were initially promised
‘100% impermanent loss protection’ – ie, that
they wouldn’t lose out from having put the
tokens on the platform versus keeping them
in their wallet. In June 2022, Bancor paused
that.
Banking licence
To carry out regulated financial activities
in the UK, firms need to be authorised
and licenced by the financial regulatory
authorities. They are the Financial Conduct
Authority and the Prudential Regulation
Authority. Regulated activities include
lending deposits, providing mortgages
and issuing electronic money. The aim of
regulation is to ensure the stability of the
financial system and the fair treatment of
customers. There are various prerequisites
to obtaining a licence, from demonstrating
adequate capitalisation to an extensive
business plan. These requirements differ
depending on the jurisdiction in which the
business operates.
Basel III
The Basel III framework covers a range
of regulatory reforms aimed at cutting
risk in the banking sector. Developed in
the aftermath of the global financial crisis
of 2008/09, Basel III sets standards in
prudential regulation including liquidity
needs, capital levels, leverage ratios and
stress testing. It has now been integrated
fully into the Basel Framework. Twenty-
eight jurisdictions take part in the Basel
Committee on Banking Supervision.
Bitcoin
Bitcoin is a decentralised digital currency
based on the white paper published by
Satoshi Nakamoto in 2008 on how to
enable peer to peer electronic cash without
an intermediary and double-spending.
Bitcoins are kept on the cloud and recorded
through blockchain, a ledger designed to
enable trust across a distributed network.
Bitcoin is supposedly underpinned by
‘cryptographic truth instead of trust’, but this
has been questioned.
Bitcoin cash
Bitcoin Cash is a spin-off of the original
Bitcoin cryptocurrency, known as a ‘fork’
or altcoin. It has larger ‘blocks’ – the data
structures that record transaction data in a
blockchain – than classic Bitcoin. This means
it can be used to process a greater number
of transactions.
Bitcoin Cash is a ‘hard fork’ of Bitcoin –
i.e., the upgraded software it uses is not
compatible with older versions.
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Bitcoin mining
Bitcoin mining is the core process at
the heart of delivering the decentralised
cryptocurrency. Miners solve the
mathematical problems that verify bitcoin
transactions. The first computer to solve
a problem is rewarded with new bitcoins.
Mining requires a lot of computing power
and energy use, which has made it
controversial.
Bitcoin wallet
A Bitcoin wallet is a software programme
in which owners can store their
cryptocurrency. It holds passkeys that a
Bitcoin owner employs for their transactions,
while offering an interface that is used to
gain access to the Bitcoin.
Blockchain
Blockchain is an online ledger designed to
enable trust across a distributed network
without the need for an intermediary like a
bank.
Blockchain operating system
A conventional operating system (OS), such
as Microsoft Windows or Android, manages
the software applications on a computer or
smartphone. It eliminates the need for each
application to have its own code interface
with the hardware. A blockchain operating
system is also a layer that makes it easier
to connect software and hardware, but it
doesn’t operate on the hardware of the
computer or phone in question. Instead, it
resides on the blockchain. There are several
different blockchain operating systems and
they are seen as offering a range of security
and privacy benefits, but most still have
limited uptake.
Blockchain wallet
A blockchain wallet is designed to hold and
manage cryptocurrencies like Bitcoin or
Ether. Owners can use the wallet to transfer
their crypto or to convert their digital
currencies into a fiat currency.
BigTech
The term BigTech refers to dominant
retail-facing technology companies, in
particular Alibaba, Alphabet (the parent
company of Google), Amazon, Apple, and
Facebook. The large user bases of these
tech giants and the ubiquity of their services
could have major implications for financial
services, in particular payments. They are
also important across sectors. For example,
Amazon and Google are hyperscale cloud
providers through their subsidiaries Amazon
Web Services and Google Cloud.
Big data
Big data refers to complex and very large
data sets, which can be structured or
unstructured. This data often has greater
variety, volume, and velocity, known as the
‘three Vs’, than other data sets. The huge
amount of diverse data in big data can
offer significant opportunities, but it can be
difficult to manage and interpret, requiring
specialised software.
Biometrics
Biometric data is generated from biological
or behavioural characteristics that are
unique to an individual, such as a fingerprint
or the way that they tap and swipe their
phone. It can be used for identification.
The uniqueness of biometric data gives
it security advantages over PIN codes or
passwords, though there are concerns
about privacy. Under the General Data
Protection Regulation (GDPR), biometric
data is one of the eight special categories
of data that require greater data protection
and user consent before processing.
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BitPesa
BitPesa is a blockchain-based universal
payment and digital foreign exchange
platform that allows users to send and
receive payments within – or to and from –
‘frontier markets’, in particular Africa.
Card-not-present fraud
Card-not-present fraud is a scam conducted
through mail, online transactions, or over
the telephone, in which a payment card is
not physically presented to the merchant
at the checkout. The fraud relies on the
inability of a merchant to physically check
the card. Prevention measures include
demanding a CVV number, a three-digit
number found on the back of a card, and
authentication via an app or SMS.
Central bank digital currency
(CBDC)
Many central banks are launching, or
considering launching, digital versions of
fiat currency known as central bank digital
currencies (CBDCs). At the start of 2023, the
Bank of England began a consultation on
introducing a ‘digital pound’. The Bank said it
was considering a CBDC because the use of
privately-issued digital money could lead to
a fragmentation of payments in the UK and
pose a threat to financial stability.
Consumer bankers association
(CBA)
The Consumer Bankers Association (CBA) is
a US trade association for the retail banking
sector. The CBA’s Corporate Members
include the largest retail banks in the US,
according to the association, with 85%
holding more than US$10 billion in assets.
The CBA advocates for the sector with
regulatory agencies and federal legislators,
communicates the services banks provide
to consumers, and aims to educate the
next generation of leaders in retail banking,
among other goals.
Card-based payment instrument
issuer (CBPII)
A card-based payment instrument issuer,
or CBPII, allows users to choose payment
instruments not offered by the firm that
holds their account. With the user’s consent,
the CBPII can initiate card-based payments
from a payment account of an Account
Servicing Payment Service Provider (ASPSP).
Before PSD2 (and open banking in the UK)
let third-party payment providers check the
availability of funds in an account (yes or
no), debit card payments were only carried
out by the account-holding institution.
Commodity futures trading
commission (CFTC)
The Commodity Futures Trading
Commission (CFTC) is a US federal agency
that regulates the commodity futures and
options markets in the US, aiming to set the
global standard for derivatives regulation.
It has several goals, including protecting
investors against fraud and other dangers
and promoting a competitive, efficient, and
resilient market.
Challenger banks
The term challenger bank refers to any
bank that aims to compete with the UK’s
banking incumbents, the so-called ‘big five’
of Barclays, HSBC, Lloyds, Natwest and
Santander. They are generally relatively new
and small institutions, and include Atom
Bank, Monzo, and Starling Bank. Many are
online only, but not all.
Cloud computing
Cloud computing enables users to access
a range of third-party computing services
over the Internet. These include data
storage, software services, and large-scale
server capacity. Cloud computing can offer
a range of benefits, such as economies of
scale and avoiding the need to actively
manage such services in-house.
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Cloud provider
A cloud provider offers cloud computing
services. Major names include Amazon Web
Services (AWS), Google Cloud IBM Cloud,
and Microsoft Azure, which all have large
server farms.
Competition and markets
authority
The Competition and Markets Authority
(CMA) promotes competition for the benefit
of consumers. It has powers to investigate
anti-competitive behaviour – including
individual mergers or entire markets if
necessary – to protect consumers from
unfair trading practices. It has a Digital
Markets Unit that is aimed at preventing
BigTech from manipulating markets in their
own favour. The UK government plans to
give the Digital Markets Unit enforcement
powers as part of 2023 legislation.
CMA9
The CMA9 are the UK’s nine largest banks,
as decided by the Competition and Markets
Authority. They are: Allied Irish Bank, Bank
of Ireland, Barclays, Danske Bank, HSBC,
Lloyds, Nationwide, RBS, and Santander.
Their dominance of retail banking (ie, for
consumers and SMEs) saw them required
to develop Open Banking APIs that allow
account holders to share account data with
third parties.
Collaborative economy
The term collaborative economy – also
known as a sharing economy – is when a
group of users connect to share/swap/loan
goods or services, rather than relying on a
large company to provide them. This often
utilises a purpose-built website or platform.
Collaborative finance
Collaborative finance refers to financial
transactions that take place between
individuals, without a traditional financial
institution as an intermediary, often
facilitated by online information and
connections. It can also refer to offline
organisations like a rotating savings and
credit association, or ROSCA, where
individuals all contribute to a pot and take
turns in borrowing from it. Peer-to-peer
online lending has not always fulfilled
its promise. One of the first peer-to-peer
lenders in the UK, Zopa, announced at the
end of 2021 that it was exiting P2P lending
and getting a bank licence.
Consensus protocol
A consensus protocol allows distributed
systems like computer networks to co-
ordinate by setting the rules for interaction.
They play an essential role in blockchain,
the foundation technology of bitcoin and
other cryptocurrencies, enabling the various
nodes in a blockchain network to verify
transactions.
Core banking
Core banking centralises the back-end
processing at a retail bank and allows
banks and customers to access services
away from their branch. Core banking – an
acronym for ‘Centralised Online Real-time
Exchange’ – began in the 1970s when banks
networked their own servers. Increasingly,
core banking is provided by specialist firms
in the cloud.
Crowdfunding
Crowdfunding raises finance through large
numbers of often small contributions from
many people. Tapping the power of social
media and the internet, it can provide
companies and other ventures with access
to diverse investors. The investor can
receive equity in a business or some type of
reward, such as a product or service, among
other approaches.
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Cryptoasset
A cryptoasset is a digital asset that is
secured through cryptography and
can be traded or stored electronically.
Cryptocurrencies are perhaps the best-
known forms of cryptoasset.
Crytocurrency
Cryptocurrencies are digital or virtual
currencies, which are secured using
cryptography. They are forms of
cryptoassets, digital assets that can be
exchanged or stored electronically. They
are referred to as ‘exchange tokens’ due to
their use as payment methods. They rely
on distributed ledger technology – such
as blockchain – and are independent from
central banks or national governments.
Cryptocurrencies can, under certain
circumstances, be a medium of exchange,
but they are not a store of value or a unit
of account. As such, they do not meet the
definition of money.
Cryptocurrency exchange
A cryptocurrency exchange is an online
marketplace that enables users to buy, sell
and trade cryptocurrencies. They make
money by charging transaction fees.
Crypto token
Crypto tokens come from applications or
platforms that use a particular blockchain
without being ‘native’ to it. All blockchains
have ‘native’, or intrinsic tokens, that are part
of its basic design. Ethereum blockchain, for
example, has Ether as its native token.
A token can be used to represent an asset,
such as a financial security, and tokenisation
is considered to have a promising future as
it could reduce friction and costs in financial
services.
Cybersecurity
Cybersecurity is the broad array of practices
and technologies that defend computer
systems, data, and other assets from
cyberattacks. This includes, for example,
measures to protect network security,
such as anti-spyware applications, user-
authentication, or cryptography.
Cybercriminal
A cybercriminal is a person who commits
cybercrimes through technology: for
example, by hacking into a network and
attempting to steal private information.
Dash
Dash is a fork of Bitcoin that was launched
in 2014. It is a digital currency that aims to
offer fast and private transactions to users
through a decentralised blockchain system.
The name is a blend of ‘digital cash’.
Data breach
A data breach occurs when an unauthorised
individual accesses sensitive or confidential
information. It can occur for a wide range of
reasons, from organised criminals seeking
financial gain to a hostile government
attempting to secure secret information.
Data management platform
A data management platform enables users
to collect and manage data. They can be
used to better organise and gain useful
insights from data, such as understanding
of particular markets or groups of users.
Marketing and advertising rely heavily on
data management platforms.
Data mining
Data mining seeks to find patterns,
relationships and other valuable information
from large data sets. It can be used to help
predict trends for the future. Data mining
makes use of statistical analysis, machine
learning and artificial intelligence.
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Decentralized autonomous
organisation (DAO)
Decentralized Autonomous Organisations
are member-controlled organisations that
do not have a central leadership. Members
of the group vote on decisions using smart
contracts and blockchain. Rules around
crucial areas like spending are embedded in
the organisation via a computer protocol.
DeFi
DeFi is short for ‘Decentralised Finance’.
DeFi claims to remove the need for
intermediaries in finance by allowing
participants to connect directly and
transparently. Like cryptocurrency, it relies
on blockchain technology. There are
questions marks over the concept. Some
argue that DeFi is not really decentralised
because the developers of blockchain
platforms make discretionary decisions and
exercise power both on behalf of and for
others.
Deep data
Deep data is data in large data sets that
is both high quality – that is, among other
things, consistent, complete and correct
– and actionable. The concept includes
and goes beyond the ‘five ‘V’s’ of big data:
velocity, volume, value, variety and veracity.
Deep learning
Deep learning is a form of AI/machine
learning that deploys artificial neural
networks, essentially mimicking the process
by which humans develop knowledge. It can
have multiple applications in finance and
banking, such as analysing data to establish
credit risks.
Digital bank/neobank
A neobank is a deposit account and
payments services provider that can only be
accessed online. Some, like Monzo, are fully
licensed banks that can offer a wide range
of regulated banking services including
loans and mortgages. Others, like Revolut’s
UK business, are e-money institutions.
Importantly, e-money institutions don’t
offer account holders the protection of the
Financial Services Compensation Scheme
that banks support.
Digital fingerprint
A person’s digital fingerprint can be used
to identify or track an individual online. It
is made up of various elements of online
personal data, such as browsing history
or language settings. An online device
can be fingerprinted using data such as
the location, the operating system and
the screen resolution, the details of which
are collected by websites to optimise
performance.
Digital identity
A digital identity is a kind of virtual passport
that could be used to verify certain
attributes online. It could be set to disclose
just those aspects of the user’s persona
needed to access a particular service such
as, for example, the fact that they are over
eighteen if they want to buy alcohol in the
UK.
Digital native
The term digital native refers to those born
after 1980 who have grown up immersed in
the evolving landscape of digital technology.
They are believed to have more exacting
expectations of online services than older
people.
Digital wallet
A digital wallet is an electronic system or
application that stores a person’s payment
details such as credit or debit cards, to
enable online payments. Like a physical
wallet they can also store other things
including funds, coupons, loyalty points and
tickets.
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Disposable virtual cards
Disposable cards are online payment cards
designed for a single use. They can be used
via a mobile app or website and can cover
a wide range of purchases online. A card’s
details are erased when it has been used.
Distributed ledger technology
(DLT)
Distributed ledger technology (DLT) is
a shared, online database that records
transactions and other digital data
immutably and in a synchronised form.
A distributed ledger is not overseen by a
central intermediary. It is constructed by
consensus across different sites, institutions,
and geographies. One of the best-known
forms of DLT is blockchain.
Dodd-Frank Act
The Dodd-Frank Wall Street Reform and
Consumer Protection Act is US financial
reform legislation that was introduced in
2010, in the wake of the global financial
crisis. The overarching aim was “to promote
the financial stability of the United States by
improving accountability and transparency
in the financial system, to end ‘too big to
fail’, to protect the American taxpayer by
ending bailouts, [and] to protect consumers
from abusive financial services practices.”
Core elements include the Financial Stability
Oversight Council, the Volcker Rule against
proprietary trading, and the Consumer
Financial Protection Bureau (CFPB).
Dogecoin
Dogecoin is an open-source cryptocurrency.
Originally designed as a joke targeted at
the speculation in cryptocurrencies, it is
associated with the face of a Shiba Inu
dog. The decentralised, script-based virtual
currency has gained acceptance for use in
online transactions.
DRaaS
Disaster Recovery-as-a-Service (DRaaS) sees
data and infrastructure hosted by a third
party on the cloud, essentially providing a
back-up service in the event of disruption
such as a cyberattack or a natural disaster.
European Banking Authority
The European Banking Authority (EBA) is an
independent EU body that aims to maintain
financial stability and to safeguard the
integrity, efficiency, and orderly functioning
of banks in the 27 states of the European
Union. Its main task is to contribute to the
European Single Rulebook in banking – a
single set of harmonised prudential rules for
financial institutions.
eCommerce
The eCommerce business model refers to
buying and selling products and services
over the Internet. It utilises a range of
technologies, such as electronic funds
transfer, payment encryption and online
transaction processing. With trillions of
dollars of sales at stake, it is now a focus for
retailers, bringing significant implications
for the banking and finance sectors that
support them.
eIDAS certificates
eIDAS refers to Electronic Identification,
Authentication and Trust Services. It is a
set of EU regulations that aims to make
electronic interactions between businesses
safer, faster, and more efficient, creating a
single framework for electronic identification
and trust services. There is a UK-tailored
version of the regulations called UK eIDAS.
eIDV (electronic identity
verification)
Electronic identity verification (eIDV) enables
users to quickly confirm an individual’s
identity, using both public and private
database information. It’s particularly
important to financial services firms that
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must comply with know-your-customer
and anti-money laundering rules, but
many sectors use eIDV as part of their due
diligence.
EMV
EMV provides a set of standards for ‘smart
cards’ that use integrated circuit chips. The
chip has a microprocessor, a memory and
application software. When the card is used
to make a payment, the chip generates a
unique code that is validated by the bank
and not reused. A spoofed card with stolen
data would not be able to create the correct
code because it doesn’t have the chip.
This boosts security and interoperability
across the debit and credit card ecosystem.
EMV was named for its initial founders
– Europay, Mastercard and Visa – and is
managed by EMVCo, whose members now
include American Express, Discover, JCB,
Mastercard, UnionPay and Visa.
Encryption
Encryption is core to the security of modern
financial transactions. Essentially it conceals
information by altering ‘plaintext’ – the
original data – into ‘ciphertext’, which cannot
be read without the right ‘keys.’
E-payment
E-payment refers to the process of paying
for products or services online, through
methods including debit or credit card
transactions or bank transfers. It is now a
ubiquitous element of global eCommerce.
Equity crowdfunding
Equity crowdfunding is a form of
crowdfunding that raises equity finance
through large numbers of often small
contributions from many people. In this
instance, the contributors invest in return
for a stake in the company, but not all
crowdfunding provides equity ownership.
ERC-20 & ERC-721
ERC-20 is a standard for tokens in Ethereum.
It ensures that tokens are compatible with
the existing ecosystem. ERC-20 is designed
to set standards for interchangeable tokens,
ie, they are ‘fungible’, while ERC-721 was built
for non-fungible Ethereum tokens.
ESG
ESG standards aim to ensure a company
complies with various ethical, governance
and sustainability criteria. Reporting on ESG
standards is increasingly being required by
financial regulators that want to reduce the
risk that unsustainable business practices
pose to the financial system. Assessing ESG
risk is increasingly a priority for investors
across sectors.
European Securities and Markets
Authority (ESMA)
The European Securities and Markets
Authority (ESMA) aims to safeguard the
EU’s financial system by enhancing investor
protection and promoting orderly and stable
financial markets. Among its key objectives,
ESMA assesses risks to investors, markets
and financial stability, promotes supervisory
convergence, builds a single rulebook for
EU financial markets, and supervises credit
rating agencies, trade repositories and
securitisation repositories.
Ethereum
Ethereum is a blockchain-based technology
platform that can be used for a range of
applications, including services built on the
concept of decentralised finance (DeFi). Its
native cryptocurrency is called Ether.
Ethereum classic
Ethereum classic is a fork of Ethereum,
which emerged in the wake of a 2016
cyberattack. Ethereum classic performs
many of the same services as Ethereum,
but has an emphasis on blockchain
immutability, or ‘code is law’.
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Facial recognition
Facial recognition technology analyses the
geometry of a person’s face and compares
the results with those in a database to
identify that individual. It is a form of
biometrics. Facial recognition used to secure
a smartphone does not search a database
of faces. It checks only that the ‘correct’ face
is requesting access.
Financial Conduct Authority
(FCA)
The Financial Conduct Authority, or FCA, is
an independent public body that oversees
the conduct of around 50,000 financial
firms in the UK to promote financial markets
that are ‘honest, competitive and fair’.
Its objectives are to protect consumers,
enhance market integrity, and boost
competition in the interests of consumers. It
is funded by the fees it charges to regulated
firms. It is part of a ‘twin peaks’ regulatory
approach, alongside the Prudential
Regulation Authority (PRA), put in place after
the 2007 financial crisis.
Fiat currency
Fiat money or fiat currency is money that a
government has deemed legal tender, and
which is not backed by a commodity like
gold. In economies like the UK, most money
is created by commercial banks when they
make loans.
Financial Industry Regulatory
Authority (FINRA)
The Financial Industry Regulatory Authority
(FINRA) is a US body that aims to protect
investors and safeguard market integrity
while facilitating vibrant capital markets. It
oversees US broker-dealers, and is a non-
profit organisation authorised by the US
government.
LIBF 2023
Fintech charter
Fintech charters from the US Office of the
Comptroller of the Currency (OCC) allow
fintech companies to provide lending and
payments services across the US under
one set of standards, rather than being
regulated on a state-by-state basis. The OCC
was sued by the Conference of State Bank
Supervisors (CSBS) over fintech charters.
The CSBS argued that they undermine
the ability of states to oversee non-bank
lenders. The CSBS now accepts charters
if the fintech in question also applies for
FDIC deposit insurance – which is a legal
requirement for national banks.
Fintech sandboxes
A fintech sandbox allows firms to test new
business models with consumers before
they apply for full regulation of a product.
The sandbox is a restricted environment
overseen by regulators.
Freemium
Freemium services offer consumers a
restricted or limited form of a service or
product at no cost, with additional features
accessible for a fee.
GAFA
The ‘GAFA’ acronym refers to the four
major US technology giants: Google, Apple,
Facebook (now Meta) and Amazon.
Gazelle company
Gazelle companies are fast-growing, and
generally relatively new, companies. They
are commonly defined as achieving 20%
annual growth.
GDPR
The General Data Protection Regulation
(GDPR) came into effect in the European
Union in May 2018, introducing the most
stringent online privacy and security law
in the world. The EU regulation places
a range of obligations on organisations,
11
wherever they are in the world, if they
target or collect data related to those in the
EU. Its regulations on storing customers’
personal data have significant implications
for open banking. Those who fail to meet its
standards can face fines of up to €20m or
4% of worldwide turnover for the preceding
year, whichever is higher.
Geolocation
Geolocation is the process of identifying
the physical location of a connected device
through an IP address.
Global Financial Markets
Association (GFMA)
The Global Financial Markets Association
(GFMA) represents the interests of major
financial and capital market participants.
It brings together three capital markets
trade associations from around the world:
the Association for Financial Markets in
Europe (AFME); the Asia Securities Industry
& Financial Markets Association (ASIFMA);
and the Securities Industry and Financial
Markets Association (SIFMA), which focuses
on North America.
Gig economy
Gig economy refers to an economy defined
by flexible employment, in which many
people rely on freelance or temporary jobs.
The system can offer a range of benefits,
notably in terms of flexible work, which can
have advantages for employers, employees,
and the wider economy. However, critics
point to a number of downsides, such as
insecure working lives.
Green investing
This refers to investments that focus
on environmentally positive goals, such
as conservation or the development of
renewable energy.
LIBF 2023
Hadoop
Hadoop, from the Apache Software
Foundation, is a project that creates open-
source software for distributed computing.
Its software library enables the distributed
processing of large data sets across clusters
of computers using simple programming
models, according to the Apache Software
Foundation. It brings storage advantages
and other benefits for users working with
large amounts of data.
Hybrid cloud
Hybrid clouds combine private and public
cloud environments – that is server capacity,
data storage and software services. It can
offer benefits in areas like security, where
an operator might wish to keep sensitive
information – financial information, for
instance – in their own private cloud, rather
than in a public cloud environment.
Hyperledger
Hyperledger is an open-source,
collaborative effort that aims to advance
cross-industry blockchain technologies.
Hosted by the Linux Foundation, it was
set up to allow organisations to create
industry-specific applications, as well as
platform and hardware systems, to support
their individual business transactions.
Hyperledger offers open-source distributed
ledger frameworks and code bases.
IaaS
Infrastructure as a Service (IaaS) is a form
of cloud computing. It provides users with
access to infrastructure services including
computing and networking, reducing the
need to maintain such infrastructure in-
house. Users of IaaS need to have in-house
IT expertise to develop, code and run their
own software stack. This compares with
Software as a Service (SaaS) in which the
cloud provider delivers everything including
the app. There is also Platform as a Service
12
(PaaS), which delivers everything except the
final app.
International bank account
number (IBAN)
An international bank account number
(IBAN) identifies a customer’s account
worldwide for cross-border payments. The
IBAN is in addition to the account’s own
regional identification. Each nation has its
own recognised format for IBAN.
Initial coin offering
An initial coin offering (ICO) raises funds by
issuing and selling cryptocurrency tokens.
The tokens can promise buyers benefits
like a share in a firm. Unlike IPOs (initial
public offerings), which sell equity stakes to
investors, they are unregulated. Many ICOs
have turned out to be scams.
Identity verification
Identity verification is a requirement for
banks and other financial services firms that
need to comply with ‘know-your-customer’
(KYC) regulations. It relies, among other
things, on ID card verification, document
verification and biometrics.
Incumbent
Incumbent generally refers to established
and leading firms within a particular sector.
The incumbent banks in the UK are the
largest five retail banks: Barclays, HSBC,
Lloyds, NatWest and Santander.
Insurtech
Insurtech is fintech targeted at the needs
of the insurance industry. For example,
it could seek to tap sources of real-time
and personalised data, such as fitbits,
to price policies more dynamically. The
aim is to improve the service, and boost
the efficiencies and performance, of the
insurance sector.
LIBF 2023
Integrated circuit card
Integrated circuit cards contain embedded
electronic chips and are used in EMV
standard smart cards. In financial services,
they are commonly associated with debit
and credit cards. They can also be referred
to as chip cards.
Internet of Things
The Internet of Things (IoT) refers to
physical objects equipped with the
technology to connect online and share
data. Examples include wearable devices
like smart watches, as well as home devices
such as smart thermostats and smart
speakers, and industrial applications like the
sensors on smart warehouse pallets.
Initial public offering
An initial public offering (IPO) sees a private
company sell shares to the public for the
first time. This raises capital for the firm and
provides it with liquidity in the stock market.
The process is highly regulated. Among
other things, the firm must make public
disclosures about its strategy, finances and
management. IPOs rely on underwriters –
such as an investment bank – to support the
listing.
International Organization for
Standardization (ISO)
The International Organization for
Standardization (ISO) is a non-governmental,
independent body comprising 167 national
standards organisations. Founded in 1947,
the ISO aims to bring together experts to
share knowledge and develop voluntary
international standards that support
innovation and provide solutions to global
challenges. ISO is responsible for ISO 20022,
a global standard for payments messaging
in use, as of 2022, in 70 countries.
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Islamic banking
Islamic banking refers to banking or
financing that is based on the principles of
Shariah law. In Islamic banking, money is a
way to exchange goods and services, not
something of intrinsic value. Because of
that, Islamic finance does not pay or accept
interest. It also aims to avoid harm (eg,
financing of tobacco) and it encourages the
sharing of profit and risks.
Issuer
An issuer is the entity that offers shares,
bonds, and other securities for sale. Such
entities can be governments, companies,
and other organisations.
Initial token offering (ITO)
An initial token offering is similar to an
initial coin offering. However, rather than
being deployed primarily to raise funds
for a cryptocurrency, ITOs focus on
offering tokens that are built on an existing
blockchain without being native to that
chain.
Knowledge based authentication
(KBA)
Knowledge-based authentication (KBA)
aims to prove someone’s identity online
before providing them with access to a
particular service, such as a website. It
usually involves asking questions that
require specific personal knowledge. There
are two types of KBA. The ‘static’ option
means asking questions that have already
been chosen and answered by the user: for
example, where they met their spouse. In a
‘dynamic’ KBA scenario, the questions are
generated through the use of data in public
records and are not selected by the user
beforehand.
LIBF 2023
Know your customer (KYC)
Know your customer, or KYC, describes a
range of financial regulation guidelines on
verifying the identity of customers. There
are two main reasons for the regulation.
One is to prevent criminals using financial
services to launder money. The other is to
help ensure that any regulated financial
products sold to a particular customer are
suitable for them.
Ledger
A ledger is a record of an organisation’s
financial transactions. It records the data
used to prepare a firm’s financial accounts.
Legal tender
Legal tender is the form of payment that
can’t be rejected when offered in settlement
of a debt or for the payment of taxes. In the
UK, if debtor offers Sterling to pay what they
owe, they can’t be sued for non-payment.
Creditors are not required to accept
cryptocurrencies like bitcoin.
London Inter-bank Offered Rate
(LIBOR)
The London Inter-Bank Offered Rate
(LIBOR) is an average of the interest rate
at which a panel of major banks will lend
to each other. It was devised as a way for
banks to pass on fluctuations in their own
funding costs and served as one of the
primary credit benchmarks from the early
nineteen seventies until the early 2020s. It
is a forward-looking rate derived from five
different currencies and seven maturities
or borrowing periods. LIBOR was replaced
by new benchmarks including the Sterling
Overnight Index Average (SONIA), which will
be calculated by the Bank of England.
Litecoin
Litecoin is a peer-to-peer cryptocurrency
that claims to offer a decentralised global
payment network. Known as an ‘altcoin’,
it is a fork of Bitcoin. It is similar to Bitcoin,
14
though there are some key differences, with
Litecoin generating blocks at a quicker rate.
Machine learning
Machine learning is a field of Artificial
Intelligence (AI) that aims to build software
systems that can learn from experience.
They are often used in data science to make
predictions or to classify data. In finance,
machine learning has a wide range of uses,
from supporting investors with advice to
detecting potential fraud. Some of the first
work in machine learning was done by IBM
in 1959 – programming computers to play
the game of checkers. Increased computing
power means machine learning can now
play the much more complex game of ‘Go’.
(See ‘deep learning’).
Mass payment
Mass payment allows organisations to make
multiple online payments at once, often on
an international basis and across different
currencies. The technology solutions greatly
simplify and speed up such payments by,
for example, checking that the payments
are compliant with regulations and
automatically finding the best exchange
rate. Automated payroll is an example of
mass payment.
Merchant acquirer
A merchant acquirer processes electronic
debit or credit card payments for
merchants. They are part of the ‘four-party’
payments model, which involves the card-
issuer, the cardholder, the merchant, and the
merchant acquirer. When a retailer accepts a
card payment, the merchant acquirer sends
notice to the card issuing bank to debit an
account. That money is then sent from the
card issuing bank, via the merchant acquirer,
to the retailer. The function is performed
by a bank or another financial institution.
Acquirers work with card schemes such as
American Express or Visa.  
LIBF 2023
Merchant aggregator
A merchant aggregator – also known
as a payment aggregator – supports
merchants in accepting payments, without
the merchant needing to set up their own
merchant account. One aggregator can
work on behalf of multiple merchants,
overseeing a huge array of transactions.
Messaging commerce
Messaging commerce – also known as
conversational commerce – refers to online
text chat or voice assistance provided
by businesses for clients. Many of the
responses in messaging commerce can
be automated using natural language
processing (NLP), artificial intelligence
(AI) and machine learning (ML). Text chat
bots and online assistants like Alexa are
examples.
Metaverse
The metaverse, a virtual online world in
which the line between the digital and the
physical is blurred, is expected to be central
to Web4.0. If futurists are correct, Web4.0
will be a decentralised internet with no
separate platforms. Massively multiplayer
online role-playing games (MMORPG) are
said to be a foretaste of the metaverse.
Micropayment
Micropayments are the holy grail
of ecommerce. The definition of a
micropayment is wide, ranging from a
few cents to under US$10. Because of
the interchange fee on card payments,
small sums are too expensive to process
in conventional payment systems. Some
firms get around this by setting up a
pre-paid wallet, which could be used to
cover, say, access to an individual online
article. Micropayments are of increasing
importance to the Internet of Things.
15
Middle office
In financial services companies, the front
office deals directly with customers and
the back office comprises functions like
administrative support. The middle office
focuses on areas like calculating profit, IT,
and risk management.
Middleware
Middleware is software that connects
disparate applications. It lets developers
work across a consistent environment,
saving time and cost and has been
described as ‘the connective tissue between
applications, data, and users’. It is particularly
important in cloud-native application
development where in-house and cloud-
based systems can have different software
tools, architectures, and languages.
Mid-sized full-service banks
Mid-sized full-service banks are generally
defined as banks that have a limited number
of physical branches and fewer than 10
million customers. They typically operate at
a regional or national level, with little or no
international presence.
Markets in Financial Instruments
Directive (MiFID)
The Markets in Financial Instruments
Directive (MiFID) has been in operation
in the EU since November 2007, seeking
to improve the competitiveness of the
EU’s markets through a single market
for investment services and activities. It
aims to ensure a high level of harmonised
protection for investors in financial
instruments, setting out requirements
for investment firms, trade transparency
obligations, rules on the admission of
financial instruments to trading, and more.
An updated and expanded version, MiFID
II, which focused on increasing market
transparency, was implemented in 2018.
LIBF 2023
Multi-factor authentication (MFA)
Multi-factor authentication requires users to
supply more than one factor to authenticate
their identity. For example, they might have
to supply a pin or a password along with
a biometric signifier, like a fingerprint. A
common example is a website that asks
for a password and then sends a code to
their phone, providing an additional level of
security.
Minimum viable product
The minimum viable product (MVP) concept
refers to developing a version of a product
with enough basic level of features to attract
early adopters whose activity can inform
further development. Some MVPs are as
basic as a landing page where people can
input their email to indicate interest in the
product outlined.
Near-field communication (NFC)
Near-field communication is supported
by short-range wireless technologies that
allows contactless communication when
devices are close to one another. Usually,
the distance has to be 4cm or less. NFC
has significant implications in FinTech,
for example through the expansion of
contactless payments.
Natural language processing
Natural language processing is an aspect of
artificial intelligence (AI) that focuses on how
computers process text and words. The aim
is to have computers interpret written and
spoken language, deriving relevant data and
insights, as people can. Examples of NLP
include chat bots, translation programs and
digital assistants.
Non-fungible Token (NFTs)
An NFT, or non-fungible token, refers to
data stored on a blockchain that cannot
be copied or used by someone else. The
16
importance of NFTs, in an online world
where data files can easily be duplicated, is
that they are unique. They can, for example,
be used to show ownership of a particular
data asset, such as online art.
Non-bank brands
Non-bank brands provide financial services
generally associated with banks – lending
money, for instance – but do not have a full
banking licence. Hedge funds and payday
lenders are examples of non-bank brands.
OBIE
The Open Banking Implementation Entity
(OBIE) sets the guidelines and software
standards for open banking. Open banking,
which went live in 2018, enables consumers
and SMEs to share their current account
data with third-party service providers. The
idea was to boost competition in banking by
making it easy for consumers to access new
financial services without having to switch
current account.
On-boarding
On-boarding describes the process of
introducing new users into a system,
allowing them to access everything
they need for a particular service. In a
competitive environment, a clear and
easy-to-navigate onboarding process is
particularly important and a strength for
many FinTech firms.
Online investment platforms
Online investment platforms provide a
one-stop-shop for retail customer to invest
in assets such as stocks, commodities,
currencies, indices, and exchange-traded
funds. Before the development of such
platforms, retail investors needed to go
through individual brokers to deal in each
asset and many assets, such as forex, were
not open to retail investors.
LIBF 2023
Open banking
Open banking was introduced to boost
competition and innovation in UK retail
banking. It requires established banks to set
up and maintain application programming
interfaces (APIs) that allow customers to
securely share their current account data
with third-party providers. Those other
providers may be able to offer cheaper
and more efficient services. Open banking
can also be used to make direct account to
account payments that don’t incur the costs
of using payment cards.
Open finance
Open finance refers to the extension of open
banking principles to financial products
like pensions, savings and insurance. Like
open banking, it would exploit the potential
of application programming interfaces to
enable customers to share financial data
with competitive third-party providers.
Open-source software
Open-source software allows anyone to
look at and/or modify its source code. The
source code is the basis of a computer
program and contains the instructions on
how the program should function. The main
benefit of open-source software is that it
is developed via large-scale collaboration
and peer review. Linux is the world’s largest
open-source software project, partly
because of its use on Android phones.
P2P
The aim of peer-to-peer lending is that
lenders provide funds directly to a borrower,
without the need for a financial institution.
This proved to be more challenging in
practice than in theory, mainly because
it directly exposed investors to ill-defined
risks. The FCA introduced new regulation
in 2019 that, among other things, required
P2P platforms to either give advice to
investors, or to make ‘an appropriateness
17
assessment’. That is, they had to assess an
investors experience and knowledge of P2P.
Several P2P providers in the UK have, since
then, either closed down or changed their
business model to become a platform for
institutional lenders.
Platform as a service
Platform as a service (PaaS) is a form of
cloud computing whereby the provider
delivers everything needed to build, run
and manage applications and data. The
user logs onto the platform to develop
their own applications and does not have
to run in-house hardware or software such
as operating systems or middleware. This
can make it easier for small, or non-expert,
teams to launch a new service.
The level of service offered by PaaS sits
between that of Software as a Service
(SaaS), which provides and manages
everything including the app, and
Infrastructure as a Service (Iaas), where the
user only buys access to the data centre
infrastructure services, such as storage
and computing. Providers of PaaS include
Amazon Web Services (AWS), Google Cloud,
IBM Cloud and Microsoft Azure.
Passwordless authentication
Passwordless authentication does away
with the need for online passwords. It relies
instead on methods such as recognising
something the user owns – a phone,
for instance – or on checking personal
biometric data like a retina scan.
Payment gateway
Payment gateway is the technology
merchants use to read and authorise debit
or credit card payments at the point of sale
(PoS), both in physical stores and online.
LIBF 2023
Payment card industry (PCI)
compliance
The Payment card industry (PCI) Data
Security Standard (DSS) refers to 15 security
standards that ensure any company
involved in handling credit card data does
so in a secure manner. It is overseen by the
PCI Security Standards Council, a global
form set up in 2006 by the major card
brands.
Payment initiation services
Payment Initiation Service Providers allow
users to make payments directly from their
bank account to another account, meaning
they do not have to rely on credit or debit
cards. The customer gives a Payment
Initiation Service Provider (PISP) – which is
a third-party service – permission to access
their bank data via open banking and to
make the payment.
Proof of concept
Proof of concept is when a new idea,
product or service is examined to see
whether it is suitable for real-world use.
This goes beyond a demo. For example,
a FinTech might use proof of concept to
demonstrate that a new app is mature
enough to launch.
Point of sale (PoS)
The point of sale (PoS) is where payment is
made for goods or services. Shops maintain
PoS terminals, such as card readers. Online,
the PoS is an app. Before the launch
of Square (now Block), in 2009, many
small firms could not accept credit card
payments. Square launched a dongle that
sole traders and small firms could attach to
a mobile phone to swipe cards. That created
a PoS that could be used anywhere and that
had lower fees than other solutions.
18
Premium API
Premium APIs build upon open APIs, with
third-party providers paying a fee to access
additional data not available through the
open API. This is sometimes called elevated
access.
Private key
Private keys are used in cryptography to
encrypt and decrypt data. They are paired
with a public key that allows anyone to send
encrypted data to the private key – a bit like
a slot in a letterbox. That message, however,
can only be opened with the private key,
analogous to having the key to the letterbox.
Private keys are core to the operation of
cryptocurrencies like bitcoin as they keep
the data secure and prove ownership of the
cryptocurrency. If users lose their private
key, they have also lost the bitcoins.
PropTech
PropTech refers to technology designed
for the real estate/property sector. Also
known as real estate technology, it could
include a range of technologies, such as
developments in analytics or providing 3D
models.
Prudential Regulation Authority
(PRA)
The Prudential Regulation Authority (PRA)
regulates around 1,500 UK banks and
insurance firms with the aim of ensuring
that the services are provided in a ‘safe and
sound’ manner. It is part of a ‘twin peaks’
regulatory approach alongside the Financial
Conduct Authority (FCA), which was put in
place after the financial crisis of 2007.
(PSD2) Second Payment Services
Directive
Payment Services Directive (PSD2) is
an EU directive that outlines a range
of requirements for organisations that
offer payment services. It aims to bolster
LIBF 2023
competition and innovation, increase the
protection of consumer data, and to boost
the safety and security of payments at the
same time as pushing down their cost.
PSD2 brought in open banking, which is
facilitated by application programming
interfaces (APIs) that allow the safe
exchange of account data. Over time, the
EU’s aim is to have just one, or at most a
few, API standards to ensure a “standardised
and reliable access interface to payment
accounts.”  Robo advisor
Payment service user (PSU)
The term payment service user (PSU)
describes a person who uses a payment
service, either as a payer, payee, or both.
QCSEAL
In PSD2 and open banking, the Qualified
Certificate for Seals (QCSEAL) is a certificate
that permits electronic sealing – effectively
a digital form of a signature, confirming the
identity of the sender and the integrity of a
particular package of information.
Quick response (QR) codes
Now a familiar sight in a range of business
environments, quick response (QR) codes
are barcodes composed of black and
white pixels in a square grid. QR codes
can store a lot more data than standard
barcodes and they don’t need to be read at
a particular angle to be scanned. Because
they encode much more data, they are very
versatile. They can, for example, be used
to authenticate accounts, link directly to
an app, and to send and receive payment
information. Most smartphones include a
QR reader.
RegTech
The term RegTech refers to the use of
technology to help firms remain compliant
with regulatory requirements and to
evidence that compliance to regulators.
19
Reference data
Reference data is the data that is used
to define and classify other data. It is
fundamental to data management, for
consistency and accuracy. It is different to
master data, which gives a firm the data it
needs for transactions, such as information
about customers and products.
Examples of reference data include cost
centres, post codes and cross-referencing of
symbols.
Robo advisors are automated platforms that
provide investment support and financial
advice.
Regulatory technical standards
(RTS)
When the EU set up its three European
Supervisory Authorities (ESAs) in 2011 – the
European Banking Authority, the European
Securities and Markets Authority and the
European Insurance and Occupational
Pensions Authority – it gave them the
mandate to develop regulatory technical
standards.
That mandate doesn’t involve making policy,
or strategic decisions or having legislative
power. However, because the ESAs are seen
has having the best market intelligence
and knowledge, the European Commission,
which does have legislative power, can
only amend the regulatory technical
standards after consultation and in limited
circumstances.
The European Council and the Parliament
can both prevent a standard coming into
force. If an RTS is not blocked, it becomes
binding and applicable across all member
states of the EU. The aim of an RTS is to
“further develop, specify and determine the
conditions for consistent harmonisation of
the rules”.
LIBF 2023
Security token
A security token is used to access a
restricted digital resource, such as a bank
account. Tokens take many forms. For
example, they can be a physical asset that
connects to a device, or they can be non-
physical, such as a one-time-password.
Sharing economy
The term sharing economy describes a
system in which under-utilised goods or
services can be shared commercially or
non-commercially via an online platform.
Airbnb and Task Rabbit are examples of
sharing economy businesses.
Single sign-on (SSO)
With single sign-on (SSO), a user can access
a range of websites and applications
through a single ID. This is achieved
through the creation of an authentication
token, which is relayed between the app
in question and an SSO provider to permit
access.
Service-level agreement (SLA)
A service-level agreement (SLA) refers
to a contract that provides definitions of
an agreed service and outlines what the
service provider will deliver.
Smart contracts
Smart contracts are computer programmes
designed to self-execute when certain
conditions are met. They do not rely on
an intermediary for activation. The term
smart contract is usually identified with
computation on a distributed ledger like
blockchain.
Social finance
Social finance refers to a range of
financial services that seek to address
social challenges. Unlike charitable or
philanthropic donations, the investments
often involve debt financing or equity,
with the intention of generating a profit for
20
investors and thus being self-sustaining.
Soft fork
A soft fork is a change to a blockchain’s
software protocol and is often used to
allow new functions. Because a soft fork
follows existing rules, none of the nodes in
the chain have to be upgraded to maintain
consensus. A soft fork can be introduced
with majority agreement and is backwards-
compatible. A hard fork demands that all
miners upgrade to the newly agreed rules,
and it is not backwards-compatible.
Software as a service (SaaS)
SaaS is a cloud computing service that
provides the user with a fully managed app,
which they access online. This compares
with Infrastructure as a Service (IaaS), in
which the cloud provider offers on-demand
infrastructure services such as storage
and computing but the user deals with the
software and data in-house. Between these
two levels of service there is Platform as a
Service (PaaS), which manages the software
development platform, but the apps and
data are written and managed by the client.
Sterling Overnight Index Average
(SONIA)
The Sterling Overnight Index Average
(SONIA) is a UK interest rate benchmark
overseen by the Bank of England. It reflects
the average of the interest rates paid by
banks to borrow sterling overnight from
financial institutions and other investors. In
the UK, it is being used to replace LIBOR,
which was discontinued because the
calculations could no longer be based on
sufficient market transactions. The Financial
Conduct authority discontinued publication
of 24 of the 35 LIBOR settings on 1 January
2022. Until the end of 2022 six sterling
and yen LIBOR settings are being made
‘synthetically’. As of mid-2023 the remaining
five-dollar LIBOR settings will no longer be
calculated.
LIBF 2023
Specialist banks
Specialist banks focus on a specific set of
customers or market, developing products
that are targeted for this purpose. They
often have a small customer base and a
restricted physical presence, with a focus on
third-party channels to enable distribution.
Split payment
Split payment has three main meanings.
The first involves paying for something
using a mix of different payment methods
– for example, a debit card and cash. The
second is paying in instalments, as in
buy now, pay later. The third type of split
payment involves splitting a bill, say with an
app like Venmo.
STET
STET is a European payments processor
that was created by major French banks
in 2004. Its CORE platform was launched
in 2008, aiming to provide a large-volume
market with efficiency and security. STET
also maintains open banking APIs, making
it an important factor in Open Banking. It’s
a systemically important payments system,
which complies with regulations of the ECB
and processes, on average, €25 billion a day.
Streaming analytics
Streaming analytics involves analysing large
amounts of data in real-time. In finance
it could have several applications. For
example, it could enable users to better
analyse prices in a market.
Strong customer authentication  for Worldwide Interbank Financial
Strong customer authentication (SCA) is a
set of rules designed to boost payments
security and reduce fraud. It was introduced
as part of the PSD2 set of EU regulations
in 2021 and remains part of UK regulation
post-Brexit.
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SCA applies when a payer initiates an
electronic payment transaction, accesses
their payment account online, or conducts
any action that might imply a risk of
payment fraud. SCA requires online bank
customers to provide two out of three of:
something they know, such as a password
or pin; something they are, such as a
fingerprint; or something they have, such as
a device.  
Structured/unstructured data
Structured data is defined and organised
in a way that persists over time and
can be easily accessed both by AI and
people. Usually, structured data is in a
database. Around 20% of the world’s data is
structured. Unstructured data, in contrast,
is more difficult to categorise and analyse.
It comes from sources such as audio files,
videos and documents. Many tasks involve
analysing a mixture of both types of data.
SupTech
Supervisory technology (SupTech, also
known as RegTech) refers to technological
solutions that are used by supervisory
agencies to support their work. For example,
it could be used to digitise a range of
processes, enabling agencies to monitor risk
more effectively. According to the Bank for
International Settlements, data collection
and data analytics are the two major areas
of application for the technology.
SWIFT
SWIFT is the acronym of ‘Society
Telecommunications’. It is a member-owned
cooperative society, originally founded
by banks, that runs the core messaging
network used in international payments. The
system ensures this information is securely
exchanged, including instructions related to
payments.
LIBF 2023
SWIFT gpi
SWIFT global payments innovation (gpi) is a
SWIFT service that seeks to provide greater
transparency in international payments
while streamlining the service. According
to SWIFT, this messaging functionality
provides “full transparency over where
a payment is at any given moment” and
enables payments to be credited to end
beneficiaries within minutes or even
seconds, based on a range of cloud-based
tools.
Tokenisation
With tokenisation, sensitive data is replaced
with a randomly generated string of
numbers – a token that acts as an alias to
that data. This enables a system to map
back to the original data while protecting it.
Processing credit card data is one example
of how tokenisation is used in finance.
Rather than store sensitive credit card
information, firms store tokens.
Third-party provider
Third-party providers or TPPs are a key
element of the Open Banking concept.
They are individuals or organisations that
access customers’ banking information
through open APIs or premium APIs and
use that data to provide services. They can
be Payment Initiation Service Providers
(PISPs) and/or Account Information Service
Providers (AISPs), according to the Open
Banking Implementation Entity (OBIE).
Underbanked
The term underbanked refers to individuals
with insufficient access to banking services.
Unlike the unbanked, they may have a bank
account, but do not have ready access to
mainstream financial services.
Underwriting
Underwriting is a crucial concept in
financial services, and it means taking on
financial risk in exchange for payment. It is
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commonly seen in investments, lending,
and insurance. The term comes from
signing at the bottom of an insurance
contract.
Unicorn company
Unicorns are private start-up companies
valued at $1 billion or more, which have
not listed on the stock market. There have
been further extensions to the concept: for
example, a ‘decacorn’ has a value of over
$10 billion, and a centicorn more than $100
billion.
United Payments Interface (UPI)
Created by the National Payments
Corporation of India (NPCI), the United
Payments Interface (UPI) allows users to
bring together multiple bank accounts into
one mobile application. This offers a range
of advantages, such as providing a single
interface to interact with these different
accounts and the ability to immediately
transfer money at any time. The customer
also avoids the need to enter details like
card or account numbers. Since March
2022, Indian banks been required to allow
users to active the UPI using Aadhaar, rather
than a debit card. Aadhaar is the 12-digit
identification number issued on request to
Indian citizens by the Unique Identification
Authority of India. It serves as a proof of
identity and address anywhere in India.
Venture capital
Venture capital funds provide capital to
small businesses and start-ups to help
finance their growth. The investment
is provided in return for a stake in the
company. VCs are not, typically, early-stage
investors. They look for more proof of
concept than angel investors do. Further,
angels invest their own money while VCs
manage investments for others.
LIBF 2023
Virtual asset
A virtual asset refers to a digital
representation of value that can be traded,
transferred, or used as a payment method.
Digital versions of fiat currencies are not
included in the definition.
Wealth management
The term wealth management refers to
a wide range of services, such as estate
planning, tax planning and investment
advice. Affluent individuals work with wealth
managers who develop strategies using a
mix of financial tools, tailored to the client’s
overall needs.
Wearable technology
Wearable technology is a range of electronic
devices that can be worn by an individual
and collects data on various metrics such
as location, speed, or heart rate. Common
examples of wearables are smartwatches,
virtual reality headsets and fitness trackers.
Sectors that use data from wearables
include healthcare, insurance, and sport.
Wholesale banking
Wholesale banking means the provision of
financial services and solutions by banks
to large customers. These could include
other banks, government organisations or
major corporations. It covers services from
underwriting to mergers and acquisitions.
Retail banking deals with consumers and
small businesses.
eXtensible Business Reporting
Language (XBRL)
The eXtensible Business Reporting
Language (XBRL) is a software standard
for communicating financial data and
other business information. It is a type of
extensible markup language (XML), which
is applied to organise data and conduct
related tasks. XBRL aims to be ‘the open
international standard for digital business
reporting’.
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XRP
XRP is the cryptocurrency of the Ripple
payment network. Unlike Bitcoin, the
Ripple network is not distributed and XRP
is ‘pre-mined’. The XRP Ledger has a total
of 100 billion tokens that are periodically
released for sale by Ripple. (Ripple has been
in dispute with the Securities and Exchange
Commission over whether XRP was a
tradeable financial instrument, like stocks or
bonds.)
Ripple aims to provide a quick and cost-
efficient method of facilitating cross-border
payments. Banks that want to make
conventional cross-border payments
either need an existing relationship with
the receiving bank to make a wire transfer,
or they must be part of a correspondent
banking network, which is costly. Increased
regulation following the financial crisis made
it uneconomical to maintain correspondent
banks in some parts of the developing
world. Ripple says that it can ‘send money
globally, instantly, reliably and for fractions
of a penny’. Users can buy XRP with one
fiat currency and sell it to purchase a target
currency. Ripple says can pay out in over 40
currencies.
Zero knowledge proof
Zero-knowledge proof is a concept in
cryptography through which one individual
can prove to another that something is so,
without having to reveal any data associated
with it. For example, it could be used to
authenticate identity, without sharing
personal information.
Zombie firm
Zombie firms make enough money to keep
operating and to service debt, without
being able to pay off that debt or to invest
in growth and development. They are
particularly vulnerable to rises in interest
rates or other market changes.
LIBF 2023