FinTech glossary

To ensure a common understanding the NBS has compiled a list of frequently used FinTech terms and their definitions. The Glossary includes definitions from resources listed on the last page.

Expression	Description
Account Initiation Service (AIS)	an online service to provide consolidated information on one or more payment accounts held by the payment service user with either another payment service provider or with more than one payment service provider.
Algorithm	a set of computational rules to be followed to solve a mathematical problem. More recently, the term has been adopted to refer to a process to be followed, often by a computer.
AML/CFT	Anti-Money Laundering and Countering the Financing of Terrorism.
Application programming interface (API)	a set of rules and specifications followed by software programmes to communicate with each other, and an interface between different software programmes that facilitates their interaction.
Artificial intelligence	the theory and development of computer systems able to perform tasks that traditionally have required human intelligence.
Asset-backed token	a digital representation of an actual asset or revenue stream.
Augmented intelligence	augmentation of human capabilities with technology, for instance by providing a human user with additional information or analysis for decision-making.
Big Data	is generally used to refer to large volumes of different types of data, produced with high velocity from many and varied sources (such as the internet of things, sensors, social media, financial markets data, etc.), which are processed, often in real time, by IT tools (powerful processors, software and algorithms).
BigTech or BigTech firms	large technology companies that expand into the direct provision of financial services or of products very similar to financial products.
Biometrics	Biometric authentication technologies are based on measuring a person’s unique and stable biometric features and matching them with authorised biometric samples of that person. Examples of implementations for the use of biometrics to authenticate customers include authentication based on customer’s fingerprint, voice recognition, biometric signature verification, ATMs using facial recognition.
Blockchain	a form of distributed ledger in which details of transactions are held in the ledger in the form of blocks of information. A block of new information is attached into the chain of pre-existing blocks via a computerised process by which transactions are validated.
Customer Due Diligence (CDD)	is the process where relevant information about the customer is collected and evaluated by obliged entities within the meaning of anti-money laundering legislation for any potential risk or money laundering/terrorist financing activities.
Chatbots	virtual assistance programmes that interact with users in natural language.
Cloud computing	an innovation in computing that allows for the use of an online network (“cloud”) of hosting processors so as to increase the scale and flexibility of computing capacity. Cloud computing has made possible the analysis of very large datasets (big data), and a number of specific FinTech applications.
Cloud services	services provided using cloud computing, that is, a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g. networks, servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.
Crowdfunding	Crowdfunding is a method of alternative finance for initiatives (projects) of individuals and companies. It usually has the form of on-line campaigns and can be aimed at both non-profit and business activities. The term means raising funds from a large group of people (called ‘supporters’) in different ways for the purposes of financing the projects or business plans of specific persons (called ‘project owners’).
Crypto-asset	a type of private asset that depends primarily on cryptography and distributed ledger or similar technology as part of their perceived or inherent value.
Crypto-asset trading platform	any trading platform where crypto-assets can be bought and sold, regardless of legal status.
Cryptography	the conversion of data into private code using encryption algorithms, typically for transmission over a public network.
Deep learning	a subset of machine learning, this refers to a method that uses algorithms inspired by the structure and function of the brain, called artificial neural networks.
Digital ID verification	a range of technologies used to confirm the identity of actors in financial transactions or other applications, e.g. to prevent fraud and to ensure the security of clients and counterparties.
Digital token	any digital representation of an interest, which may be of value, a right to receive a benefit or perform specified functions or may not have a specified purpose or use.
Digital wallet	electronic applications that allows customers to have, in a single application on a portable device, one or more payment instruments stored in a digital form, such as NFC contactless card payment, virtual cards, direct debit and other types of payment instruments. The wallet can be linked to payment accounts to fund payments and reduce the need to carry cash or plastic payment cards, and allow internet payments.
Distributed ledger technology (DLT)	a means of saving information through a distributed ledger, i.e. a repeated digital copy of data at multiple locations, as in a blockchain.
e-Aggregators	Also known as price comparison websites or comparison aggregators, provide internet-based venues for retail customers to compare the prices and features of a range of financial products such as standardised insurance, mortgages, and deposit account products. e-Aggregators also provide an easy way to switch between providers.
eIDAS Regulation	Regulation on electronic identification and trust services for electronic transactions in the internal market (Regulation (EU) No 910/2014).
e-Trading	A broad category of financial market trading methods on electronic trading platforms and virtual market places. This can include algorithmic or high-frequency trading among professional investors, and online investment, “social trading” or “copy trading” among retail investors.
FinTech	technology-enabled innovation in financial services that could result in new business models, applications, processes, or products with an associated material effect on financial markets and institutions and the provision of financial services.
ICT	Information and Communication Technology.
Initial coin offering (ICO)	an alternative method of financing, which represents an innovative and significantly expanding means of raising capital from the public to be used to finance the projects of specific persons. Electronic ‘coins’ or ‘tokens’ are created and subsequently offered and sold to the public in exchange for fiat currencies (e.g., Euro) or, more frequently, for virtual assets (e.g., Bitcoin and Ether). These transactions are mostly arranged via the Internet and social media.
Innovation facilitator	means an institutional arrangement where regulated or unregulated entities (i.e. unauthorised firms) engage with the competent authority to discuss FinTech-related issues (share information and views, etc.) and seek clarification on the conformity of business models with the regulatory framework or on regulatory/licensing requirements (i.e. individual guidance to a firm on the interpretation of applicable rules).
InsurTech	the application of FinTech for insurance markets.
Internet of things	the inter-networking of physical devices, vehicles, buildings, and other items embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data and send, receive, and execute commands.
KYC	Know Your Customer.
Machine learning	a method of designing a sequence of actions to solve a problem that optimise automatically through experience and with limited or no human intervention.
Mining	one means to create new crypto-assets, often through a mathematical process by which transactions are verified and added to the distributed ledger.
Mobile and web-based payments	applications that allow consumers to conduct transactions through their mobile phone or tablets, improving efficiency and the customer experience.
Natural Language Processing (NLP)	an interdisciplinary field of computer science, artificial intelligence, and computation linguistics that focuses on programming computers and algorithms to parse, process, and understand human language.
Open banking	a system in which financial institutions’ data can be shared for users and third-party developers through APIs.
Open source	a designation for a computer programme in which underlying source code is freely available for redistribution and modification.
Payment initiation service (PIS)	means a service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider.
RegTech	any range of applications of FinTech for regulatory and compliance requirements and reporting by regulated financial institutions. This can also refer to firms that offer such applications. There is also a close link with “SupTech,” or the use of FinTech by supervisory authorities.
Regulatory sandbox	provides financial institutions and non-financial firms with a controlled space in which they can test innovative FinTech solutions with the support of an authority for a limited period of time, allowing them to validate and test their business model in a safe environment.
Reinforcement learning	a subset of machine learning in which an algorithm is fed an unlabelled set of data, chooses an action for each data point, and receives feedback (perhaps from a human) that helps the algorithm learn.
Robo-advisors	applications that combine digital interfaces and algorithms, and can also include machine learning, in order to provide services ranging from automated financial recommendations to contract brokering to portfolio management to their clients, without or 36 with very limited human intervention. Such advisors may be standalone firms and platforms, or can be in-house applications of incumbent financial institutions.
Smart contracts	programmable distributed applications, or self-executable contracts, that can trigger financial flows or changes of ownership if specific events occur.
Social trading	a range of trading platforms that allow users to compare trading strategies or copy the trading strategy of other investors. The latter is often referred to as ‘copy trading’ or ‘mirror investing’.
Strong customer authentication	an authentication based on the use of two or more elements categorised as knowledge (something only the user knows), possession (something only the user possesses) and inherence (something the user is) that are independent, in that the breach of one does not compromise the reliability of the others, and is designed in such a way as to protect the confidentiality of the authentication data.
Supervised learning	a subset of machine learning in which an algorithm is fed a set of ‘training’ data that contains labels on the observations.
Supervisory Technology (SupTech)	is the use of technologically enabled innovation by supervisory authorities.
Token	any digital representation of value.
Tonality analysis	a method to gauge the negativity of a piece of text by counting terms with a negative connotation.
Unsupervised learning	a subset of machine learning in which the data provided to the algorithm does not contain labels.
Wallet provider	a firm that offers storage services to persons engaged in crypto-assets transactions. These services may be provided online (‘hot’ storage) or offline (‘cold’ storage).

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Sources

1. EBA, Glossary For Financial Innovation, available at https://eba.europa.eu/documents/10180/2270404/Glossary+for+Financial+Innovation.pdf/72036f35-beac-4d44-acf1-2875c12b709e
2. Financial Stability Board, Financial stability implications from FinTech: Supervisory and regulatory issues that merit authorities’ attention, 27. jún 2017, available at http://www.fsb.org/wp-content/uploads/R270617.pdf
3. Report, FinTech: Regulatory sandboxes and innovation hubs, 7. január 2019, available at https://eba.europa.eu/documents/10180/2545547/JC+2018+74+Joint+Report+on+Regulatory+Sandboxes+and+Innovation+Hubs.pdf
4. Financial Stability Board: FinTech and market structure in financial services: Market developments and potential financial stability implications, 14. február 2019, available at https://www.fsb.org/wp-content/uploads/P140219.pdf
5. Financial Stability Board, Artificial intelligence and machine learning in financial services Market developments and financial stability implications, 1. november 2017, available at https://www.fsb.org/wp-content/uploads/P011117.pdf
6. Financial Stability Board, Crypto-asset markets Potential channels for future financial stability implications, 10. október 2018, available at https://www.fsb.org/wp-content/uploads/P101018.pdf
7. Payment services (PSD 2) – Directive (EU) 2015/2366