If you’re looking to pivot into the fintech industry, you need to be able to talk the talk. Whether you’re transitioning from a role in financial services or have never worked in the financial industry before, being able to keep up with all of the lingo that flies around fintech companies will help you feel more confident. Especially during the stressful interviewing process.
To make things even more challenging, a lot of fintech jargon is referred to in acronyms. That’s okay—who doesn’t love cracking a good code? Keep reading for a debriefing of must-know fintech lingo so you can walk into your next interview, meeting, or networking event with confidence.
Before we get started, don’t forget to register for our upcoming and FREE event in collaboration with Fintech Today—How to Break into and Navigate a Career in Fintech with Charley Ma, Trevor Marshall, and Colleen Wenk—where you’ll learn about various career path options within the fintech space and how to navigate them.
RTP stands for Real-Time Payments. These are payments that a consumer initiates and settles almost instantaneously. Typically, real-time payment networks can process transactions 24 hours a day. You’re probably encountering real-time payments anytime you shop online.
BaaS, aka banking as a service, is an important element of open banking and encourages financial transparency. Banking as a service accomplishes this by allowing banks to open up their APIs for third parties to develop new services.
Surprise! We’re explaining two terms for the price of one. Both challenger banks and neobanks are types of digital banks. This means that customer interaction with their banks happens through a digital interface. Often this interface is accessed on mobile devices.
More specifically, a challenger bank is a digital bank with a bank license. A neobank isn’t regulated as a bank and while they may offer some banking services, they can’t be called a “bank”.
Decentralized finance (DeFi) is a system that allows financial products to become available on a public decentralized blockchain network. This makes it so anyone can use the financial products without having to go through a middleman like a bank or brokerage. You don’t need to have a government-issued ID, Social Security number, or proof of address to use DeFi, all of which you do need in order to use a bank or a brokerage account.
Robo-advisors are digital platforms that provide financial planning services such as account setup, goal planning, account services, portfolio management, and security features, with little to no human intervention. These algorithm-driven financial planning services are automated.
When an individual or family is underbanked, that means that while they may have access to a bank account, they often need to rely on alternative financial services like payday loans instead of traditional loans. Being underbanked can be caused by a lack of access to convenient or affordable banking services.
RegTech is short for regulatory technology, which is a type of technology that helps organizations meet their compliance obligations. Oftentimes, RegTech relies on artificial intelligence and machine learning in order to automate routine tasks necessary in compliance departments.
PFOF, also known as payment for order flow, refers to the compensation received by a brokerage firm when they direct orders to outside parties for trade execution. For their involvement, the brokerage firm will receive a very small payment, such as a fraction of a penny of a share.
The terms “know your client” or “know your customer” (both known as KYC) refer to an investment industry standard that helps ensure that investment advisors know what they need to know about their clients’ investment knowledge, risk tolerance, and financial positions. KYC serves to protect investment advisors as well as their clients, as all parties benefit when the investment advisor has the proper information at hand.
Now, Pay Later (BNPL) services are rising in popularity as they give consumers the ability to pay for large purchases (or any purchase they can’t afford to pay in-full) in smaller installment payments. Typically, these loans are interest free if payments are made on time, unlike a credit card which charges you interest when you carry a balance (unless you have a 0% APR introductory offer).
For more insight into this lingo and building a career in fintech, register for our upcoming and FREE event in collaboration with Fintech Today—How to Break into and Navigate a Career in Fintech with Charley Ma, Trevor Marshall, and Colleen Wenk.