Fintech Cheat Sheet: 6 Terms you Should Know

Alessandro Ravanetti
6 min readAug 6, 2015

Are you struggling to stay up to date with all the new jargons used in finance? The industry is changing fast and with that also the vocabulary associated. This post is intended to be used as a cheat sheet for those wanting to stay knowledgeable and are looking to understand a bit more about FinTech. If you are an avid reader of our Crowd Valley’s blog then you probably know most of what explained below, but you can always take a look at it as a quick refresher.

So what’s FinTech?

FinTech is a contraction of two words, finance and technology, and refers to companies, that provide financial services through the engagement of technology. According to the Accenture’s new report ‘The Future of FinTech and Banking’, global investment in financial technology tripled in 2014, with a 201% increase between 2013 and 2014, with approximately $12B invested through more than 730 deals. Looking at the last twelve months the number increased again going very close the $14B mark. The following chart by CB Insights, reported by Business Insider, help visualise the huge growth within the sector.

Going back to our FinTech glossary below you can find the brief explanation of six of the most commonly used terms when we talk about financial technology.

1. Equity Crowdfunding (also known as Crowdinvesting or Digital Investing)

Crowdfunding is defined as the pooling of small amounts of capital from a large number of individuals to finance a person, cause, or business.

Equity crowdfunding is a sub-category of that and refers to the process where people invest in a company not listed on a stock market in exchange for shares in that company. Right now, in the United States, equity crowdfunding is possible only for accredited investors, as defined by the Title IV of the JOBS Act, adopted by the SEC last March. If you are interested to know the latest regulation news in some of the regions that have seen the most regulatory activity over the past few years, you should not miss this list on Crowd Valley’s site.

2. Peer-to-Peer Lending (also know as P2P Lending or Social Lending)

As defined by Investopedia, P2P Lending is “a method of debt financing that enables individuals to borrow and lend money — without the use of an official financial institution as an intermediary.”

P2P Lending market is booming all over the globe, with US, UK, China and Australia doing particularly well. In the US alone, on the basis of what’s reported by Morgan Stanley, marketplace loan origination has doubled every year since 2010, to $12 billion in 2014. Looking five years ahead, they forecast that globally this market can reach $490 billion by 2020.

Along with the market also the platforms are growing quickly, with companies such Prosper and Lending Club that are now valued billions of dollars.

3. Digital Wallets

A digital wallet usually refers to an electronic device that allows an individual to make electronic commerce transactions. As reported by Financial Brand, the consumer payments industry will process about $2.7 trillion of card-based payments in the US in 2015, explaining why there is much innovation happening in the payments space and why there are so many competitors trying to impose their digital wallets as a standard for the consumers. Until now it’s pretty clear that the biggest barrier for digital wallets has been the lack of NFC-enabled terminals (devices that allow contactless communication with smartphones, tablets, etc.). Google Wallet debuted four years ago as an early player in mobile payments and in Q1 2015 there were only about 220,000 live contactless merchant locations out of about 8 million US card-accepting locations.

It’s still unclear how the market will evolve but things are now changing and the competition between the providers of mobile payments solutions is heating up. Apple Pay, Samsung Pay, Google Wallet/Android Pay and Barclays bPay are just few of the digital wallets available now and the number of competitors is growing every day.

4. Robo Advisors

Robo advisors are a class of financial adviser that offer automated investment advisory services with no or minimal human intervention through web based platforms, using automation to select investments that meet clients’ temperament and goals.

They become very popular in the last years, with names as Wealthfront and Betterment that are now well known in the wealth management industry. But their popularity is going to get much bigger if the forecasts from consulting firm A.T. Kearney are correct. According to their projections the assets under management by robo advisors in the US are estimated to increase 68% annually to about $2.2 trillion by 2020.

5. Cryptocurrencies

A cryptocurrency is a digital currency that uses cryptography to secure the transactions and to control the creation of new units. Bitcoin, that was created in 2009, became the first decentralized cryptocurrency, but since then many new ones have been created. Blockchain instead is a public database of all the Bitcoin transactions in chronological order that have been executed and is considered one of the main technological innovation of Bitcoin. As reported by Nesta, while we are still far away from cryptocurrency usage becoming mainstream, online funding portals have strong incentives to be the early adopters of the technology because of their ability to transfer small amounts of value across at little cost.

6. API

API stands for ‘application programming interface’ and is a set of requirements that governs how one application can talk to another. At Crowd Valley we have recently announced the digital back office to power investing and lending marketplaces that is easily accessible by open API.

This solution takes investing and lending services to the fully digital era by enabling any financial institutions, brokers and FinTech companies, along with any in-house or third party software developers, to build their own online investing or lending service. Our public API can be integrated very easily into new and even existing online investing and lending services. Basic setup can be completed in a few days, get in touch if interested to learn more.

What’s Next?

All in all there is no area in FinTech that is not experiencing tremendous growth. Banking giants like Goldman Sachs, Citi, Bank of America and Morgan Stanley, as well the biggest Venture Capital’s firm have started to bet big money on FinTech, with startups in this sector that have attracted $12 billion of investment in 2014, up from $4 billion the year before. From crowdfunding to p2p lending, from payments to wealth management, there is a new wave of startups that is disrupting the finance industry, with $4.7 trillion in revenue for traditional financial services at risk of being displaced by the new entrants according to a Goldman Sachs research. The future for the FinTech industry looks brighter than it has ever looked before.



Alessandro Ravanetti

Freelance writer & digital strategist. European Commission expert, Fintech curator at Techstars Startup Digest, SXSW advisory board member.