What is Fintech? Fintech Glossaries

In our previous blog, we have curated different definitions of fintech adopted by consultancies and international organisations.

Summing them up in one sentence, fintech is essentially about the evolving intersection of financial services and technology. To understand fintech, the best way is to look into the specific examples of how technology is innovating finance.

What’s What in Fintech?

Challenger Banks:

Challenger bank, broadly defined, is a term that describes any bank that is not a recognised main high street bank. There is now a growing number of challenger banks that leverage technology to provide superior offerings. The rise of challenger banks can be attributed to the regulators’ decision to loosen regulations to promote healthy competition in the wake of the financial crisis. Coupled with the reduced technology cost and increase public trust towards startups, the challenger bank segment is now flourishing and growing rapidly.

Examples of challenger banks: Revolut, Starling, Monzo, Atom

Alternative Finance and P2P Lending:

Alternative Finance refers to a growing industry of digitally based lending platforms for different borrowing needs. P2P Lending is the largest form of alternative finance in terms of market size and funding round, providing a marketplace for non-bank investors to lend their money to borrowers.

Examples of P2P Lending companies: Lending Clubs, Prosper, ZhaoCaiBao (Alibaba), Lufax

Payment:

Accenture defines payments innovation as something new — it need not be radical — but something that is new, different and which delivers on an incentive for the innovator and a benefit for users. Areas of innovation include card payments, internet payments, mobile payments, electronic invoicing and billing payment and improvements in infrastructure.

Examples of payment innovation: Venmo, Alipay and M-Pesa

Blockchain, Cryptocurrency and ICO:

Blockchain is a decentralized tamper-proof digital record of transactions. The record is not stored in any single location, but hosted across and validated by many computers simultaneously. The goal of blockchain is to allow digital information to be recorded and distributed, but not edited.

Cryptocurrency is the first major application of blockchain technology. It is a digital currency that is fully peer-to-peer, operating independently of any trusted third party.

Initial Coin Offering (ICO) is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin or Ethereum.

Examples of cryptocurrency: Bitcoin and Ethereum

Where to Learn More about Fintech?

In this age of digital transformation, understanding what is fintech is crucial to a successful career in finance. To empower finance professionals around the globe to speak the new language of finance, CFTE has launched a pioneer Fintech Foundation Course, a fintech executive education program designed to provide an accessible and comprehensive overview of the landscape of financial technology to working professionals.

CFTE developed the course with 4 experts who know the industry inside out. CFTE’s co-founder and senior lecturer, Huy Nguyen Trieu, has led the Oxford fintech Programme and the HKU edX fintech MOOC. The executive program also featured exclusive insights from 16 Fintech CEOs, heads of innovation and global investors. These include:

• Rob Frohwein, CEO of Kabbage, an automated lending platform for small businesses with a unicorn valuation.
• Aurelien Menant, CEO of Gatecoin, a cryptocurrency exchange in Hong Kong.
• Anne Boden, the CEO of Starling Bank, a leading challenger bank in the UK.
• Claire Clamejane, Director of Innovation at Lloyds Banking Group

Start learning fintech now with CFTE and enter the world of finance 2.0!