Blog post
August 2, 2016

FinTech jargon buster: the innovation shaping the future of finance

Innovation is the mother of new words, which is why FinTech entrepreneurs are fast creating their own language from robo-advisers to digital wallets. Whether you’re a master of FinTech lingo or confused by it, this glossary will give you a firm grasp of the latest concepts and buzzwords in financial technology. You’ll get bitesize definitions for the words changing our world, like algorithm, as well as those defining startup success, like cockroach. As the FinTech space grows and develops so will this library of pioneers, definitions and digital inventions. Welcome to the living FinTech glossary. . . Check back once in a while.



A centre or programme where FinTech startups are “incubated” through mentorship, workspace and sometimes the provision of finance. Some of the biggest and best in Europe include Startup Bootcamp, Barclays Accelerator, FinTech Innovation Lab, Seedcamp, Level 39, Anthemis, Bright Bridge Ventures, Unicredit Group EU, 3ds and Holland FinTech.


Often a fear inducing term associated with robot takeovers. When you break it down it seems far less daunting and obscure. In his book The Master Algorithm, Pedro Domingos offers a simple definition: “An algorithm is a sequence of instructions telling a computer what to do.” He goes on to explain, algorithms are reducible to three logical operations: AND, OR, and NOT. While these operations can chain together in extraordinarily complex ways, at core algorithms are built out of a simple rational.

If you want to read more about how algorithms are shaping the future, Slate magazine has some great reads.

Altfi/ Alternative finance

FinTech is part of the broader landscape of alternative finance. The Cambridge Centre for Alternative Finance describes altfi as “financial channels and instruments that have emerged outside of the traditional finance system such as regulated banks and capital markets.” 

The altfi market grew by £3.2 billion in 2015 according to Nesta, with debt and equity-based funding for real estate amounting to almost £700 million.

Bitcoin (BTC)

Bitcoin is a decentralised digital cryptocurrency that was invented by the pseudonymous Satoshi Nakamoto in 2008. In the past few years, Bitcoin has evolved from being a murky money of the digital underworld to an increasingly mainstream digital currency.

Bitcoin mining

In traditional systems, governments simply print more money when they need to. But in bitcoin, money isn’t printed at all – it is discovered. Miners use special software to solve maths problems and are issued a certain number of bitcoins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine. Mining also ensures fairness while keeping the Bitcoin network stable, safe and secure. Miners compete with each other to authenticate transactions in the blockchain with a digital wax seal called a hash. A hash is created by taking the information in a block of transactions, and applying a mathematical formula to it, turning it into  random sequence of letters and numbers. Each hash is unique. If you change just one character in a bitcoin block, its hash will change completely. It confirms that this block – and every block after it – is legitimate, because if you tampered with it, everyone would know. So, that’s how miners ‘seal off’ a block. Every time someone successfully creates a hash, they get a reward of 25 bitcoins, the blockchain is updated, and everyone on the network hears about it.



A blockchain is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority. In the context of bitcoin, the blockchain is the general ledger, where people’s buying and selling of bitcoin is recorded. It is a long list of blocks, which is why it is known as the ‘blockchain’. It’s distributed across several, hundreds or even thousands of computers around the world. Every time a new batch of transactions is authenticated and encrypted with its own unique hash by the bitcoin miners, it is added to the ‘chain’ as a “block.” It’s appeal stretches beyond FinTech into government and diamond mining, where it’s being used to end the trade in conflict diamonds. Today, more than 40 top financial institutions and a growing number of firms across industries are experimenting with distributed ledger technology as a secure and transparent way to digitally track the ownership of assets, a move that could speed up transactions and cut costs while lowering the risk of fraud. 

Card not Present 

A card not present transaction is any credit/debit card based transaction that is made without a physical card being presented to the merchant. Online payment transactions are an example, where only the card details are provided to process the transaction. The customer never produces their card to make the payment. Most mobile payment transactions are card not present.


Another word for digital currencies. The first cryptocurrency to be created was Bitcoin in 2009. Since then, numerous cryptocurrencies have been created such as, Litecoin, Namecoin, Stellar and Dogecoin, which started as a joke combining Bitcoins and the doge meme and is now one of the most talked about currencies behind Bitcoin. Encryption techniques regulate the generation of units of cryptocurrency and verify the transfer of funds. Cryptocurrencies are not issued by a central bank, making them theoretically immune to government interference or manipulation. AKA altcoins/ cryptocoins.

Digital challenger bank

It’s a broad term, but basically any new bank that has been granted a banking licence since 2010 is classed as a challenger bank. The latest innovators are using technology to help customers get maximum benefit from and even enjoy their relationship with a bank. Four leading digital startup banks are Atom Bank,  Mondo, Starling and Tandem.


Ethereum is a platform that is intended to allow people to easily write decentralized applications (dapps) and smart contracts using blockchain technology. A smart contract is the simplest form of decentralized automation, and is defined by Vitalik Buterin, Ethereum co-founder, as follows: “a smart contract is a mechanism involving digital assets and two or more parties, where some or all of the parties put assets in and assets are automatically redistributed among those parties according to a formula based on certain data that is not known at the time the contract is initiated. [e.g.] A wants to pay $500 to B to build a website. The contract would work as follows: A puts $500 into the contract, and the funds are locked up. When B finishes the website, B can send a message to the contract asking to unlock the funds. If A agrees, the funds are released. If B decides not to finish the website, B can quit by sending a message to relinquish the funds. ”

A decentralized application is similar to a smart contract, but different in two key ways. First of all, a decentralized application has an unbounded number of participants on all sides of the market. Second, a decentralized application need not be necessarily financial, it can be a company or service that isn’t controlled by any single individual, board or other central entity. These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property. Proponents of the technology are envisioning ways to replace things that today require a centralized leadership, from businesses and services to governments.


As described on Ethereum’s website, Ether is “a necessary element — a fuel — for operating the distributed application platform Ethereum.” It is the native digital currency of the Ethereum platform used by clients of the platform to pay for requested operations by machines and as compensation for the resources contributed when building applications.

FX (Foreign exchange, Forex)

 In the context of FinTech, FX is a dynamic subsector where companies are offering ordinary people and businesses ways of saving considerable amounts on foreign exchange rates when they travel or move abroad. Revolut, Curve, Currency Fair and Transferwise are some of the forerunners. Startup digital banks like Mondo also offer low exchange rates.

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Machine learning

Machine learning is an example of technology using algorithms. Unlike conventional computer programs, machine-learning algorithms modify themselves to better perform their assigned tasks. This makes them sound a little scary, as if they were alive. To be clear, they’re not! Learning and Machine vision (below) are some of the most recent applications of algorithms.

Machine Vision

A key goal of many algorithms, machine vision is where computers try to identify the elements of a picture. It’s the kind of system that can tell you (or claim to) how hot you look in a picture or identify the most inventive paintings of all time.

Mobile/ Digital wallet

 A mobile or digital wallet is a way to carry your credit card or debit card information in a digital form on your mobile device. Instead of using your physical plastic card to make purchases, you can pay with your smartphone, tablet, or smartwatch. This can be either using cryptocurrency or real money which is often pre-loaded onto a digital account.

In theory, according to the BBC, it is safer to use than a physical credit or debit card as the owner does not need to reveal their account number at point of purchase, and even if someone was able to intercept the transmitted encrypted information, they could not re-use it to authorise further payments. Android pay launching in the UK in the next few months and Apple Pay are two of the big players. Google Wallet has a tap-to-pay feature similar to Android pay, but Gizmodo report from now on it will be marketed as a way of transferring money between friends over the Internet.

Near field communication (NFC)

 This is the technology behind digital wallets, tap to pay cards and tapping a debit card as opposed to an Oyster card to pay for the tube. It is a set of communication protocols that enable two electronic devices, one of which is usually a portable device such as a smartphone, to establish communication by bringing them within 4 cm (2 in) of each other.

Smart contracts

 Smart contracts are computer protocols that facilitate, verify, or enforce a digital contract. The idea is that these programs will eventually be used to replace lawyers and banks when handling common legal and financial transactions.

Other common terms & phrases used in the FinTech sector

Bleeding Edge

As Quin Woodward Pu founder of Audienti describes it: “An extremely pretentious way of saying on the vanguard since every person in startups thinks he or she is there.”


Using “friends and family” cash to get going.


Cockroach is scuttling in to challenge the term Unicorn as the definitive word for a startup that reaches a valuation of a billion or more. It underpins a VC investment strategy for investing in billion dollar startups focused on resiliency. Whilst a Unicorn achieves meteoric almost magical growth, cockroach achieves slow, steady, sustainable growth: “Unicorn, it’s a mythical beast, whereas a cockroach, it can survive a nuclear war,” says Tim McSweeney, a director at technology-focused merchant bank Restoration Partners in Business Insider.

Disruptive Technology

Something that completely changes the way people do something (e.g. Uber/Lyft vs. Taxis or Amazon vs. in-store shopping).



First Mover Advantage. Not every startup is the first to market, but if you are, you want to point that out to investors. First to market also means educating your market as you go,  which is more costly than it would be in a market with clearly established demand.


A Minimum Viable Product (MVP) is: “[the] version of a new product, which allows a team to collect the maximum amount of validated learning about customers with the least effort” — Eric Ries, Silicon Valley Entrepreneur.

Seed Capital

Initial capital used to start a business, it usually comes from friends and family and is relatively small.

Series A

A company’s first round of venture capital financing. It is the

beginning of the growth stage for the business.

Series B

A company’s second round of venture capital financing.


Cowboy Ventures founder Aileen Lee coined the term in 2013 to describe startups with billion dollar valuations. With some startup valuations in the US hitting $10B+, “Decacorn” is getting thrown around.

This glossary was first published in April 2016 and was last updated on 2 August 2016.

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