FaaStrak is a FinTech platform for equipment leasing and financing. But what exactly is FinTech? And what does it mean?
We have created a guide to better understand FinTech and other terms within the industry!
What is FinTech?
FinTech stands for “finance technology.” A lot of consumers are unaware they are using products/services that classify under FinTech. This industry creates and manages software within the financial sector. This is an incredibly broad term, and it could mean any type of service/product that enables banking and financial services.
Technology allows us to create new financial services for vendors and businesses. Most services within FinTech include categories such as personal financing, retail, investments, lending, cryptocurrencies, consumer banking, etc. These tools/solutions are being used to disrupt traditional financial markets.
With the rise of digital services, businesses are looking for speed, efficiency, and easy access. Many people have already switched to digital and mobile platforms for their personal finance use. Companies within the finance technology industry are providing scalable tools and software solutions.
1/3 of consumers around the world use at LEAST two FinTech services. This could be as simple as a payment app or more complex services including A.I.
Who Uses FinTech?
Essentially, there are four user categories for FinTech:
- B2B (business to business) for banks
- clients/customers of these financial institutions
- B2C (business to consumer) for smaller companies
8 Key Words to Know
We have compiled a list of eight FinTech buzzwords to help you better understand the industry:
Blockchain: Blockchain is a digital ledger that keeps track of all digital transactions in bitcoin (or cryptocurrency). This information is stored within a network of computers. When a group of records is encrypted by the network, it is added as a “block” (hence the name).
Encryption: Encryption is the coding of messages. With a network like blockchain, data is formulated into a code. Therefore, a key (very much like a elongated password) is needed to turn the code back into data.
API: API stands for “application programming interface.” Essentially, it is a set of rules that allow two pieces of software to communicate. Have you ever tried to move data from one application to another? Well, API lets you do that!
P2P: P2P stands for “peer-to-peer.” Customers can secure money from lenders while bypassing banks. For example, two or more computers can be connected and share resources without going through a separate server computer.
Bitcoin: Bitcoin is extremely popular in the FinTech news. Bitcoin is a type of cryptocurrency that enables payment in a P2P network. Essentially, it is promoting digital money. It is not controlled by one central entity, which is attractive to most users. Bitcoin is cash for the internet.
Payment Gateway: This is a provider that authorizes credit card payments. This connects the payment portal on a website to a financial institution.
KYC: KYC stands for “Know Your Customer.” This term relates to authentication. It is important for businesses to be able to identify (and verify) their customers. KYC is used in anti-money laundering regulations.
KBA: Finally, KBA stands for “Knowledge-Based Authentication.” This is another way to verify identity for a client or company. An example of KBA would be a secret question presented to a user after logging into a specific account. The FinTech industry relies heavily on password protection. Financial security is important within all digital transactions!