5 FinTech Terms that you should know in 2015

In 2014, FinTech became a buzz word. In 2015, FinTech is one of the most promising industries. What do social transfers, digital wallets, biometric authentication have in common? Most of these are categorised as FinTech.

By definition, Financial technology, also known as FinTech, is a line of business based on using software to provide financial services. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.

However, business opportunities and reach for FinTech is far from just the financial or technology sides of the organization. Therefore, whether you’re a consumer, an entrepreneur, from the industry or a business owner, keeping up with the industry jargons is essential today. Here is a list of 5 FinTech terms you should familiarize yourself with if you are looking to stay up-to-date with the recent trends.


This is a form of digital or virtual currency that maintains security using cryptography. This security feature makes it difficult to counterfeit cryptocurrency. One significant feature of cryptocurrencies are that they are decentralised – they function independent of any central authority. This is why they are theoretically immune to government interference or manipulation.

Since cryptocurrency funds are transferred using public and private keys, they are easy and convenient, and do not involve the steep processing fees that are charged by most banks and financial institutions.

Launched in 2009, Bitcoin is one of the most popular digital cryptocurrencies.

Bitcoin works on intricate mathematical problem-solving software that enables people and businesses around the world to produce these online “coins”. The peer-to-peer Bitcoin network is owned by no one person or entity – it works with complete consensus among all users. Its transparency is one thing that sets Bitcoin apart from similar offerings in the market. Bitcoin operates on an open source software, which means that anyone can review and use the code. In the recent days, Bitcoin transfers have been hailed as a solution for many financial challenges – like lower remittance fees worldwide and even for reduction of fraud across transactions. However, Bitcoin has not come without its own share of controversy – in 2014, one of the biggest Bitcoin exchanges, Mt Gox, crashed overnight. Also, while they are a safer medium of transactions, Bitcoins are not as regulated as offical forms of currency, leading to concerns about how people are using bitcoins – possibly as a way for money laundering

Block Chain

Blockchain is essentially an open, transparent public ledger that records digital events. For example, the blockchain technology used by Bitcoin records every transaction ever processed, and this information is shared between all users. This enables a user’s computer to verify the validity of each transaction. The ledger is updated by consensus of a majority of the participants in the system, and once entered, information can never be erased.

The technology uses a tamper-proof data structure and specialised hardware to construct this vast chain of cryptographic data, thereby making it practically impossible to replicate. With its ground-breaking system of distributed consensus, blockchain can actually create a true record of events, past and present, in the digital world without compromising privacy. One can record the fact that the event happened, and even that it happened correctly, without exposing confidential details about the subject matter or the parties involved.

In 2015, Blockchain is hailed as the future of Fintech and possibly Wall Street. The technology can aid the effectiveness and use of complementary currencies. Beside cryptocurrencies and distributed payment systems, blockchain applications could include areas of finance where a central, trusted third party has traditionally been used, trade reporting, depository receipts, escrow accounts or trade finance

P2P Lending

Peer-to-peer lending is a system that enables individuals to borrow and lend money online without having to go through banks or any intermediary financial institutions. It is much like lending money to a friend, except that it operates on a much larger scale, involving thousands of people.

P2P lending is controlled online by startups like Lending Club, Zopa and Prosper. These companies work to secure relations between borrowers and lenders. Unlike banks, these companies do not require brick-and-mortar branches or thousands of employees to operate.While traditional microcredit interest costs remain higher than those of commercial banks in spite of significant donor funds, largely owing to transaction costs relative to small loan sizes, the rise of Web 2.0 and online social interactivity can change that.

Peer to Peer lending and Web 2.0 have two things in common. The first common denominator is that both of them are rather newcomers in their respective fields and growing fast. The second is that they are both based on mutual and social exchanges between people instead of centrally controlled communications and relationships.This is thus an extremely cost effective method of debt financing.

Done correctly, P2P lending provides better value to both borrowers and investors and is viewed as disruptive to banks. Most of the operations outside the USA are still undefined and largely unregulated, which makes this an area with huge opportunity


Tokenisation is the process of replacing sensitive data (like credit card details, bank transactions and registration numbers) with unique identification symbols that retain all the essential information about the data without compromising its security. This enables businesses to minimise the amount of data they need to keep at hand.

This is especially useful for small and medium businesses. Tokenisation helps these companies bolster the security of credit card and e-commerce transactions without having to worry about cost of compliance with industry standards and government regulations. Unlike other payment security features, tokenization is relatively easy to set up. One doesn’t need a lot of additional hardware since most of the changes happen on the payment processor’s side.

At Fastacash, we use Tokenisation to ensure that security for our clients and their customers always comes first. Tokenization can be the answer to securing not just payments, but other aspects of commerce as well, including the transmission and storage of electronic health records and age verification identity checks.

Messaging Commerce and Social Payments

 With smartphones becoming the norm, there have been interesting implications on commerce – this new wave is called messaging commerce where messaging apps bring the point of sale to the individual.

The best example here would be the We Chat model. With China’s increase in the market share of Smartphones, shopping using the mobile interface has risen from 25.9 percent of China’s total e-commerce market in the first quarter of last year to a current portion of 47.8 percent, putting it on track to surpass sales on PCs. WeChat works both for online sales, where the retailer takes money and goods or services are delivered; or offline, where retailers scan a QR code in store that has been generated by the app during the transaction. By teaming up with other apps WeChat has made it easy for users to pay for all kinds of services.

Messaging commerce also led to the rise of Social Payments. The Time Magazine mentions this as one of the “5 Trends That Will Change How You Use Social Media in 2015”. Currently Social Payments fall into 2 major categories: online purchases and peer-to-peer transfers.

Online Purchases: Earlier this year, both Twitter and Facebook began beta-testing “buy” buttons, which appear alongside certain tweets and posts and allows users to make purchases with just a click or two, without ever leaving the network. This helps customers make conversations and payments and for companies, allow for a more tangible view in terms of conversion from aware prospects to paying customers.

Peer to Peer Transfers: Social networks are also picking up with non-digital natives who are starting to understand its value especially for personal communication. It has been estimated that by 2017, the users of social networking platforms globally is estimated to cross 2.5 billion. For users of social and messaging networks globally, peer to peer transfers provide the next step of comfort and convenience in terms of transactions with friends and family, without leaving their favourite networks. Operators like Venmo or Snapcash are the biggest players in this space and social payments are gaining momentum fast, with Facebook also announcing Pay features within its messaging interface.

With the concurrent spike in popularity of mobile messaging apps, portion of total online time spent on social networks, and the referral power of social media, our guess is that it’s only a matter of time until social payment emerges as an option on each of the major networks. With Banks, Wallets and Retailers now being able to integrate social payments within their Apps, using API services like Fastacash, its now possible to provide easier and more convenient service to customers, faster than one can imagine. These services can enable both peer-to-peer transfers as well as online purchases, ensuring your customers have everything they need at one place.

Source: http://www.fastacash.com/5-fintech-terms-that-you-should-know-in-2015/