Introduction to FinTech, Key Technologies, and Operational Models

Vocabulary practice flashcards covering core definitions across all four units of FinTech, including ecosystem development, key technologies, wealth management innovations, and digital banking operational models.

FinTech (Financial Technology)

The innovative intersection of finance and technology where digital tools and platforms disrupt traditional financial services to deliver efficient, accessible, and customer-centric solutions.

Glass-Steagall Act (1933)

A U.S. law passed following the Great Depression that mandated the separation between commercial and investment banking to reduce systemic risks.

Challenger Banks

Online-only or mobile-only banking institutions, such as Atom Bank, Monzo, and Starling, that offer agile, customer-centric banking without physical branch networks.

Payment Services Directive 2 (PSD2)

A European Union regulation that mandates open banking and requires incumbent financial institutions to expose their services through Application Programming Interfaces (APIs).

RegTech

Regulatory technology solutions used by financial institutions and FinTech startups to automate and manage regulatory compliance efficiently without incurring heavy operational costs.

SupTech

Supervisory technology adopted by regulatory authorities to enable data-intensive, AI-driven monitoring systems for tracking financial risks and compliance in real time.

Regulatory Sandbox

A controlled framework established by regulators that allows FinTech firms to test innovative financial products and business models in low-risk environments under direct supervision.

Machine-Executable Regulation

The practice of encoding financial regulations directly as computer code to enable automated compliance, near-instant reporting, and lower operational costs.

Blockchain

A shared, immutable distributed ledger technology (DLT) that facilitates recording transactions and tracking digital or physical assets across a peer-to-peer network.

Proof-of-Work (PoW)

A resource-intensive blockchain consensus mechanism pioneered by Bitcoin where nodes compete to solve complex cryptographic equations to mine and validate new blocks.

Proof-of-Stake (PoS)

A blockchain consensus mechanism where dedicated validator nodes validate transactions based on their held stake rather than through competitive cryptographic mining.

Permissionless Blockchain

A public blockchain network with no central gatekeepers, allowing any individual to join, validate transactions, maintain a full ledger copy, or participate in mining.

Permissioned Blockchain

A restricted blockchain network where explicit permission is required to join, operate nodes, validate transactions, or modify system protocols.

Consortium Blockchain

A blockchain model governed by a group of trusted organizations across different corporate entities to facilitate private, shared enterprise transactions.

Hybrid Blockchain

A blockchain system combining private access controls with selective public visibility to meet enterprise privacy needs while maintaining regulatory transparency.

Propensity Model

A statistical modeling approach used by AI systems to evaluate processed data and predict the probability of specific future outcomes or customer responses.

Reactive AI

The most basic class of artificial intelligence that cannot store past memory and operates solely by reacting to immediate data inputs with predictable outputs.

Limited Memory AI

An AI system capable of temporarily storing historical data inputs to make short-term operational decisions, such as self-driving autonomous vehicles.

Theory of Mind AI

A theoretical level of artificial intelligence designed to comprehend that humans and animals possess internal thoughts, emotions, and mental states that govern behavior.

Self-Awareness AI

A theoretical advanced stage of artificial intelligence possessing human-level consciousness, self-perception, and independent decision-making capabilities.

Ransomware

A type of malware that locks files or computer systems through encryption and demands ransom payments from victims to restore access.

Spyware

Malicious software that covertly installs on computing or mobile devices to monitor online activities, record calls, read messages, and gather sensitive login details.

Cyber Espionage

A cyberattack mechanism utilizing Advanced Persistent Threats (APTs) to secretly target enterprise or government networks and extract classified data over long periods.

Distributed Denial-of-Service (DDoS)

A cyberattack where thousands of compromised IoT devices across multiple IP addresses flood a target system simultaneously to render it unresponsive to users.

Endpoint Security

A centralized IT security system used by enterprises to manage antivirus, VPN, data encryption, and software across all device endpoints connected to its network.

Identity and Access Management (IAM)

An IT security discipline responsible for verifying user identities, granting access permissions via authentication, and monitoring application activity across enterprise systems.

Incident Response Management (IRM)

A security process enabling organizations to identify cyber threats promptly, mitigate active attacks, and minimize financial damage.

Data Mining

An analytical method that sorts through large datasets to identify hidden patterns, isolate anomalies, and group relevant data into structured clusters.

Predictive Analytics

The use of historical organizational data and statistical models to forecast future events, evaluate potential risks, and identify business opportunities.

Multicloud

A cloud deployment strategy where a customer engages two or more distinct cloud service providers to utilize specialized features or mitigate single-vendor dependency risks.

Robo-Advisor

A digital platform that provides automated, algorithm-driven financial planning and investment management services with minimal human oversight.

Tax-Loss Harvesting

An automated investment tactic employed by robo-advisors to sell underperforming securities at a loss to offset capital gains tax obligations for investors.

Modern Portfolio Theory (MPT)

A classic mathematical portfolio framework utilized by robo-advisors to construct passive, index-based investment portfolios optimized for given risk levels.

Socially Responsible Investing (SRI)

An investment strategy that selects companies according to Environmental, Social, and Governance (ESG) criteria while excluding harmful industries like alcohol or tobacco.

Social Investing

An investment approach specifically intended to generate both measurable positive social impact and sustainable financial returns.

Fractional Share

A portion of an equity share that allows retail investors to purchase partial units of high-priced securities proportionally to their available investment capital.

Rupee-Cost Averaging

The practice of investing fixed monetary amounts at regular time intervals regardless of share prices, helping smooth out the average cost per share over market cycles.

Peer-to-Peer (P2P) Insurance

An insurance model where a collective group of policyholders pool their premiums to cover shared losses, with excess funds returned or donated to charity.

On-Demand Insurance

An app-based coverage model allowing users to activate or deactivate protection in real-time, paying fees strictly for the active duration or usage period.

Digital Wallet

An electronic software application that stores payment cards, identification details, loyalty cards, and invoices to execute mobile and online transactions.

Buy Now, Pay Later (BNPL)

A point-of-sale financing model that splits purchase prices into scheduled interest-free installments, paying merchants upfront while collecting repayments from consumers over time.

Neo Banks

Digital-first banking institutions operating entirely online without physical branch networks, prioritizing rapid paperless onboarding and AI-driven personalization.

Embedded Finance

The seamless integration of financial products, such as payment gateways, credit options, or insurance, directly into non-financial consumer platforms.

Peer-to-Peer (P2P) Lending

A crowd-lending framework connecting borrowers directly with individual or institutional lenders via online platforms that manage risk profiling and terms.

Crowdfunding

A method of raising capital for ventures, causes, or startups by pooling small monetary contributions from a large number of individuals through online platforms.