INTRODUCTION
Fintech is changing how we handle money,from online banking to cryptocurrency.but with innovation comes a flood of hard terms that can be confusing.in this guide,I'll break down common fintech jargon into simple interpretations with real-world examples.
COMMON FINTECH TERMS
1.API(Application Programming Interface)
API allows different apps or system to communicate with each other.
*Example*:when you use a budgeting app that connects to your bank account,it's using a banking API to fetch your transaction data.
2.BLOCKCHAIN
A decentralized,digital ledger that records transactions surely.
Example:Bitcoin transaction are stored on a blockchain,preventing fraud or double spending.
3.KYC (Know Your Customer)
This is a process where financial institutions verify a user's identify,before allowing any transactions.
Example:when you sign up for an online bank,they ask for ID and proof of address- that's KYC.
4. DIGITAL WALLET
This is an app or online service that keeps payment information and allows digital transaction.
Example:Google pay,pay pal all this are digital wallet etc.
5. SMART CONTRACTS
Self-executing contracts with terms directly written into code usually on blockchain.
Example: A smart contract can automate rent payment between tenants and landlord,removing the need for a middle man.
6.P2P( peer-to-peer) lending
This is a way for individual to lend money to another person without using a bank.
Example: platforms like lending club allows people borrow money directly from investors.
7.EMBEDDED FINANCE
Financial services integrated directly into non-financial platforms.
Example: when you save your card in apple pay it replaces your actual card details with a token, making transaction safer.
8.EMBEDDED FINANCE
Financial service integrated directly into non-financial platform
Example:when you save your card in Apple pay,it replaces your actual card details with a token,making transaction safer.
9.BNPL( Buy Now, pay later).
A payment option that allows consumer to buy a products and pay for it in installment.
Example:when you use After pay split a purchase into four payment,your using BNPL.
BENEFIT OF FINTECH
- CONVENIENCE:Many fintech service are available online or via mobile apps.
2.COST-EFFECTIVE:Technology can help reduce fees to make financial service more affordable.
3.SECURITY:Modern fintech solutions often use advanced encryption and block chain technologies to ensure the security and privacy of financial transaction.
CONCLUSION
Fintech doesn't have to be complicated,understanding this terms will assist you navigate financial apps and digital payment .
"What Fintech term have you always wondered about? drop a comment below!
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