Like any buzzing industry FinTech is filled with buzz words that are thrown around with little regard to who actually understands them. While some people in the industry might have an inkling given their use in context, these words and phrases can still seem vague.
For those looking to fully immerse themselves in the financial technology space, being able to define the key industry vernacular is essential. Here are three terms you’ve probably come across, and a simple explanation of what they are:
You don’t have to be a FinTech aficionado to know about the cloud. It’s changing every industry and allowing for heretofore unknown flexibility of data access.
Here’s the simplest way to explain it — your data used to be stored on servers located on your premises, and accessed directly. Now it’s stored offsite on other servers and can be accessed from anywhere. Because of data’s seeming omnipresence, it’s called “The Cloud.” Referring to it as “other people’s servers” just doesn’t have the same ring to it.
The cloud is revolutionizing FinTech because it’s facilitating cost effective relationships with financial institutions of all sizes. Without the enormous up-front costs of deploying on-prem servers and the IT costs associated with maintaining them, banks are more easily able to access the latest and greatest tech (like our very own Zafin Cloud product, for example.)
We recently wrote a piece on Digital Transformation, and now we’re talking about it again. It really is a big deal, and the banks are well aware of it.
At its core, Digital Transformation is about the wide scale adoption and implementation of new technology to spur growth and remain relevant to increasingly digital savvy consumers. It represents a paradigm shift from the old processes to the new, tech-influenced way of doing business.
For financial institutions, this means developing partnerships with technology companies to ramp up the speed at which they can innovate. Rather than investing the prohibitively expensive/time consuming process of developing new technologies in-house, these FinTech partnerships are helping banks stay competitive in a dynamically digital industry.
People are expecting a level of flexibility from traditional institutions that has never been available before. As part of a digital transformation to cater to the needs of a evolving customer base, financial institutions are adopting “Open Banking.”
In a nutshell, Open Banking refers to the more fluid transfer and sharing of customers’ financial data to make it easier for them to work with multiple financial institutions. In fact, sometimes Open Banking is simply called “open bank data.”
Traditionally, customer financial data was kept siloed in the institution they were first with. Transferring accounts, funds and investments was extremely difficult. It’s obvious that as FinTechs and banks are working to improve the financial lives of people, Open Banking is going to be an increasingly important initiative.
Sometimes buzzwords are more than just the buzz. In the case of FinTech, some terms are reflecting the evolution of an industry. But to fully realize their impact, you first need to understand them.
Cloud, Digital Transformation and Open Banking are all essential terms to the current financial conversation. Want to learn about how we’re working with institutions to implement these and other ideas? Don’t hesitate to reach out!
Zafin (@zafin) is a leading financial technology provider that enables banks to form richer, more personalized client relationships. Built from the ground up for financial services, its platform empowers banks to enhance revenue and operational efficiency. Founded in 2002, Zafin sits among North America’s top FinTech companies, and is trusted by retail and corporate units at some of the largest banks worldwide. Headquartered in Toronto with global offices, Zafin has a proven track record with a 100 percent client retention rate as validation.
Cam is the Digital Communications and Marketing Coordinator at Zafin. With a background in journalism and a passion for blogging, Cam strives to tell compelling digital stories. At Zafin he will share the latest trends and news in the FinTech world, and share the Zafin role as leader in the industry. Follow him on Twitter @CamSmoth