If you’re going to wrap your head around the nuances of the FinTech industry, it’s important to know some key phrases. In our last “Buying Into the Buzzwords” post, we talked about the cloud, digital transformation and open banking — a good place to start.
But there’s a lot more to know if you want to have deeper insight into the important conversations happening in financial technology. Here are three more key phrases you’re going to want to keep an eye on:
Blockchain:
Full disclosure — Zafin doesn’t (currently) work with blockchain technology. But like everyone else in FinTech, we are incredibly interested in the possibilities it provides the industry. It’s a game changer — and one you should be aware of.
Blockchain technology was originally developed to act as accounting ledgers for the cryptocurrency Bitcoin. It connects a network of computers, each acting as a “block” that will keep a record of transactions made on the network. Rather than a centralized authority keeping track, blockchain allows for a completely decentralized system making it incredibly difficult to hack, forge records or in any way tamper with the system.
What’s really cool about blockchain tech is that it’s not limited to cryptocurrencies. In fact, companies of all industries are scrambling to incorporate it into their systems. It’s theoretically possible to code any document into the blockchain and it has the potential to revolutionize the security of information transfer as we know it.
Machine Learning:
Along with artificial intelligence, machine learning is probably among the most used FinTech buzzwords. Where artificially intelligent computers acting independently is still a bit of science fiction, machine learning is happening right now — and is a major precursor to AI.
In essence, machine learning is the practice of allowing machines to learn, improve and optimize automatically, without having a human constantly inputting new data. This allows software to improve with all the advantages computers have over humans (notably speed of data processing) and improve programs beyond conventionally available methods.
While computers as of writing still haven’t attained the ability of self awareness, they’ve gotten tremendously good at optimizing programs automatically based on trial and error. In the FinTech world, this is huge because of the amount of customer data the banks have. The more data available, the better machines learn. This will revolutionize the way banks offer products to customers, and increase their ability to react to market changes.
Legacy Systems:
At its broadest interpretation, “legacy systems” might simply refer to older tech still in use for one reason or another. But in FinTech, a legacy system almost invariably refers to the core banking technology financial institutions rely on to keep bank accounts running. And when we say legacy we mean legacy — some of the software running your banking is 50 years old at least.
While FinTechs are often described as disruptors or competitors to banks, in fact many of us out there want to work with bank to improve their old technology. Legacy core banking systems can be extremely finicky, and replacing them both extremely difficult and obscenely expensive. A lot of FinTechs (including Zafin) work with banks to augment their core system without breaking it — letting banks do much more.
This is good for customers as well as banks because it means they can access the latest financial innovation without leaving the comfort of their traditional financial institution, and without the risk of their banking being interrupted by a core crash. A lot of the hottest financial technology being developed today is designed as a direct response to these aging legacy systems.
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If you’re interested in the latest happenings in financial technology, you’d do well to look out for these buzzwords. Want to learn even more about what’s going on in FinTech? Reach out to us today and chat with one of our experts.
About Zafin
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 Smith
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
