Glossary from A to Z to understand the new world of personal finance
Grow Your Business, Not Your Inbox
It is common to hear and read more and more about transactions, payments and digital finance, as well as QR codes, point of sale terminals and online credits. The reason is a word, or rather, an industry: fintech (pronounced fintec, without the ch at the end). The fintech era is here to stay and make financial life more comfortable, but if you still don't know what it is about, this glossary is for you.
App A: Forget the offices and especially the lines. To be a fintech user, you will first have to download an application (app) and do everything from your phone.
B for Blockchain: It may require a separate glossary, but blockchain or blockchain is a technology that was born for Bitcoin and now gives fintech the opportunity to carry out transactions in a safe, independent and economical way.
C for Crowdfunding: It means collective financing or funding. In Mexico, fintech companies that have crowdfunding as a business model are being regulated: IFC by Collective Financing Institutions. The other fintech model that is being legalized is that of IFPEs, by Electronic Payment Fund Institutions.
D for Digitization: It is the essence of fintech. Digital money, digital transfers, digital payments and a digitized financial life without leaving home.
E for Entrepreneurs : The founders of fintech companies are entrepreneurs, but also fintech solutions came to make life easier for entrepreneurs in general by offering them new payment methods, financial services and point of sale terminals to grow their businesses without the obstacles of traditional financial institutions.
F for Fintech : You could not miss the basic definition of fintech, an acronym for the words finance and technology. It was born to refer to technology in finance and today it gives its name to a whole sector of companies that offer financial services and products through technology. They are in contrast to traditional banking institutions, although banks also use financial technology to serve their customers.
G for Geolocation: If you want to use the services of a fintech, you have to activate your location. This makes it possible to combat identity theft and money laundering. Since 2021 it is also law for banks, so do not feel it as an invasion of your privacy.
H for History: If you suffered rejections at banks because of your history, you should know that fintech companies do not care. You can open accounts, receive loans and carry cards without worrying about previous behavior or the hated credit bureau.
Fintech is the acronym of the name finance and technology, financial technology in English / Image: Depositphotos.com
Inclusion I: What fintechs really offer is true financial inclusion. More than half of the population lives without access to the traditional banking system and you cannot imagine (no) access to credit. Fintechs have the potential to include millions of underserved people.
J for Players : A greater number of players or players in the market improves competition and encourages fintech companies to develop innovative products for users. As the sector continues to grow, financial inclusion will also increase.
K for KYC: They are the acronym for Know Your Customer or Know your customer. Fintech companies request photos of documents or facial recognitions that allow them to authenticate identities. Sometimes they are annoying, but it is another process that cannot be avoided.
L of Fintech Law: In 2018 a law was approved to regulate fintech companies and Mexico is one of the most advanced countries in the region in terms of legislation. It specifically regulates crowdfunding fintech (IFC) and those that operate with electronic payments (IFPE).
M de Mercado Pago: It is the largest fintech in Latin America. It operates as a super app (payments, collections, cards, accounts, transfers, investment, recharges and credits) and offers financial services to users and sellers alike. Mercado Pago's digital account in Mexico has more than one million active users.
N for Neobanco: It is the term used to recognize fintech companies that offer services, accounts and cards without being banks. In English they are known as challenger banks . They are digital “banking” services without having to waste time in branches.
Or Open banking: It means open banking and is vital for the growth of fintech companies. Under your authorization, your bank details will be shared with other institutions so that they can offer you products adapted to your profile. Banks were always the owners of your data; With Open Banking , you are the owner and you share them.
P for P2P: It stands for peer-to-peer , and refers to peer-to-peer transactions. Financial technology and fintech make it easy to send and receive money immediately from person to person with no additional fees or hassles. A basic function of all fintech.
Q for QR: A payment method born in the 90s and revived with the pandemic. Banco de México developed CoDi for these payments, but it is Mercado Pago that leads the QR technology with more than 20 thousand establishments nationwide that accept payment from the phone without contact or delay. There are always discounts in your app.
R for Radares: They are not real, but studies by Finnovista , the main institution in Latin America that studies fintech. Every year they publish the Fintech Radar by country and Mexico constantly exchanges first and second place with Brazil. By 2020, there were 441 fintech born in Mexico.
S for Startups: Term to refer to startups. It is a term related to the temporality and size of the new company. Almost all fintech is born as a startup; If you manage to raise more money and demonstrate scalability, move on to the Scaleup level.
T de Tecnología: It is the “surname” of the fintech companies. For the development of new technologies, many countries propose a regulated “sandbox”, a “sandbox” where fintech companies can test their innovations before implementing them.
- To find out more: We have another unicorn! The Mexican fintech Clip reaches a valuation of 2 billion dollars
U for Unicorn: It is the term to recognize companies that reach a value of more than one billion dollars. In Mexico there are four unicorns and two of them are fintech (Bitso and Clip); GBM, the Mexican Stock Market Group, made the leap since it began to apply financial technology to its traditional business.
V for Venture Capital: It is the risk capital or financing that investors give to new companies, especially startups . Many promising fintechs need this first injection of money from risky investors.
W for Wallet: It is the virtual wallet within the fintech companies. A physical wallet is no longer necessary if operations such as telephone recharges, service payments, money transfers and other common financial transactions can be carried out in the app.
X for X-Sell: It is cross-selling , or cross-selling. A common term in marketing and business, which seeks to offer an existing customer, a complementary service to the one they already have. For fintechs, especially those that offer various financial services, cross-product is vital to scale the business and better serve the customer.
And YA! : Fintech are not the future, their time is now and they came to change personal finances forever. If you don't have one, don't wait any longer. The Y was difficult, as you may have noticed.
Z for Zen: The state you will achieve by never having to visit a bank again. Fintech digital transactions are going to give you a lot of peace. Z was more difficult, luckily the glossary is over.