Breaking Down the Buzz in Fintech
Everyone is disrupting the industry. Everyone is a startup. Everyone is exploring blockchain tech. And everyone is on their way to becoming the next unicorn. Right!? Wrong! We’re cutting through buzz and breaking down the meaning of these overused fintech term.
Check out our ‘glossary of buzz’ before giving into the hype and inaccurately describing your company.
Fintech: A computer-based technology enabling the banking and financial services industries. Fintech speeds up traditional processes via algorithm and code, unlocking capabilities that humans either can’t do or that are incredibly cumbersome in terms of time and resources.
Startup: There are many definitions of what makes a startup floating around. However, we think Alex Wilhelm with TechCrunch is spot on with his “50, 100 or 500 rule.”
–$50 million revenue run rate (forward 12 months);
-100 or more employees;
-Worth more than $500 million, on paper or otherwise.
Unicorn: A (true) start-up company (see definition above) valued at more than one billion dollars.
Disrupt: The process of a displacing an established technology or traditional process with a technology capable of doing the same thing in a fraction of the time or doing something that has never been done before.
Artificial Intelligence (AI): A computer-based system powered by complex algorithms enabling the ‘machine’ to perform tasks normally requiring human intelligence. This includes tech capable of visual perception, speech recognition, decision-making and language translation.
Machine learning: AI intelligence capable of automatically learning from experiences and improving upon processes without being explicitly programmed by accessing and utilizing data. This falls under the umbrella of AI – all machine learning is AI, but not all AI is machine learning.
Fully-automated: Many companies claim systems are fully-automated when they simply enable processes to be done via the web. This is not enough. If you claim full automation, the technology should do work in place of manual data input. Often, this involves data mining, when computer systems examine large data bases to generate information.
E.g. Instead of a human filling out a 10-page mortgage application, they only respond to five questions, which are used to identify the individual and gather all needed documents to complete the forms – from social security numbers to employment history and income verification.
Blockchain: A digital ledger that keeps track of transactions and processes and requires validation via a peer-to-peer (P2P) network. Once a transaction is input into the ledger, third-party coders verify the legitimacy of the transaction. When confirmed, the ‘block’ containing this data is solidified – no one can alter or change a block once it is recorded in the ledger. Every subsequent transaction builds upon the block before it, and records transactions chronologically and publicly.
Cryptocurrencies: Digital currency that is encrypted, recorded and regulated via a public ledger, such as the blockchain. The ledger verifies fund transfers through third parties, allowing the digital currencies to operate independently of a central bank. It enables real-time monetary transfers without need for currency conversion.
Robo-advisors: Digital platforms automating investment and financial planning by way of algorithm-driven technology that requires little to no human supervision. These new-age advisors typically collect investor information relating to their financial situations and future goals. This information is then analyzed in conjunction with market data to weigh risks and opportunities based on investors’ risk tolerance, ultimately used to offer financial advice or automatically invest client assets.
To preserve the meaning and impact of these ‘buzz words,’ we need to start using them as intended!