Fintech Glossary Fintech domain involves lots of jargons and terms not easily understandable by people not in this business. Here, we will look at some important terms that we think you should know. Anti-Money Laundering (AML) Application Programming Interface (API) Customer Due Diligence (CDC) Encryption Know Your Customers (KYC) Mobile Payment Payment Gateway P2P Lending Underbanked Anti-Money Laundering (AML) Anti-Money Laundering (AML). There are rules and regulation to follow to discourage flow of illegal money. State Bank of Pakistan has formulated these rules for all financial services providers to follow. API Application Programming Interface (API) is an interface that allows companies to integrate with each other. For example, you develop a software that calculates complex mathematical problem but you don’t want to share how it works with anyone else. In such case you can develop an API that other programs can call with their data. In return, your software calculates the numbers and returns the results. APIs ensure security of your software and data and only trusted parties can use them. Customer Due Diligence (CDD) Customer Due Diligence (CDD) is a process to assess a customer’s risk profile. Organizations need to check customer’s background to ensure that establishing relationship with this customer is within range of acceptable risk. This proactive approach helps organizations avoid fraud activities. Encryption While sharing financial data, its very important to encode it so that it cannot be read by anyone not intended. This is very critical for fintechs to ensure security of their data and maintain privacy of their customers. Know Your Customers (KYC) Know Your Customers (KYC) is a very common term being used in Fintechs. Before getting into any agreement with your clients related to financial transactions, you need to know them well. Like their CNIC, Address, Nature of Business etc. This is required to minimize the risk of business. Mobile Payment Money transfer for the payment of services and goods made through mobile phones are called Mobile Payments. For example, Mobile Wallets and Money Transfer services offered by Finja, JazzCash, Easypasia are all mobile payments. Payment Gateway Payment gateway is a software that lets website, apps and Point Of Sale devices to accept payment from credit and debit cards. For example, when you make a purchase form daraz.pk and pay with your credit card, there is a payment gateway that facilitates this payment. Payment gateways are complex softwares and have detailed checks and controls at backend. P2P Lending Traditionally, when people need money they go to banks or their friends and family. A new model of lending is emerging where people who don’t know each other directly lend money. This is based on some complex analysis of individuals to ensure risk is in control. One form of P2P Lending is Crowd Funding where people put up details on website about their needs and people give them money. Underbanked People who don’t have access to banking services or they don’t have access to all the banking services are called unbanked or underbanked respectively. In Pakistan, only 12 to 16 million people have bank accounts. Rest of the population is unbanked. Fintechs are basically aimed at serving the unbanked and underbanked population by giving them easy access to services. This list is not conclusive as there are many more terms that you will come across. Feel free to suggest more terms to the list to make a big resource for everyone’s benefit.