Banking Glossary
Confused by banking jargon? Here is a simple guide to the most common terms in fintech and digital banking.
A
- APY (Annual Percentage Yield)
- The real rate of return earned on a savings deposit or investment taking into account the effect of compounding interest.
- AML (Anti-Money Laundering)
- Laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.
C
- Challenger Bank
- A bank that challenges the 'big four' traditional banks. They are often digital-first but have full banking licenses.
- Cold Storage
- An offline wallet used for storing cryptocurrencies. It provides the highest level of security against hacking.
E
- EMI (Electronic Money Institution)
- A financial institution authorized to issue electronic money but not allowed to lend money or pay interest on deposits (unlike a full bank).
F
- FDIC (Federal Deposit Insurance Corporation)
- A US government agency that insures deposits in member banks up to $250,000 per depositor.
- FSCS (Financial Services Compensation Scheme)
- The UK's deposit guarantee scheme, protecting up to £85,000 per person per firm.
K
- KYC (Know Your Customer)
- The process of a business verifying the identity of its clients and assessing potential risks of illegal intentions.
N
- Neobank
- A direct bank that operates exclusively online without traditional physical branch networks.
O
- Open Banking
- A banking practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of APIs.