Understand the language of innovation, automation, and digital lending

The fintech world is booming, reshaping how businesses and consumers interact with financial services. Whether you're a lender, an NBFC, a developer, or someone curious about the future of finance, understanding the core fintech vocabulary is crucial.

At iDreamBiz, where we build end-to-end digital lending journeys and integrate powerful third-party APIs, we often come across terms that are essential for anyone navigating the fintech landscape.

So here’s our curated list of the top 30 fintech terms explained simply.

 

1. Digital Lending

Digital lending refers to the use of technology to automate and streamline the process of loan origination, approval, and disbursement. It eliminates paperwork and reduces turnaround time for both lenders and borrowers.

 

2. API (Application Programming Interface)

An API allows different software systems to communicate and exchange data. In fintech, APIs are used to integrate services like KYC, credit checks, and payment gateways seamlessly.

 

3. eKYC (Electronic Know Your Customer)

eKYC is a digital method to verify a customer's identity using Aadhaar or other government-issued documents. It speeds up the onboarding process while maintaining compliance.

 

4. Payment Gateway

A payment gateway authorizes online payments made through credit cards, UPI, wallets, etc. It’s a bridge between a customer’s payment method and the merchant’s bank.

 

5. UPI (Unified Payments Interface)

UPI is a real-time payment system in India that enables instant bank-to-bank transfers using mobile apps. It supports both peer-to-peer and business payments.

 

6. eMandate

eMandate allows automatic deductions of payments like EMIs from a customer's bank account. It simplifies recurring payments and ensures timely collections.

 

7. Credit Bureau

A credit bureau collects and maintains credit histories of individuals and businesses. Lenders use this data to assess loan eligibility and risk.

 

8. Loan Origination System (LOS)

LOS is a platform that manages all steps of the loan application journey — from initial application to approval. It ensures transparency and compliance.

 

9. Loan Management System (LMS)

LMS handles the post-disbursement phase of a loan. It tracks repayments, interest calculations, and overdue amounts.

 

10. Risk Assessment Engine

This system analyzes customer data to assess creditworthiness and risk. It helps lenders make informed lending decisions quickly.

 

11. Account Aggregator (AA)

AA is a regulated framework that allows users to share their financial data securely with third parties, with their consent. It promotes data-driven lending.

 

12. Buy Now Pay Later (BNPL)

BNPL is a short-term financing option allowing consumers to buy goods/services and pay later in installments. It’s popular in e-commerce.

 

13. OCR (Optical Character Recognition)

OCR technology reads and converts text from scanned documents into digital data. It’s used in fintech for document verification.

 

14. Liveliness Detection

Used in video KYC, this AI-driven tool confirms that a real person is present during identity verification to prevent fraud.

 

15. Fraud Detection System

A security tool that uses algorithms to detect unusual or suspicious behavior during transactions or onboarding to prevent fraud.

 

16. Credit Scoring

Credit scoring uses customer data (credit history, income, repayment behavior) to generate a score that indicates creditworthiness.

 

17. Neobank

A neobank operates entirely online without any physical branches. It offers banking services like savings accounts, cards, and payments through mobile apps.

 

18. P2P Lending (Peer-to-Peer Lending)

P2P lending connects borrowers directly with individual lenders via online platforms, bypassing traditional banks.

 

19. RegTech (Regulatory Technology)

RegTech helps financial institutions comply with regulations through automated tools that track, report, and manage compliance data.

 

20. Fintech Sandbox

A controlled environment for fintech startups to test their products with real users under the supervision of regulators, without full compliance burdens initially.

 

21. NACH (National Automated Clearing House)

NACH is used for processing high-volume, recurring transactions like EMIs, salaries, and utility payments. It’s especially useful for lenders and NBFCs.

 

22. White-Label Solution

A ready-to-use fintech product or platform that can be rebranded by other companies as their own. It speeds up go-to-market timelines.

 

23. Straight Through Processing (STP)

STP enables end-to-end automated processing without manual intervention, ensuring faster and error-free transactions.

 

24. Consent Architecture

A system that records and manages customer consent when sharing or using their data. It's essential in data privacy and AA-based systems.

 

25. Digital Signature (eSign)

A legally valid electronic signature used to authorize documents online. It helps complete agreements or loan applications faster.

 

26. Tokenization

Tokenization replaces sensitive data (like card numbers) with unique tokens for safer digital transactions and fraud protection.

 

27. Customer Due Diligence (CDD)

CDD is a key compliance step where businesses verify the identities of customers and assess risks before entering into a financial relationship.

 

28. Financial Inclusion

The process of ensuring access to affordable financial services (banking, credit, insurance) for individuals and small businesses, especially in underserved areas.

 

29. Real-Time Payments

These are digital transactions processed instantly, 24/7. UPI and IMPS are examples in India, enabling instant fund transfers.

 

30. Embedded Finance

This refers to integrating financial services (like lending or payments) into non-financial platforms - such as offering loans directly within e-commerce apps.

 

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