Talking Fintech: Definitions from A to D

Did you know that Merriam-Webster pinpoints the first known use of the word “fintech” in 1971? But it wasn’t added to the dictionary until 2018 when the word became more commonly used. Today, fintech has a plethora of terms and definitions. This first post breaks down key definitions of terms from A to D. 

ACH:

Simply put, ACH is the automated clearing house (ACH) network for processing transactions between participating financial institutions, usually domestic low-value payments. The Automated Clearing House Network allows for moving money between bank accounts across the United States much more cheaply than credit card payments and more securely than paper checks. 

Application Programming Interface, or API:

An application programming interface is a connection between computers or between computer programs. It is a type of software interface offering a service to other pieces of software. For financial institutions and fintechs, APIs play an important role in the future of Open Finance, enabling reliable access to financial data to drive innovation and deliver better outcomes for businesses and consumers. 

Data aggregation:

In its simplest form, this is the process of compiling typically large amounts of information from a given database and organizing it into a more consumable format. Before you can utilize the resource that is data, you need to compile it first. 

Data cleansing:

The process of fixing or removing incorrect, corrupted, incorrectly formatted, duplicate, or incomplete data within a dataset. This is where you create value in your data, because it’s in a usable state where it can now have context.

Digital verification:

A digital process that validates a person, account, or data based on defined criteria. This is one of the most important steps to preventing fraud or identity theft. Types of verification include: 

• Account verification: Verifying that a new or existing account is owned and operated by a specified actual individual or organization. One type of account verification is Instant Account Verification (IAV).
• Account owner verification: The process of ensuring that a person is who they claim to be when opening a bank account, applying for a loan, etc. This is also referred to as identity verification.
• Know your customer (KYC): A general process or program within a financial services company to verify customer identities. This process usually fits within a bank’s anti-money laundering (AML) policy.