Open banking is closely linked to the Fintech industry. In recent years, new concepts have been introduced to open banking and the open finance sector. Thus, understanding the financial terms and abbreviations is crucial to stay abreast with the industry. With the constant evolution in technology and concepts, we have compiled a glossary for open banking and open finance to help you understand the language of financial innovation.
Let’s now dive into the key terminology of open banking and open finance below:
Table of Contents
. A
Account to Account (A2A)
It refers to cardless payments directly from one bank account to another.
Account Information Service Provider (AISP)
This entity offers service to customers by accessing their bank account information with their permission.
Account Servicing Payment Service Provider (ASPSP)
This means that the regulated organization is responsible for servicing customers’ accounts and facilitating payment transactions.
API Data
Applications Programming Interface (API) enables communication and integration between different software systems.
API Provider
Entity-offering APIs allow developers to access and interact with its services or data, which are often required for third-party applications.
API User
Individuals who use APIs interact with external services and enable functionalities integration into their applications.
. B
Business Identifier Code (BIC)
Also known as the SWIFT address, it is assigned to banks that allow automated payments to be sent swiftly and accurately to the respective banks.
. C
CMA Remedies
Actions implemented by the Competition and Market Authority to address issues pertaining to consumer choice, competition, etc.
Competent Authority
It is a government body responsible for regulating the subject matter concerning participants.
Consent Management
It’s a process of obtaining and managing customers’ consent to share their financial data with third-party providers.
Clearing House Interbank Payment Systems (CHIPS)
It is a US payment system used for international and high-value domestic transactions.
. D
Data Aggregation
It is the process of collecting data from multiple sources and presenting it in a summarized format.
Digital Wallet
A system which securely secures and stores users’ payment information and passwords for multiple payments.
. E
Embedded Finance
It refers to the integration of financial services into products or services.
. F
FedNow
A service developed by the Federal Reserve to enable financial institutions of every size.
Financial Data
Any info related to individual business, accounts or other assets refers to financial data.
Fintech
This term refers to new tech looking to enhance and automate the delivery and use of financial services.
Financial Data Exchange (FDX)
It unifies the financial industry around a common standard for data sharing & security.
. K
Know Your Business (KYB)
Like KYC, it is a process to identify business identity to prevent financial fraud.
Know Your Customer (KYC)
Financial institutions use this process to verify the identity of a customer.
. O
Open Authorization 2
It is an open standard for access delegation for granting access to websites or applications.
Open AI
An application programming interface that offers developers access to proprietary software.
Open Banking
A practice which offers third-party financial service providers open access to consumer banking.
Open Finance
It refers to the sharing and leveraging of broader financial data via APIs beyond banking data.
. P
Payment Rails
A fundamental network which is used to move money from one party to another.
Payment Initiation Service Provider (PISP)
A type of third-party provider in the open banking system to initiate payments on behalf of customers.
Personally Identifiable Information
It refers to any data which is used to identify a specific individual.
Pull Payment
It is a transaction method where funds are pulled or drawn from a payer’s account by the payee.
Push Payment
A transaction initiated by the payer pushes funds to the payee’s account.
. R
Real-Time Payments (RTP)
Near-instant payment processing allows immediate transfer of funds between parties.
. S
Screen Scraping
It is the practice of collecting screen display data from one application and translating so another application can display it.
Secure Customer Authentication
PSD2 is required for online payments of financial transactions to prevent fraud.
. T
Third-party Provider
A service provider that uses Open Banking APIs to access customers’ financial data.
Tokenization
It is a process of replacing sensitive data with exclusive identification symbols to retain all essential information.
