Demystifying FinTech in KSA: The Ultimate Glossary for Beginner Explorers
Last Updated on November 9, 2023 by Ameer Hamza
KSA’s FinTech sector is expanding quickly and is now competing with neighboring economies like Egypt and the UAE regarding startup investments. The nation possesses a highly advanced financial service industry, encompassing cutting-edge technologies that streamline and enhance financial services. KSA’s fintech sector has also experienced a significant increase in investment from September 2021 to August 2022, reaching a record high of SAR1.5 billion ($402.2 million). In the first half of 2022, venture capital funding in Saudi Arabia increased to SAR2.19 billion. Here are some key terms you will encounter in KSA’s FinTech sector.
FinTech Glossary For Beginners
The term ‘3D Secure’ refers to a method of protecting the financial technology industry. This security protocol uses three different areas to address security vulnerabilities and fraud concerns in online card transactions.
Crowdfunding involves gathering financial contributions from a large group of individuals to support a project or business venture. It is often carried out through internet-mediated registries to collect money for lending or equity issuance.
Internet of Things (IoT)
These devices can transfer data over a network without the need for human-to-human or human-to-computer interaction.
Account Information Service Provider
An AISP, or Account Information Service Provider, is a licensed company that operates within the open banking model. Its purpose is to assist third-party institutions in accessing customers’ financial information, but only with the explicit approval of those customers.
Alternative finance refers to various financial options that differ from traditional financial instruments like cash, stocks, and bonds. Crowdfunding and peer-to-peer lending are examples of alternative finance.
Artificial Intelligence is the idea of programming robots to mimic human behavior. In the field of fintech, AI has the potential to establish new standards by teaching machines to solve problems and learn new tasks.
Green finance refers to the financial activities carried out by fintech companies and platforms to achieve positive environmental outcomes. This refers to financial products that either fund environmentally friendly projects or tackle issues related to climate change.
Financial institutions usually take due diligence measures to identify customers and understand their financial activities.
A blockchain is a form of ledger that records transactions in a distributed manner. Each block contains transaction information, such as the date, value, and time. Once a transaction block has been verified and deployed on the blockchain, it becomes impossible to alter the record. The primary uses of blockchain technology in the financial technology industry are related to cryptocurrencies and decentralized finance (DeFi).
Decentralized finance, or DeFi, is another significant highlight in the A to Z of fintech. Decentralized finance uses blockchain technology to make financial products and services more accessible. DeFi applications offer smart contracts that ensure transparent transactions.
FinTech is a rapidly growing sector that has the potential to transform the way humans handle money and conduct financial transactions. In KSA, FinTech is already making a big impact. By understanding the key terms and concepts in the world of FinTech, you can be better equipped to navigate this exciting new landscape.