Are you bluffing your digital knowledge?

Can you differentiate your IoT from your blockchain, your AI from your ICO? Do you know what robo-advisors are all about? How machine learning really works? Will you pass the financial services tech jargon proficiency test – or will your lack of digital knowledge start to become evident?

When information is power

A recent survey by FINTECH Circle Institute, revealed that 94% of financial services professionals suspect colleagues of using buzzwords they don’t understand. And because ignoring how new technologies work comes with its own perils, we have compiled a list of the fintech terms candidates should know.

“I challenge any bank to ignore the deep onset of fintech,” says Steve McGerr, Head of Direct Commercial for Hiscox UK and author of an interesting timeline on the evolution of job titles throughout the years.

“Banking jobs of the future will be fully dedicated to the digital experience. Strategists, technologists, analysts; all those who contribute to the visionary ideas that reinvent the banking environment into something that provides a revolutionary experience to the customer, will be an essential hire of the future. Skillsets will include a knowledge of AI and machine learning capabilities. Banks will need the sorts of people who understand how traditional processes can be sped up, fine-tuned and built upon, and who can conceptualise how to use this resource to break the mould by providing consumers with radical new products and services that are as enjoyable as they are useful,” he concludes.

Blockchain

Most candidates will have heard of this ‘miracle’ decentralised ledger technology that has come to prominence with the rise of digital currencies like Bitcoin, Ethereum and Ripple because it is the technology that underpins them. Blockchain works like a digital ledger – or record book – where all the entries (‘blocks’) that are recorded result from a peer-to-peer transaction, which means they cannot be tampered with. We know it’s a big deal because every financial institution out there is trying to find ways to monetise this nascent technology.

As Abigail Johnson, the influential President and CEO of US investment firm Fidelity Investments, once said: “Blockchain technology isn’t just a more efficient way to settle securities. It will fundamentally change market structures, and maybe even the architecture of the Internet itself.”

Initial Coin Offering (ICO)

ICO – or crowdfunding using crypto-currencies – has become an increasingly popular way for investors to acquire a stake in a start-up where they are given digital tokens. It works by the company selling a new token at a discount to investors to raise money. The investor makes a profit when the new cryptocurrency succeeds and goes up in value. According to CoinDesk, ICOs raised more money in the first quarter of 2018 than the whole of 2017, with a staggering US$6.3bn of financing obtained that way.

Artificial Intelligence (AI)

AI is a vast umbrella term but one of the most common uses of this technology in the financial sector, ‘deep learning’, consists of algorithms that can sift through large amounts of data and learn – i.e. re-programme themselves. Those algorithms are useful for spotting anomalies and are, therefore, a key tool for banks to fight cybercrime.

Ned Baltagi, Managing Director, Middle East & Africa at SANS, and a global provider of cyber security training and certification says: “Organisations are now tapping into the wealth of data being generated by their security infrastructures and using this to identify patterns, uncover vulnerabilities and stay one step ahead of would be attackers…Advancements in computational power and the development of algorithms that more accurately simulate human thought processes make it possible for machines to take informed decisions grounded in a tremendous wealth of experience and consider a number of factors. The speed and efficiency are particularly important here as delays can turn away genuine customers.”

The Internet of Things (IoT)

IoT, also referred to as machine-to-machine (M2M) connectivity consists of connecting objects and machines such as mobile devices, cars and appliances. Research firm Gartner estimates that there will be 20 billion smartphones, smartwatches, wearables, connected cars and other connected devices by 2020. IoT will offer financial services firms the possibility of gathering client data and personalised pricing for a loan or an insurance contract based on individual usage.

Robo-advisors

Robo-advisor platforms, such as Moneyfarm, SoFi Wealth, Wealthfront and Betterment, have been mushrooming lately as their business proposition is simple – robots (clever algorithms, not the humanoid type) help you invest and manage your money. Those online investment managers offer the great advantage of being cheap as they require little human intervention. Australia’s Map My Plan for instance is an online, self-directed service that lets individuals create their own financial road map based on their goals, thereby automating the personal finance management process. Furthermore, it can be used by advisers themselves.

• Top jobs in fintech in 2018
• The jobs and skills to seek out in 2018
• Remaining employable in the digital world of financial services
• Digital assets: the next generation of financial services