Electronic money, also known as “e-money”, is stored electronically, usually in an online wallet or on a prepaid card and is used to make payments for goods and services

APIs provide a range of regulated payment services. A type of API you could use may be a money remitter, which sends money around the world.

SPIs or SEMIs can provide the same services as APIs or EMIs, but handle much smaller amounts of money. As a result, there are fewer rules that SPIs need to follow.

EMD/PSD Agents or Distributors are firms that can act on behalf of another firm (its principal) that is authorized or registered by the competent authority as a payment or e-money institution.

RegTech is an emerging area in FinTech, that uses technologies to solve regulatory and compliance requirements more effectively and efficiently. Technologies that are deemed to be applicable for RegTech include machine learning and artificial intelligence, biometrics, the interpretation of unstructured data such as e-mails and Facebook posts, and the use of application programming interfaces (APIs).

RegTech firms offer technological automation solutions to regulatory processes to other firms in the financial services sector, allowing the latter to improve their efficiency in areas such as risk management, regulatory reporting, and compliance.

RegTech firms may develop solutions using Distributed Ledger Technology – DLT and indicatively refer to:

• Customer digital onboarding, where firms enable the remote identification of customers through software solutions that automate the know-your-customer (KYC); due diligence; and identity verification processes.
• Compliance and risk management solutions, enabling authorised firms to ensure that the processing of legal information by means of artificial intelligence and machine learning is performed in an efficient manner and that all results are explainable and transparent.

AISPs are market players that retrieve account information data from banks and financial institutions, mainly through open banking interfaces, and use them to build new services for customers.

The most common and obvious service provided by AISPs is account information aggregation, which offers customers an overview of all their accounts held with different financial institutions, possibly enriched with added value services such as reporting and extensive data analysis.

The most common AISPs are offering services with credit-scoring applications based on the processing of aggregated account data with Big Data analytics and Artificial Intelligence.

Crypto assets may be regulated (security tokens and e-money tokens) or non-regulated such as BitCoin, LiteCoin.

This category includes utility tokens which can be redeemed for access to a specific product or service that is typically provided using a DLT platform. Investment products such as derivatives contracts that reference these cryptoassets are likely to be within the regulatory’s parameter.  Notably, DLT is a relatively recent advancement that has received increasing amounts of industry, media, political and other stakeholder attention in recent years. It combines various existing tools such as shared databases, cryptography and peer-to-peer networking to offer firms the ability to share data efficiently and securely.

P2P lending platforms, in which individuals and companies invest in small businesses, enable the provision of credit without bank intermediation. They match borrowers and lenders directly: Some allow the lenders to choose the borrowers, while others form packages of loans, and online auctions are often used for this purpose. These platforms frequently provide business risk rankings to borrowers, obtained by algorithms using big data.

Crowdfunding can provide an alternative to unsecured bank lending, such as bank overdrafts or credit loans, which are currently the main sources of external finance for SMEs, especially during the initial period of activity.

FinTech innovation in investment advice is provided by so-called robo-advisors, which are computer programs that generate automated investment advice according to customer data while employing portfolio management algorithms.  FinTech business models are created involving self-guided online wealth management and the provision of investment advice to their customers based on the analysis of the clients’ account information data. Investment institutions may use Application Programming Interfaces and rely on the use of APIs in order to be able to offer their service or product.

The insurance sector is not an exception to technology innovation, with developments in technology leading to possibilities of new methods of service provision as well as greater opportunities for data collection that can lead to better risk identification and mitigation measures, which are being referred to as “InsurTech”.

InsurTech businesses are developing business models that may better address the insurability of policyholders by using technology to simplify the contracting process (smart contracts) and tailoring policies to better suit their needs.