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Understanding banking terms and definitions is crucial for making informed financial decisions. Whether you’re managing personal finances, applying for a loan, or considering investment opportunities, having a grasp of banking terminology can significantly impact your financial well-being.
New Banking Words
As new technologies continue to emerge, so do new banking terms. Staying current with these innovations is crucial, especially considering the simultaneous emergence of new banking regulations. Adapting to these changes is essential for navigating the rapidly evolving landscape of modern finance, ensuring that individuals and businesses can make informed decisions in an environment shaped by both technological advancement and regulatory updates.
We’ve made an overview of the most common banking terminology you can find at the moment ones:
- Green Finance: the banks issue loans to sustainable projects such as solar energy, hydropower, and reducing greenhouse gas emissions.
- FinTech: FinTech, een acroniem voor financiële technologie, verwijst naar de creatieve toepassing van technologie in de financiële sector. De impact ervan reikt verder dan het bankwezen en omvat domeinen zoals beleggingsbeheer, verzekeringen en persoonlijke financiële toepassingen.
- P2P LEnding: Peer-to-peer lending services are revolutionising lending and borrowing beyond traditional banking channels by enabling direct loans between individuals. The way that people access and provide financial resources is evolving due to this decentralised approach.
- NeoBanks: Neobanks, sometimes known as “digital banks,” don’t have any traditional physical branches; they only do business online. With user-centric and cutting-edge technology services, their rise is upending the banking industry and posing a threat to established banking structures.
- Microfinanciering: Originally intended to empower marginalised populations, microfinance has expanded to have a wider social impact than just banking. It entails offering financial services, such as savings accounts and small loans, to those living in underprivileged economic zones. To get the loan, the borrower approaches the bank for loan origination, and the bank processes it according to its internal criteria.
- Crowdfunding: Crowdfunding, dat zijn oorsprong vindt in groepsfinanciering, heeft gevolgen voor online bankieren. Deze vorm van financiering is relevant geworden in verschillende sectoren en stimuleert ondernemingen en gemeenschapsinitiatieven.
- Amortisation: Amortisatie is een concept dat vaak voorkomt in afbetalingsplannen voor leningen en dat beschrijft hoe schulden in de loop van de tijd geleidelijk worden afgebouwd. Dit idee is niet beperkt tot banken; het kan worden gebruikt wanneer een schuld langzaam wordt afgelost.
- Regtech is the abbreviation of regulatory technology. The bank develops an IT-based system to check if there is any irregularity or exception against the regulatory requirements.
- Customer journey: every step involved in the customer’s experience, starting with opening an account, filling out forms, and applying for a loan. It might also cover the post-service activities. A customer journey map is a visual representation of all these digital phases.
- Request to pay: This is a digital payment request made by the payee to the payer. The request for a specific transaction can be made via a mobile banking app or an online transaction app. As soon as the payer receives the digital request, he can accept or reject the payment request.
- Mobile first: With the development of the banking sector, customers can now remotely open bank accounts using mobile apps. They can easily complete routine tasks with the help of this cutting-edge, scalable technology infrastructure.
- PSD2 stands for Second Payment Services Directive.PSD2 is a European regulation aiming to make electronic payments safe and protect consumers. Thus, PSD2, according to these regulations, the real costs and charges of transferring money abroad while benefiting all banking and payment parties.
- AML: stands for Anti-money Laundering. It is a procedure of laws and guidelines designed to deter and prevent financial crimes.
- Embedded Finance: Integrating financial services into non-financial offerings is known as embedded finance. It could have to do with financing, handling payments, or insurance. A shopping mall`s branded credit card, a local gym app that allows one-click payments, or an online retailer offering insurance are a few instances of embedded finance.
- Banking as a Service: Embedded finance is when financial services are incorporated into non-financial offerings.. It could have to do with financing, handling payments, or insurance. A shopping mall`s branded credit card, a local gym app that allows one-click payments, or an online retailer offering insurance are a few instances of embedded finance.
- Buy Now Pay Later (BNPL) This kind of purchase is made, but the payment is made at a later predetermined time. It is a brief financing period that typically carries no interest. These payments can be made in one of two ways: through a third-party BNPL provider or a contract the banks make with the businesses. This third party might be a go-between for the company and the lender.
- – Crypto Asset: These are assets in the digital realm. They can be electronically transferred or stored. These are entirely digital assets, and ownership is established through public ledgers.
- Fiat Currency It is actual money that the government issues on a national level. Any commodities do not support it and is lawful. Paper money or coins are an example of fiat currency.
- – Robo Advisor: It creates, tracks, and automatically rebalances a diverse portfolio per your objectives. It is an inexpensive online investing platform that uses algorithms in software. It provides financial guidance on investments, including automated portfolio management.
- – Metaverse: The clients can perform a range of tasks remotely thanks to the metaverse’s virtualisation of banking and financial services. The Metaverse improves convenience and eliminates physical branch visits from cash transactions to communication with advisors, employees, and banking services.
Algemene Woordenlijst Banktermen
Inzicht in de basisprincipes van bankieren is cruciaal om financiële kennis in finance’s large and occasionally confusing world. The table below focuses on the glossary of crucial banking terms used regularly and clarifies their definitions. Government agencies have legislated standards and processes that control these phrases, so they are not arbitrary. In addition to fostering stability within the financial system, this regulatory framework guarantees banks safe and secure operations.
Laten we nu enkele veelgebruikte banktermen en definities bespreken:
| Rekeningen: | Rekeningen fungeren als centrale locaties voor dagelijkse spaar- en uitgaventransacties. Individuen kunnen gemakkelijk aankopen doen en hun financiële gewoonten controleren met creditcards/debetkaarten. |
| Balans: | Een overzicht laat zien hoeveel geld er op je rekening staat. Het geeft je een snel overzicht van je financiële situatie en verduidelijkt de beschikbare middelen. |
| Borg: | Storten betekent geld op je bankrekening zetten, per cheque of bank-app. |
| Verklaring | Een afschrift is een gedetailleerd rapport dat een overzicht geeft van je financiële activiteiten. Het bevat informatie over stortingen, opnames en de algemene geldstroom via je rekening. |
| Terugtrekken: | Een opname is het proces waarbij je geld van je rekening haalt. Hiermee kun je bij je geld komen door het aan te vullen met een cheque, een geldautomaat of een handige bankieren app. |
| Overdracht: | Geld wordt verplaatst van de ene rekening naar de andere wanneer geld wordt overgeboekt. Je kunt deze flexibele actie gebruiken om geld over te maken naar een andere persoon of om het binnen je rekeningen te verplaatsen. |
| Transactie: | Any different financial operations, including deposits, withdrawals, and transfers, are called transactions. Inside your banking ecosystem, it symbolises the ever-changing flow of money. |
| Elektronische handtekening: | Een wettelijk contract kan nu worden ondertekend met een elektronische handtekening. Het biedt een effectieve en veilige manier om contracten in de digitale sfeer te valideren. |
| Online bankieren: | Managing your accounts online is accessible and available from any location using personal devices with online banking. It makes managing your finances more accessible and more flexible. |
| Loan Origination | The process that a borrower goes through to apply for a new loan, during which the lender assesses the borrower’s creditworthiness and suitability. |
| Revolving Credit | A type of credit that does not have a fixed number of payments, unlike instalment loans. It is characterised by a credit limit that can be spent, repaid, and spent again. Examples of revolving credit include credit cards and lines of credit. This flexibility allows for better control over cash flow but requires disciplined management to avoid high interest-and debt accumulation |
| Customer Vetting (or Customer Due Diligence) | Banks and financial institutions require a critical process to assess and verify a customer’s identity, legitimacy, and risk profile before establishing a business relationship. This process involves collecting personal information, understanding the nature of the customer’s activities, and evaluating the risk of money laundering or terrorist financing. |
Banking Terms and Definitions – Navigating Financial Documents
Comprehension of banking terminology is essential for businesses aiming to make well-informed financial decisions and effectively manage their corporate finances. A firm grasp of banking terms and definitions is indispensable when evaluating credit facilities, analysing financial statements, or strategising for long-term growth. This knowledge enables business professionals to navigate complex financial documents, negotiate favourable terms with financial institutions, and strategically utilise banking products and services to optimise cash flow and capital structure. Moreover, it demonstrates expertise and competence in finance, positioning professionals for success in their endeavours within the corporate landscape.
Below, we’ve clarified some key banking terms and their definitions:
- Liquiditeit: Het gemak waarmee een activum kan worden omgezet van contanten naar beleggingen of contanten staat bekend als liquiditeit. Om ervoor te zorgen dat ze genoeg geld hebben voor onvoorziene vereisten en dagelijkse activiteiten, moeten bankiers een goed begrip hebben van liquiditeit.
- SWIFT-codes: SWIFT-codes dienen als duidelijke identificatiecodes voor internationale geldtransfers. Door bankiers te helpen ervoor te zorgen dat geld naar de juiste bank en het juiste filiaal in het buitenland wordt overgemaakt, bevorderen ze veilige internationale transacties.
- ACH overboeking: Electronic money transfers between banks are made possible by ACH (Automated Clearing House) transfers. Bankers streamline financial processes using ACH transfers for various tasks, including payroll processing and paying bills.
- Zaakwaarnemer: Banken fungeren vaak als vertrouwenspersonen die toezicht houden op andermans vermogen. Financieel adviseur zijn van klanten vereist de hoogste betrouwbaarheid en verantwoordelijkheid.
- Reserveverplichting: Reserveverplichtingen stellen een minimumhoeveelheid contant geld vast die banken in reserve moeten houden voordat ze leningen kunnen verstrekken of investeringen kunnen doen. Het is een instrument dat centrale banken gebruiken om de geldvoorraad te beheren en de economische stabiliteit te handhaven.
- Verzoening: Financiële gegevens worden tijdens de reconciliatie vergeleken om er zeker van te zijn dat ze overeenkomen. Om een accurate en eerlijke financiële rapportage te garanderen, moeten bankiers dit proces doorlopen om eventuele onregelmatigheden in transacties op te sporen en aan te pakken.
- Zekerheden: Een lener geeft een onderpand, of iets van waarde, om een lening te krijgen. De bank kan het onderpand in beslag nemen als de lener de lening niet kan terugbetalen. Bankiers die de risico's van een lening beoordelen, moeten begrijpen wat onderpand is.
- Revolving credit: The banks allow you a credit limit, which you can pay back at any time and reutilise the facility within the approved limit.
- Customer vetting: Before approving any loan to the customer, the banks conduct a background check and analyse the payback history from the previous lenders or the companies the customer has been dealing with.
- Bazel III: The worldwide banking laws known as Basel III aim to improve oversight, control, and risk management in the banking industry. Stricter capital rules are introduced, and the significance of leverage ratios and liquidity is emphasised. Bankers must be knowledgeable about Basel III to maintain financial stability and assure compliance.
- Afgeleide: De prestatie van een onderliggend actief, index of tarief bepaalt de waarde van een afgeleid financieel contract. De drie belangrijkste toepassingen van derivaten voor banken zijn deposito's, hedging en beleggen. Voor bankiers die zich bezighouden met ingewikkelde financiële transacties, is het essentieel om derivaten te begrijpen.
Familiarity with banking terminology allows for better comprehension of various financial products and services. It empowers you to confidently navigate options such as savings accounts, certificates of deposit, loans, and credit cards. Moreover, understanding terms like APR, APY, and DTI can aid in making prudent choices when borrowing, saving, or investing money.
On the other hand, small business owners and entrepreneurs benefit from a solid understanding of banking terminology when managing their company’s finances. Familiarity with terms like ACH, HELOC, and LTV can facilitate efficient cash flow management, strategic borrowing, and effective utilisation of business credit lines. This knowledge can ultimately contribute to their enterprises’ financial stability and growth.
In conclusion, a solid command of banking terminology is essential for those seeking employment or already working in finance. Whether pursuing a career in banking, financial analysis, or investment management, a comprehensive understanding of banking terms and definitions is a fundamental requirement. It demonstrates expertise and competence in the field, setting individuals apart in a competitive job market.
