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Glossary of Banking Terms

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API – Application programming interface
Asset management – The direction of cash or securities of a client by a financial services company, usually an investment bank.
NS&I account – A national savings and investment account is a government backed form of savings account.
Blockchain technology – A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.
Cash ISA account – An individual savings account that pays tax free interest. Compared to other savings accounts there is a limit to how much can be deposited annually into a cash ISA account.
Challenger bank – A relatively small retail bank set up with the intention of competing for business with large, long-established national banks.
Checking account – A checking account is a deposit account held at a financial institution that allows withdrawals and deposits. Also called demand accounts or transactional accounts, checking accounts are very liquid and can be accessed using checks, automated teller machines and electronic debits, among other methods.
CMA – The Competition and Markets Authority is a non-ministerial government department in the United Kingdom, responsible for strengthening business competition and preventing and reducing anti-competitive activities.
Commercial banks – A bank that offers services to the general public and to companies.
Co-op banks – Retail and commercial banks that are owned by customers on the basis that every individual gets one vote.
Core equity Tier 1 ratio – The Tier 1 capital ratio is the ratio of a bank’s core equity capital to its total risk-weighted assets (RWA).
Credit risk diversification – The potential benefit of a reduction in total credit risk, achieved by holding a well-diversified portfolio of  loans or other assets. Credit risk diversification is one of the economic functions of banks and other financial intermediaries.

Credit union savings account – In credit unions, members pool their savings and lend to one another. Members have something in common, such as the same employer, trade union, attending a specific place of worship or living in the same area. Credit unions use the money they earn to improve services and reward their members.
Deposits – A sum of money paid into a bank or building society account.
Economies of scale – A proportionate saving in costs gained by an increased level of production, i.e. a merger of two companies may lead to economies of scale.
Equity capital – Funds contributed by the owners of a business.
FinTech – Computer programs and other technology used to support or enable banking and financial services.
Foreign bank – A foreign bank is a bank with a head office outside the country in which it is located.
Interest rate – The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Investment banks – A financial services company or corporate division that engages in advisory-based financial transactions on behalf of individuals, corporations, and governments.
Investment funds – An investment fund is a supply of capital belonging to numerous investors used to collectively purchase securities while each investor retains ownership and control of his own shares.

Liquidity coverage ratio – The liquidity coverage ratio (LCR) refers to highly liquid assets held by financial institutions to meet shortterm obligations.
Market capitalization – The value of a company that is traded on the stock market, calculated by multiplying the total number of shares by the present share price.
Mergers and acquisitions (M&A) – Mergers and acquisitions is a general term that refers to the consolidation of companies or assets through various types of financial transactions.
NeoBank – An institution that provides some combination of checking accounts, savings accounts and debit cards via digital channels – primarily mobile – without any physical bank branches.
Non-performing loans (NPLs) – A sum of borrowed money upon which the debtor has not made the scheduled payments for a
period of usually at least 90 days for commercial banking loans and 180 days for consumer loans.
Open banking – Open banking regulations require banks to publish, both online and inside their branches, accurate and unbiased information that lets consumers evaluate their service quality, a move towards transparency designed to motivate banks to provide the best possible customer experience.
Payments Services Directive (PSD2) – An EU directive, administered by the European Commission (Directorate General Internal Market) to regulate payment services and payment service providers throughout the European Union (EU) and European Economic Area (EEA). The Directive’s purpose was to increase pan-European competition and participation in the payments industry also from non-banks, and to provide for a level playing field by harmonizing consumer protection and the rights and obligations for payment providers and users.

Personal loans – Unsecured loans (called signature loans) are advanced on the basis of the borrower’s credit history and ability to repay the loan from personal income. Repayment is usually through fixed amount installments over a fixed term. Also called consumer loan.
Private banks – Private banking is banking, investment and other financial services provided by banks to high-net-worth individuals (HNWIs) with high levels of income or sizable assets.
Recapitalization – A type of corporate reorganization involving substantial change in a company’s capital structure.
Reserves – Liquid assets held by a bank, company or government in order to meet expected future payments and/or emergency needs.
Retail banking – Also known as consumer banking, is the provision of services by a bank to the general public, rather than to companies, corporations or other banks.
Risk-weighted assets – Risk-weighted assets (RWA) are used to determine the minimum amount of capital that must be held by banks and other institutions to reduce the risk of insolvency.
Savings banks – A savings bank is a financial institution whose primary purpose is accepting savings deposits and paying interest on those deposits.
Total Assets – The sum of all current and noncurrent assets that must equal the sum of total liabilities and stockholders’ equity
Total Revenues – Refers to the total receipts from sales of a given quantity of goods or services. It is the total income of a business
and is calculated by multiplying the quantity of goods sold by the price of the goods.
Venture capital – Capital invested in a project in which there is a substantial element of risk, typically a new or expanding business.

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