FinTech (フィンテック) refers to the movement of bringing IT into finance to create new services, and to those services as a whole.
FinTech (finance × IT)
Payments and transfers (e.g., smartphone payments)
Asset management (e.g., AI investment advice)
Lending (e.g., online loans)
Insurance (e.g., claims where AI estimates the damage from photos)
It spans a wide range of financial fields, including payments and transfers, asset management, lending, and insurance. The players are not only traditional financial institutions but also startups with new technology, and the two often work together to build services.
AnalogyIt is like craftspeople with new tools joining a long-established shop and coming up with one new item after another for its menu.
How to rememberSplit it in two: Fin = Finance, Tech = Technology.
Exam points
ExamFinTech (フィンテック) is not the name of a particular product but the word for the whole movement of reshaping financial services with IT.
Mix-upBlockchain (ブロックチェーン) is the name of a technology that manages transaction records in a distributed way, while FinTech names the whole movement of changing financial services with the help of such technologies.
FinTech is a word formed from Finance and Technology, and it is how the katakana term fintech (フィンテック) is written in Latin letters.
It means exactly the same as the katakana form, and both spellings appear in study materials. The scope is also the same: it covers every effort that uses IT to make financial procedures more convenient or to create new financial services.
Exam points
ExamFinTech is the umbrella term for efforts that use IT to create services in finance that did not exist before.
A crypto-asset (暗号資産) is a form of property value exchanged over the internet whose transaction records are managed with technology such as blockchain, and it is not legal tender (法定通貨) issued by a government or central bank.
Transaction occurs
Grouped into a block
Participants verify
Linked to the chain and shared by all
The verified block is linked to the previous block and added to the ledger.
4 / 4
Crypto-assets used to be called virtual currency (仮想通貨), and Bitcoin is a well-known example. The blockchain behind their records links blocks of transaction records like a chain and has many participants' computers share the same ledger, which makes tampering difficult.
AnalogyIt is like a value whose balance is kept not in one bank's books but in a shared ledger of which every participant holds an identical copy.
How to rememberRead the two parts of the Japanese name: 暗号 (cipher) is the technology that protects the records, and 資産 (asset) means property value rather than money itself.
Exam points
Mix-upElectronic money (電子マネー) is an amount in yen or another currency that the issuing company records as electronic data (the prepaid type is typical), whereas a crypto-asset (暗号資産) is value counted in its own unit rather than in yen or any other legal tender (法定通貨).
CBDC (central bank digital currency) is currency in digital form issued by a central bank (中央銀行) in its own national currency.
Like banknotes issued by a central bank, its value is backed by the issuing central bank, and the difference is that it takes the form of electronic data. Central banks in many countries are researching it and running pilot tests.
How to rememberThe initials of Central Bank Digital Currency: CB is the central bank and DC is digital currency.
Exam points
Mix-upBank deposits and electronic money (電子マネー) are value issued and managed by private companies, while CBDC differs in that the central bank itself issues it.
Crypto-asset vs. CBDC (Central Bank Digital Currency)
An NFT (non-fungible token) is a digital certificate (token) recorded on a blockchain, each of which can be distinguished from all others.
Digital data is easy to copy, but an NFT keeps a hard-to-tamper-with record of who owns which data. NFTs are used for digital art, in-game items, event tickets, and more. An NFT is not a mechanism that stops the data itself from being copied; it is a record of ownership and trades.
AnalogyIt is like one print in an edition whose serial number and owner's name are written in a register, so it can be told apart from other prints of the same picture.
How to rememberNon-Fungible means that nothing can take its place. A 1,000-yen bill is worth the same no matter whose bill you swap it for, but a signed one is not.
Exam points
Mix-upOne unit of a crypto-asset (暗号資産) keeps its value when exchanged for another unit of the same kind, but each NFT carries its own unique information and cannot be replaced by another.
Crypto-asset vs. NFT (Non-Fungible Token)
Aspect
Crypto-asset
NFT (Non-Fungible Token)
Key differenceFungibility
One unit swaps for another of the same kind at equal value
eKYC is a procedure that completes the identity verification (本人確認) needed for opening an account and similar steps online, without visiting a counter or sending documents by mail.
Photograph an ID document
Photograph your face
Matching and review
Procedure complete
Once confirmed, account opening and similar procedures go ahead with no branch visit or mail.
4 / 4
KYC (Know Your Customer) means customer identification, in which financial institutions and others confirm who they are dealing with, and the leading "e" means doing it electronically. The basic approach combines checking a document with checking the person over the internet, and the benefit is that no branch visit or mailing is needed.
AnalogyIt is like showing your driver's license to a staff member through a camera instead of at a shop counter.
Exam points
ExameKYC is a procedure for online identity verification (本人確認); measures against money laundering (マネーロンダリング) of criminal proceeds require an identity check at the start of a transaction, and eKYC lets that check be done without a branch visit.
Mix-upeKYC confirms a person's identity once at the start, such as when an account is opened, which serves a different purpose from user authentication (利用者認証) that checks a password or similar at every login.
AML (Anti-Money Laundering) refers to measures that prevent money laundering (マネーロンダリング), which hides the origin of criminally obtained funds so that they look like legitimate income.
Identity check at the start
Ongoing transaction monitoring
Report suspicious transactions
When a suspicious transaction is found, report it to the authorities.
3 / 3
Financial institutions and others take steps such as verifying identity at the time of a transaction, monitoring transactions continuously, and reporting suspicious ones to the authorities. Money laundering often passes funds through many accounts and transfers to blur their trail, so it is necessary to look at the whole series of money movements, not just a single transaction.
AnalogyIt is like a guard who watches for, and stops, anyone running dirty banknotes through one washing machine after another until no one can tell where the dirt came from.
How to rememberLaundering means washing. Put Anti (against) in front of washing money, and you get the term.
Exam points
ExamAML is the set of measures that financial institutions and others use to stop the source of illegal proceeds from being hidden to make them look like legitimate funds.
CFT (Combating the Financing of Terrorism) refers to measures that keep money from reaching terrorist (テロ) organizations or acts of terrorism.
For example, financial institutions check whether a payee is a person or group publicly listed as subject to measures such as asset freezes. When they find a suspicious transfer, they stop the transaction or report it to the authorities.
AnalogyIt is like a ticket gate attendant at the exit who stops anyone holding a ticket to a dangerous destination.
How to rememberThe initials of Combating (fighting), Financing (providing funds), and Terrorism.
Exam points
Mix-upAML aims to stop people from hiding where illegally obtained money came from, while CFT aims to cut off the flow of money used for terrorism (テロ).
AML (Anti-Money Laundering) vs. CFT (Combating the Financing of Terrorism)
Aspect
AML (Anti-Money Laundering)
CFT (Combating the Financing of Terrorism)
Key differenceWhat it prevents
Money laundering that hides the source of criminal proceeds
Funding terrorist organizations or acts of terrorism
Main focus
Where the money comes from
Where the money goes
Funds covered
Illegally obtained money
Includes legally obtained money too
Key points
The katakana fintech (フィンテック) and the Latin-letter FinTech are two spellings of one concept: the whole movement of bringing IT into finance.
Blockchain (ブロックチェーン) is a technology that has many participants share records to make tampering difficult, and it underpins the records of crypto-assets and NFTs.
AML and CFT both keep the financial system from being misused for crime or terrorism, and they are often written together as AML/CFT.