Fintech business models (2024)

In this material we’ll explore the main business models in Fintech and the benefits that digital transformation brings them.

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Originally this article by Tonya Smyrnova was published on UppLabs blog.

Fintech business models (1)

In recent years, the rise of Fintech businesses has got much attention since they became challenging current financial service companies, including the traditional banking model. In this article, we are going to provide a better understanding of this trend and explore the main business models in Fintech and the benefits that digital transformation brings them.

There are a number of Fintech business models that are already popular among clients, financial institutions, banks, and corporates, among others. The list includes:

1. Digital banking

Some banks start to offer individual and business bank accounts using a complete digital infrastructure. This business model is almost the same as that of a bank with physical branches except that this model doesn’t require huge costs for manpower and real estate, that’s why customers can benefit from reduced rates.

Check our experience in digital banking

2. Alternative credit scoring

There are cases when self-employed people with a steady source of income can’t pass bank loan screenings because of some strict credit scoring criteria. The new Fintech companies are trying to use a new approach by looking for back-up data like social signals and scoring amongst similar loan groups. Such alternative data together with AI algorithms can ease lending decisions. For example, if some of the negative profiles could be determined before loan disbursem*nt, a bank can avoid loan recovery.

3. Alternative Insurance underwriting

As with alternative credit scoring, FinTech companies are creating different premium computing mechanisms using alternative data points, including their lifestyle data and medical history. Combined with AI algorithms, such Insurance Fintech companies can decide whether or not to give insurance, which terms and conditions to provide, and what alternative payment options to use.

4. Insurtech

Insurtech is an insurance digital business model that is based on digital technology and very popular in sales and distribution, lead management, underwriting, claims, and renewal. Traditional insurance companies are transferring to such technologies as AI, data analytics, blockchain to help agents sell, set up virtual branches, and help maintain claims faster and more efficiently.

5. Transaction delivery

In terms of transaction delivery Fintech companies can create free products (like costly management apps), to gather clients’ data and then cross-pollinate them with the rest of the group to connect the client’s potential to pay premiums or invest in real business, etc. This Fintech business model can involve other types of FinTech companies, for example, some reselling financial products by third parties.

6. Peer-to-peer lending

P2P lending is used when a person wants to borrow money from other people. The same can scheme can be used for businesses, they can borrow money from other businesses. This model can ease the lending for investors, so they can get better returns than the ones offered in debt markets. FinTech companies can create platforms that allow matching different borrowers and lenders, taking the fee from the repayment operation.

7. Payment getaways

Payment gateways are platforms where customers can pay for a product on a merchant’s website. In the modern world of debit cards, digital wallets, credit cards, and cryptocurrencies, banks charge big fees for transactions, but FinTech companies are starting to use a model that allows integrating all of these payment methods into one app that online merchants can easily download and integrate on their website. Such payment apps are perfect for businesses selling their physical products or services to end-users.

8. Digital wallets

A digital wallet provides a secure payment system that uses passwords for numerous payment methods and websites. By using a digital wallet, users can fulfill purchases easily and quickly using online transfer technologies. It’s a general practice to have digital wallets combined with mobile payment systems, allowing clients to pay with their smartphones. A few examples of digital wallets are American Express, Apple pay, Paytm, PhonePe, Ezetap, Freecharge.

9. Asset Management

FinTech companies (like Robinhood) are empowering investors to sell for free in exchange for their data. They are transferring this data to high-frequency traders who have the ability to influence the price of the asset. Usually, the difference between the amount they save from trading fees and the slight increase in price is still reasonable.

10. Neo banking

Neobanking is a Fintech model, which means creating digital platforms — neobanks that can be more fast, efficient, adaptable, and cost-effective. Different neobanks have different purposes, some can manage online bank accounts, others can use budgeting and saving tools. There are neobanks that deal with accounting to automate finance, while some are helping with the credit process.

11. Wealthtech

Wealthtech companies are transferring the small retail investors into dominant wealth management reaching out to the mass segment with small value SIPs. This Fintech model presumes the use of such technologies as gamification of processes, Robo-advisory, and technology-driven wealth, sentiment analysis, portfolio management tools.

12. API-based bank-as-service-platform

The API-based bank-as-a-service platform is a backend that hosts independent Fintech startups and integrates them with any traditional banks. With the help of such platforms, financial institutions can easily start their products and bring them to the new markets. This allows non-banks to easily and cost-effectively launch additional financial products and expand into additional markets.

13. PoS or POP

The point of sale (POS) or point of purchase (POP) means the time and place for completing a retail transaction. A digital retail point of sale system includes a POS terminal that can process credit cards and implement payments through a swipe. POS companies are service providers that maintain both POS hardware and software solutions.

14. Small ticket loans

Financial institutions usually don’t want to approve smaller ticket loans because of the low margins and high costs. FinTech companies invented a new business model that allows to delivering buy mechanisms (like buy now & pay later) and one-click buy buttons on e-commerce websites that make clients buy quickly without applying any authentication or using any card details. This model allows making money by sharing customer data with the original equipment manufacturer (OEMs).

In the first years of existing, the Fintech startups are usually mainly focused on growth instead of profit. But eventually, they are looking for new ways of making more money. How? Taking the Fintech model we described above, let’s highlight the main categories of their incomes:

  1. Budgeting and money management
    (services that offer managing the incomes and expenditures)
  2. Crowdfunding
    (collections aimed to provide monetary contributions for projects or financial institutions)
  3. Cryptocurrencies
    (using a decentralized system)
  4. Lending
    (peer-to-peer lending platforms)
  5. Robo-advising
    (charging a certain percentage of total assets)
  6. Subscription and Fees
    (the money come from the consumers)
  7. Third parties
    (accounting services, credit scoring tool, health insurance)
  8. Advertising
    (product owners sell customers’ attention or data to advertisers and business partners)
  9. Transferring Data
    (gathering data and offering more personalized service to users)
  10. API’s as revenue stream
    (selling licenses and code)

A revenue model is based on such factors: who pays, what payment structure does he/she use, and how it impacts the consumer. The main challenge for Fintechs is to keep the business making money while maintaining the company’s mission and vision.

The statistic shows how respondents see FinTech firms affecting the current business models of their banks.

Fintech business models (2)

We collected some of the main data collected from the Fintech market that work with various business models. When it gets to the market share and data analysis, the numbers always come out on top:

To help Fintech startups navigate in the changes and transformations that take place in consumer banking, money transfers, and payments, insurance, asset management, private capital, and many more, we have identified the most important trends of Fintech business models. All of them are expected to boom in all areas of the financial services industry in the next five years:

  • Banks develop non-physical service channels, implementing operational solutions, and developing new methods establishing contacts with potential clients, attracting new and retaining existing customers.
  • The main priorities in money and payments transferring are security and simplification of payment transactions.
  • Technological progress contributes to an increase in the volume of operations for issuing and obtaining loans without intermediaries.
  • Increasing client autonomy with the provision of services without the need for direct contact with a person.
  • The democratization of banking and personal finance management.
  • Transfer to the next generation of payment platforms.
  • Use of alternative retail payment service networks and money transfer systems.
  • Increase of speed requirements for payments transfer and purchases on the Internet.
  • Improving the efficiency of identifying and quantitative risk assessment.
  • Standardization and regulations compliance of customer interactions at all points of interactions.
  • The use of unconventional data collection solutions to improve the accuracy of risk and loss assessments.

With UppLabs, you can launch a new web or mobile application for your business, rebuild your legacy system, get a sophisticated Fintech solution, or grow your engineering team with our developers.

  • Open banking and credit reference agencies integrations
  • AI- and Machine Learning-based Fintech solutions
  • Money transactions platform engineering
  • Payment systems integration and optimization
  • Fintech web and mobile development
  • Online trading and exchange platform engineering

Regardless of the Fintech business model your business follows, UppLabs is ready to help, as we mastered the latest Financial technologies and gained experience in creating reliable, secure, and sophisticated Fintech solutions and products. We have strong knowledge of Fintech trends, innovations, and new business model, we constantly learn, visit the best Fintech conferences, and have the best team of professional web and mobile developers.

Also, you can be sure that by partnering UppLabs you partner developers that are experienced in Fintech development standards and limitations.

Let’s talk about your Fintech opportunities!

Fintech business models (2024)


What are two key success factors for a fintech company? ›

Quality and marketing techniques are the core fundamentals of building a successful fintech startup. Although many factors determine the success or failure of a fintech startup, it is through pinpoint strategies that a new fintech company can survive in an increasingly saturated market.

What questions should I ask at a fintech interview? ›

FinTech Futures Jobs: Five interview questions to ask to determine a company's culture
  • How are new team members integrated? ...
  • What work style do you have – collaborative or independent? ...
  • What does this company do to give back? ...
  • How does the company value its employees? ...
  • Why do you like working here?
21 Jun 2022

What are KPIs for fintech? ›

6 KPIs To Measure The Performance Of Your Fintech App's User Acquisition Strategy
  • Fintech App Industry.
  • Average time to first transaction.
  • Monthly active users.
  • Customer Acquisition Cost (CAC)
  • Install-to-registration rate.
  • Customer retention rate.
  • ARPU.
28 Jun 2022

What is the most pressing fintech need or opportunity? ›

1. Opportunities For Fintech Companies
  • 1.1 Digital Payment Services. One of the common revolutions that have taken place in every sector including finance is digitalization. ...
  • 1.2 Big Data and Analytics. ...
  • 1.3 Blockchain Technology. ...
  • 1.4 Personalization. ...
  • 1.5 Robotic Process Automation.

What makes a FinTech successful? ›

Part of the reason fintech is so successful. It's because of propensity to target consumer needs in an accurate manner. They often do so by 'disaggregating' the services. Also, the products offered by traditional banks and upgrading them using disruptive technologies.

How do I succeed in FinTech? ›

Top 6 fintech startup tips
  1. Be regulation savvy.
  2. Identify a niche.
  3. Find a competitive edge.
  4. Go shopping for tech stacks.
  5. Hire an expert team.
  6. Get funded.
9 Mar 2021

How do you crack a FinTech interview? ›

Preparing for the technical interview
  1. Make sure you can talk to every skill and project in your profile. ...
  2. Look up common coding challenges, like FizzBuzz and Fibonacci. ...
  3. Take an online algorithms class as a refresher if needed, such as introduction to algorithms offered by MIT and available on iTunes U.

How do I prepare for FinTech? ›

Here is an overview of the important steps you need to take when starting a fintech company:
  1. Get to know the regulations. Fintech and banking are highly regulated industries. ...
  2. Identify your niche. ...
  3. Find your competitive advantage. ...
  4. Hire the team. ...
  5. Choose the tech stack. ...
  6. Prioritize data protection. ...
  7. Get funded. ...
  8. Build and improve.

Why are you interested in FinTech answers? ›

Here's our example answer to this question:

A career in FinTech is hugely rewarding, one of the reasons it's so rewarding is how fast the industry is growing. This means graduates have the chance to gain lots of responsibility and autonomy early on in their career and make a real impact to the industry.

How is FinTech performance measured? ›

Know Your Numbers: KPIs for FinTech Startups
  1. ARPU = Total revenue generated in a month / Total number of customers.
  2. Retention Rate = (Customers at the end of a period – New customers added / Customers at the start of the period) x 100.
  3. COCA = Total marketing and sales expenses / Number of customers acquired.

How is FinTech measured? ›

Therefore, to “measure” fintech, one must first circ*mscribe what practicable parameters will “define” it with SMART (Specific; Measurable; Attainable, Appropriate or Attributable; Relevant, Realistic, or Reliable; and Timebound) indicators.

How do you value a FinTech company? ›

Quantitative data such as financial and operating metrics have significant weight in estimating a FinTech company's enterprise value. Key performance indicators such as revenue, expenses, profitability, growth, customer acquisition costs, and customer lifetime value have a key role in the company's value estimation.

What is the biggest challenge in fintech? ›

Among FinTech challenges in 2022, lack of tech expertise is almost the main one. The development of high-quality and safe FinTech solutions, such as banking apps that will also have smooth functionality, ultimately requires in-depth expertise and solid background.

What are 4 categories of fintech? ›

In this primer, we will highlight four fintech areas — digital lending, payments, blockchain and digital wealth management — that are of particular interest due to their rapid pace of growth, technological disruption, and regulatory and other risks.

Why fintech is the future? ›

The more they employ technology to their advantage, the stronger the brand will become, allowing them to weather any storms. Fintech is a growing industry with seemingly limitless opportunities to improve our financial systems.

What makes a company FinTech? ›

A fintech is a business that offers any financial service—such as financial accounts, cards, or loans—and makes them accessible to their customers via software.

How does FinTech make money? ›

Individuals may borrow money directly from other individuals through peer-to-peer lending, avoiding the middleman and financial institutions. Individuals can get interested in the funds they lend to others using this approach. FinTech software companies profit by brokering such relationships.

What is FinTech good for? ›

​​​At its core, fintech is utilized to help companies, business owners, and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones.

What skills do you need in FinTech? ›

Financial Fundamentals: The best fintech professionals will have a solid understanding of the core financial fundamentals needed to succeed in the field.
Hard Skills:
  • Security and privacy.
  • Programmability and scalability.
  • Trust and transparency.
  • Reliably high performance.

Is FinTech hard to learn? ›

FinTech professionals don't really need deep tech knowledge to make it in the field. They require substantial familiarity with the workings of the different underlying technologies to use them for FinTech innovations. Some of the important capabilities required to build a career in FinTech include.

What should I learn for FinTech? ›

FinTech degree programmes include traditional finance modules as well as learning about evolution and theories of data-driven financial modelling, data mining, machine learning, analytics, and recent innovations such as AI, cloud computing and blockchain.

What appeals to you about working in FinTech? ›

FinTech offers job seekers the chance to work in a highly collaborative and innovative environment. The FinTech industry offers not only an outlet for those seeking a creative challenge but also provides the opportunity for tremendous career growth and professional progression.

Why do you want to work for this company? ›

I see this opportunity as a way to contribute to an exciting/forward-thinking/fast-moving company/industry, and I feel I can do so by/with my …” “I feel my skills are particularly well-suited to this position because …” “I believe I have the type of knowledge to succeed in this role and at the company because …”

Is fintech a good career? ›

Benefits of working in the fintech industry

Highly profitable: Successful fintech companies can make quite a bit of profit, which translates into how much your salary might be. If you're looking for a high-paying career, you might want to consider this industry.

What is fintech Innovation? ›

July 2022) Fintech a portmanteau of "financial technology" refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, Blockchain, Cloud computing, and big data are regarded as the "ABCD" (four key areas) of FinTech.

What are the different types of fintech? ›

Let's look at 10 innovative FinTech business models that are leading the path of disruption.
  • Alternative credit scoring. ...
  • Alternative insurance underwriting. ...
  • Transaction delivery. ...
  • Peer-to-peer lending. ...
  • Small ticket loans. ...
  • Payment gateways. ...
  • Digital wallets. ...
  • Asset Management.

What is a FinTech company examples? ›

Fintech services like Mint and TruBill make it possible for consumers to track income, monthly payments, expenses, and more, all with their mobile devices. It helps consumers make smarter decisions, while still protecting their financial data.

How do I prepare for a finance interview? ›

Six expert tips for your next finance interview
  1. Get to the point. ...
  2. Know your finances. ...
  3. Make yourself the added value. ...
  4. Talk confidently about the industry. ...
  5. Engage with the interviewer. ...
  6. Keep learning.

Why do you want to work in finance answers? ›

Example Answer 1

I want to work in finance because I enjoy the challenging nature of the industry and how fast-paced it is. I thrive under pressure. I enjoy problem-solving and analyzing data, but also realize that finance is not just about the numbers, it is about the people too.

How does FinTech evolution affect financial development and growth? ›

Fintech can play an instrumental role in promoting financial and social inclusion in developing countries by reducing inefficiencies in resource allocation within the banking sector and creating economic opportunities that increase financial access and social development (Ding et al.

What is FinTech PDF? ›

Abstract. The term “financial technology” (or FinTech) refers to the application of technology for the provision of financial services. FinTech companies are attracting the interest of both financial services users and investment firms, which see them as the future of the financial sector.

What is a FinTech lender? ›

Fintech credit providers (alternative lenders) are nonbank lenders that have developed business models based on innovative uses of the Internet, mobile devices, and data analysis technologies.

Who is the founder of Fintech? ›

KP Atluri - Founder CEO - FinTech Group | LinkedIn.

When was Fintech introduced? ›

Fintech 2.0 (1967-2008) is about banks

It was the launch of the first handheld calculator and the first ATM installed by Barclays bank that marked the beginning of the modern period of fintech in 1967.

What is scorecard valuation? ›

Scorecard Valuation Methodology

This method compares the target company to typical angel-funded startup ventures and adjusts the median valuation of recently funded companies in the region to establish a pre-money valuation of the target.

What are some of the key factors contributing growth of Fintech? ›

5 Factors Driving the Rise of Fintech
  • 1.Increased Mobile Usage. One of the biggest drivers of Fintech growth is the increased use of mobile devices. ...
  • 2.The Rise in Digital Payments. ...
  • 3.Focus On Underserved Areas of Banking. ...
  • 4.APIs. ...
  • 5.Large Amount of Capital Available.
13 Jan 2022

Which is the critical factor to ensure success for these Fintech lending companies? ›

For emerging market fintechs, the most important success factor is innovation; it helps them become more relevant to their existing customers and/or to reach new ones. Other important factors include targeting unbanked customers and product quality.

What are 4 categories of fintech? ›

In this primer, we will highlight four fintech areas — digital lending, payments, blockchain and digital wealth management — that are of particular interest due to their rapid pace of growth, technological disruption, and regulatory and other risks.

How fintech is changing the world? ›

It is a technological solution to pre-existing financial systems. It enables new ways of processing financial transactions. Also, making it easier and easier for people to conduct commerce. Fintech organizations have raised over US$ 150Bn to date, and the number keeps climbing.

Why fintech is the future? ›

The more they employ technology to their advantage, the stronger the brand will become, allowing them to weather any storms. Fintech is a growing industry with seemingly limitless opportunities to improve our financial systems.

What are the biggest challenges facing such FinTech firms? ›

Fancy offices and too much office space. Too many Fixed Assets i.e SUVs. Too many parties paid for by the company. Having a large sales and marketing team before product/market fit has been established.

How do you grow a FinTech business? ›

5 Ways to Make Your Fintech Business Stand Out
  1. Identify Your Unique Selling Proposition. First and foremost, you need to identify your Unique Selling Proposition (USP). ...
  2. Plan Your Content Strategy. ...
  3. Leverage Social Media. ...
  4. Connect to Your Target Consumers. ...
  5. Address Internal Gaps.
30 Sept 2021

Can FinTech replace banks? ›

Nevertheless, it is unlikely that FinTech start-ups will replace traditional banking systems. This can be attributed to several reasons, the most important of these being the decades of consumer trust built by them, which FinTechs will need to build for over the years.

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