FinTech Business Models: How Do They Work And Make Money?

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Fintech is an innovative and emerging amalgamation of technology and finance. In recent years, it has gained immense popularity through financial and digital innovation. 

Until now, banks were the primary Traditional banking systems that have changed significantly with the advancements of improved financial technologies.  

Recently, a report stated that the value of the fintech investments in the most recent quarter is a whopping amount of $39.9bn

Additionally, as more and more companies are using fintech to take their business to exciting heights, the adoption rate of fintech worldwide for payments and banking is 56%. 

The pandemic has changed our lives in many ways and it has certainly changed the figure of how much consumers are relied on digital assets. Moreover, the consumer adoption rate of fintech for transferring money and making payments is at 75%.   

Fintech is a word that is used to describe organizations working in the financial tech sector.

It associates majorly to growing start-up businesses that develop creative technological solutions in various areas including mobile payments where methods like qr code scanning simplify transactions, online payments, the IoT, big data, finance alternatives and financial management.

Fintech business models     

An overview of Fintech with a business-to-consumer model includes various factors such as market size, business models, consumer views, blockchain technology and company profiles

FinTech Business Models How Do They Work And Make Money

In 2018, approximately 70 percent of senior banking employees said that collaborating with Fintechs and Bigtechs was essential to develop a fresh service.

This was an important opportunity for the banking sector. For a clear understanding of the fintech ecosystem and the latest trends of fintech, take a look at the below-mentioned report by a business insider. 

Fintech business models

The most crucial part of online data services is to be understood along the way. Thus, the more important question is how does fintech make money? Let us walk you through a detailed orientation of some of the most popular models of fintech

P2P lending

As we are much aware that the fintech market is booming and the fintech software is gaining momentum with its advancements as well. Statistics state that the peer-to-peer lending market is annually growing by a whopping 30%.

P2P lending

P2P lending solutions also known as peer-to-peer solutions are a fintech model that has gained popularity recently. With the integration of P2P lending, people can borrow money from other investors directly. 

Through peer-to-peer lending, people can even get interested in the money they lend to other people.

The P2P fintech model plays a huge role in earning commissions and aims for higher targets than those given in the debt market. This makes it much easier for people to lend to investors without going through any hassle. 

Fintech software companies are now working on optimizing the commercial sector with innovative peer-to-peer lending solutions.

Moreover, they are matching lenders to borrowers and charging a fee on the process of repayment while making their process smooth and secure

Online portals avail all types of borrowers and lenders and peer-to-peer lending gives them the freedom to meet them and offers mutually beneficial terms.

It empowers lenders as well as borrowers to earn money transactions directly with the help of the Internet without the interruption of banks or any other financial intermediaries. 

With peer-to-peer lending potential borrowers, and lenders register on their desired P2P platform and arrange loan agreements while concluding on terms and conditions.

They can decide on the terms that are beneficial to both the parties and even negotiate the repayment and debt policies. 


The Robo-advising model is a fintech model that generates income through trading. Robo advising is also known as automated investment services.

The recipients don’t need to pay investment advisors as technology solutions can automatically trade commission fees to manage their money. Such platforms use artificial intelligence and machine learning to manage portfolios effectively

For instance, a management firm might charge a certain percentage of the total assets that it manages. The advisory robot portals lend the same management services for a much lower fee, helping investors save a lot of their assets.

Artificial intelligence and machine learning are changing the financial market by making use of improved algorithms and datasets to deliver fintech solutions that are customized to users’ needs. 

One of the hottest trends in AI and ML is the use of Robo-advisers. Robo-advising has the potential of solving the complexities that come along with financial decision-making.

They use algorithms to perform investment tasks automatically rather than working with a human financial employee.

Robo-advisors are less expensive than financial advisors and are now welcomed by the vast majority of fintech investors.

Customers just need to sign up for some information with a detailed questionnaire mentioning their investment timeframes and risk tolerance while aligning them with financial goals. 

The cost of developing fintech application is based on a lot of factors such as the complexity of the application and the features that are to be added.

Fintech applications integrated with advanced features help you usher into the dynamic market of fintech. 

Robo-advising is the best fintech business model, especially for investors who are looking for a digital interface with very minimal human contact.

A lot of major financial organizations are using Robo-advising as a business model including Fidelity, Vanguard and Schwab.                       


One of the most trendsetting ways that fintech is filling its pockets is through blockchain. Studies state that 56% of the American population owns at least one share and they are investing in the stock market actively.


Additionally, more than 13% of the US population has started to invest in cryptocurrencies in the past decade and the number is expected to grow immensely. 

The financial transactions can be verified easily as cryptocurrencies are developed on decentralized and distributed ledgers.

These records can not be obscured or manipulated because of the secure nature of blockchain technology. Blockchain makes fraud-preventing solutions a lot less costly and less difficult for fintech businesses

Statistics say that fintech in particular is likely to be impacted by the growth of cryptocurrencies positively. In areas of the globe where currencies are unstable, cryptocurrencies have a better rate of adoption.

It reduces the inefficiencies and delays in the process of transferring money between organizations. This solves the problems of consumers facing a slow pace of transactions and multiple layers of bureaucracy.          

Even though cryptocurrencies have not achieved as much mainstream consumer acceptance yet they are expected to grow tremendously.

Organizations are developing cryptocurrency exchange and promoting it among their targeted audience adequately. 

In the near future of fintech industry, it is anticipated that cryptocurrency will play a crucial role in shaping the future of the fintech industry.

Cryptocurrency as a fintech model is unlocking fresh markets and supporting more convenience and creativity in product offerings.


One of the best ways to remunerate Fintech is by blending insurance services with digital technologies. Insurtech is an upcoming fintech business model that is playing a crucial role in insurance services.


These services include sales distribution, underwriting claims, lead management and much more. Technologies such as AI, ML and blockchain are replacing traditional insurance companies and helping in maintaining claims more efficiently.


E-wallets or electronic wallets are an amalgamation of a bank account with a payment gateway. This fintech model allows users to preload their virtual money into their e-wallets and use it whenever they like.


It not only gives the comfort of paying with just a few clicks but also is a hassle-free way of transferring money. Especially, in the times of covid where everything has transformed digitally, E-wallets are trending everywhere. 

E-wallets use monitoring and authenticating methods and data encryption systems to ensure secure transactions. Usually, there are two types of payments associated with digital payments as such:

P2B payments

P2P payments or person-to-business payments make use of trending technologies for the transaction of payments.

In P2B payments, the data is transferred between businesses and mobile devices with the help of wireless communications or dynamic QR codes

P2P payments

P2P payments or person-to-person payments make use of the internet and mobile applications to transfer funds from one person to another person securely

Customers can even make use of credit cards and debit cards in such fintech applications. 

This Fintech model allows customers the convenience of making payments contactless and allows the Fintech companies to charge a minimal fee in form of MDR(Merchant Discount Rate). 

With third-party financial services, these companies can generate a stable income easily. 

The cashless future looks promising as there is continuous innovation in E-wallet fintech applications. Here are a few e-wallet apps currently booming in the market:

  • Paypal
  • Apple pay
  • Google pay
  • Amazon pay 
  • Zelle
  • Venmo

Digital banking

Digital banking is one of those fintech plans that bring the conventional banking systems to the fingertips of the customers. The use of smartphones is increasing day by day and people are looking for a virtual banking approach. 

Businesses are leveraging their potential to achieve such fintech solutions and provide customers with reliable digital banking products and services

They are seeking modern business banking alternatives to offer a tailored approach to individual companies, by providing them with solutions relevant to their specific needs quickly, securely, and cost-effectively. Additionally, they can achieve significantly faster transaction times than traditional banking, increasing efficiency and accelerating business decision-making.

Alternative credit score system 

At times businessmen with a steady source of income are unable to pass loan screenings, the reason being the strict credit scoring norms.

Keeping in mind such cases, fintech companies are coming up with solutions that can look for data backups for social scoring and signals in the loan groups. Fintech solutions integrated with AI algorithms are helpful in such lending decisions.

How to make money through fintech?  

When it comes to online fintech services, there are a lot of apps that have made their name in the financial sector such as Coinbase, Mint, Venmo, Acorns and many more.

How to make money through fintech

These apps are an example of the exempted when it comes to the online banking sector and revenue generation through an online presence. Here are some of the proven ways that help monetize fintech models.


One of the most popular ways of monetization for Fintech is the subscription-based model. Through the subscription method, each client is billed a specific amount on a yearly, quarterly or monthly basis

Moreover, they even have an option of a freemium payment model where a customer gets free access to the app for a limited time but then they have to pay a decided fee to access the premium features.  

After the pandemic, subscription-based models have become an industry norm.  Subscriptions are one of the most secure ways of making money. You can generate income directly from online users with a financial app.

Thus, as subscriptions are solely based on charging at a flat rate, there's no third-party integration or any interest planning.   

Organizations can also charge a flat transaction fee between 1 to 4 percent usually. When you think of subscription-based fintech models you instantly think of Netflix, Amazon Prime, Hulu, Disney and many more. 

We can say that the global financial services ecosystem has embraced fintech with open arms as a crucial part of itself. 

With more and more people subscribing to online services and owing very few physical goods, there is a rapid increase in the demand for subscription-based fintech solutions.

Businesses are looking to partner with fintech companies to enable fintech solutions and improve their business processes. It enables them to provide their customers with safe and secure financial services. 

Customers today have an overwhelming amount of options at their disposal, thanks to the inflation of fintech startups. The subscription model gives you an edge among your peers and gives a smooth cross-channel experience to your customers.


Crowdfunding is a process of gaining money and profit by reaching out to individuals who are willing to invest in funding projects.

The ease with which social media, as well as technology, works in fintech is allowing crowdfunding to reach a larger audience. It is an important source of funding for fintech that promotes innovation and efficiency. 

Crowdfunding is also known as collective funding or crowdsourcing.

It is a collective method of a group of people that make use of their financial resources in collaboration to hold up the efforts of organizations and individuals utilizing the financial applications. 

It is a top-down practice of microfinance that deploys people as well as their resources. 

The word crowdfunding acquires its inception from crowdsourcing or the collective development of a financial service and a product.

It can cite initiatives or startups of any type, from financing a pioneering project to subsidizing financial services, lending financial support to organizations, financial research and much more.

Crowdfunding is often cast-off to encourage innovation and industrial development. It plays a huge role in breaking down the traditional barriers of financial investment.

For instance, equity crowdfunding is considered when one buys a share in a company through online investment and becomes a shareholder.

Thus, it varies from the supplementary models because of the particular profit or reward anticipated by those who according to the investment project. 

Fintech app developers are always working on innovative fintech solutions that lend a seamless experience to users.

The surge of crowdfunding in the last few decades is furnished by the proliferation and the unfolding of web portals, applications and mobile services. 

It allows entrepreneurs, businesses and creatives of all types to be able to discourse with the crowd to get ideas, collect money and solicit input on the product or service they intend to offer.   


APIs allow data to be transferred safely and come along with the ability to develop fintech products through partnerships.

APIs, also known as application programming interfaces, one can make the payment process extremely smooth and expand fintech methods dramatically. 

For instance, with the help of open banking, Fintech X has developed an innovative feature and it can sell it to Fintech Y using an API. They can sell and license their code quite feasibly in this model.

Such collaborations can lead to revenue growth for all the partners involved including banks. Fintech companies are expected to use this strategy and increase their sales in the next few years. 

An alternate source of income is that Fintech business can charge their retailers and other companies to utilize their banking infrastructure with Banking as a Service.

As the wide range of services that are provided by the bank is expensive, API interfaces help in customizing users’ experiences by providing a broad spectrum of fintech solutions while reducing costs.

The usage of APIs in fintech is shaping the entire financial market. APIs is the well-designed structural elements that empower modular microservice-based models.

Along with that, the acceptance of APIs is clearly visible in the financial sector and is getting faster with each transition. The trend of APIs is expected to evolve and increase in the coming years.


Applications have become one of the sources of great digital advertising. It is quite feasible to utilize advertising to make money by monetizing apps.

Fintech applications are now using various marketing strategies and skills to identify user needs and serve them well. This includes customer retention, demand generation and customer acquisition to drive business growth. 

Entrepreneurs simply need to display ads on their apps and get paid for advertising by third-party networks.

Moreover, the company can also get paid every time the user clicks on the ad banner and visits the link. This means that you get paid each and every time an advertisement is tapped. 

The advertising model is a great marketing tactic to engage with the customers while upselling or cross-selling your offering. Through the advertising model, your fintech app can generate a stable income with the following types of ads: 

Banner ads

Banner advertisements are more inclined towards image-based advertisements rather than text-based advertisements.

The main aim of banner ads is to promote a brand to gain visitors from the host app to go to the advertiser’s web page. They stay on the user’s screen while users engage and interact with your fintech app. 

Multimedia ads

Multimedia advertisements are designed by combining your app assets and features such as images, descriptions and headlines with the integration of machine learning. 

It is the best way to grab the attention of your customers by delivering visually appealing visual ads.  

Conclusion - fintech business models: how do they work and make money?

Bill Gates states, ‘Banking is important, Banks are not.’

In the financial banking sector, the Fintech models have proven to be a significant disruptive force. In the past few decades, we have all witnessed financial products and services changing dramatically

We have seen that Fintech companies have offered consumers creative and appealing solutions as alternatives to traditional products.

Thus, the fintech industry as a digital asset market is booming, and now is the time for entrepreneurs to bet on Fintech business models and promote their businesses.    

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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