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How does Fintech generate income? A Summary of Fintech Company Business Models

Condition of the Fintech Market

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The last two years of the Pandemic were challenging for a lot of industries. The fintech industry was not an exception either. Nevertheless, the FinTech sector has survived a storm that is still raging throughout the world. The FinTech sector is thriving these days, with worldwide funding reaching a record $91.5 billion this year. In 2020 this is almost double its amount. According to the State Of FinTech Q3 ’21 Report, 42 FinTech unicorns, or startups worth more than $1 billion, were launched, bringing the total number to 200.

How does Fintech create revenue that enables them to expand its FinTech software development companies and initiatives?

Subscriptions, third parties, and advertising are the main sources of revenue for Fintechs. Although most fintech firms are in their early phases, many of them emphasize expansion above profitability. In this post, we’ll take a close look at what makes a FinTech company lucrative and successful. Following are a few main ways, how Fintech makes money:

  1. P2P Lending

Peer-to-peer (P2P) lending occurs when one person borrows money from another. Moreover, Peer-to-business (P2B) lending happens when a corporation borrows money from one or more people. These lending strategies make it simpler for investors to earn higher returns than those accessible in debt markets. Fintech companies like Funding Circle create platforms that link borrowers and lenders and they collect a commission from the borrower’s repayment.

  1. Digital wallets or e-wallets

E-wallets are a combination between a conventional bank account and a payment processor. Moreover, users can preload virtual money into their e-wallets and use it to pay for products and services. Digital payment models made by the FinTech businesses help   Customers make contactless payments for a minimal cost.  And, retailers pay this fee in the shape of a merchant discount rate (MDR). These payment platforms also make money by selling third-party financial services to their consumers.

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  1. Crowdfunding

Crowdfunding is a method of collecting funds to support initiatives or financial organizations. It’s easy to fund a product or project by collecting smaller sums of money from a broader audience. Moreover, funds are collected faster rather than depending on a single investor. Even though most crowdsourcing initiatives are done online, crowdfunding can also be done offline. Crowdfunding has helped certain FinTech companies flourish. Donations to crowdfunding platforms like Kickstarter or Indiegogo are converted into goods or services.

Patreon, Patronite, and Buy Me a Coffee are three sites that help smaller writers, publishers, and characters. Crowdfunding sites often generate revenue by taking a percent of the overall amount raised.

  1. Digital Banking

Banks are providing no-frills individual and business bank accounts with the use of a fully digital framework. This business model is almost equivalent to that of a bank with physical branches. The only difference is that the consumers will benefit significantly from cheaper rates. This will be possible owing to significant cost reductions in employees and real estate.

Some banks are even providing personal and commercial bank accounts using a 100% digital infrastructure. This business model is somewhat similar to that of a bank with physical branches. The only difference is that it does not have to maintain the expenses for staff and buildings. This further helps them to provide reduced rates to their clients.

  1. Cryptocurrencies

The growth of cryptocurrencies has rattled FinTech software development. The blockchain has a significant influence on the banking industry. However, its greatest capability is to disrupt the conventional perspective of the banking system.

Bitcoin and other cryptocurrencies have gone a long way. A wave of frauds and breaches followed the Bitcoin fever. The general public believed that cryptocurrencies, and the underpinning blockchain database, were not worth the investment. Since then, there have also been numerous improvements.  Now they reconsider almost every facet of cryptocurrency. Therefore, they are now an excellent investment opportunities leading to continuous corporate development. Moreover, a growing number of companies have emerged in FinTech software development, accounting for a sizable portion of the market.

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  1. Robo-advising

Robo-advisors are trading platforms that earn income. Since technology solutions handle their money automatically, beneficiaries avoid paying the investment advisors. Hence, they can trade freely without paying any commission. Moreover, these platforms can successfully manage portfolios by employing modern technologies such as AI and ML.

For example, a portfolio management company will charge a proportion of the overall assets it handles. Advisory robot platforms save investors a considerable amount of money by offering the same solutions at a substantially cheaper fee.

  1. Payment gateways

Payment gateways are online payment platforms, helps customers to do payments on a merchant’s website. Debit cards, credit cards, digital wallets, and cryptocurrencies are now just a couple of the payment alternatives offered nowadays. Sometimes banks charge hefty fees to process most of these various payment methods. However, Fintech startups combine all of these payment methods into simple apps that online businesses can easily purchase and add to their websites.


Today in this blog we have discussed a few business models of Fintech companies. So you can see they do earn some revenue through their businesses. A fintech development company in Jericho, New York is helping the financial market in various ways. So, we hope that through this above-mentioned information; will help you to learn more about fintech. You can also think of opting for a fintech software development for your business.

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