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6 FinTech Business Models – A Complete Guide

The blog features a detailed insight into FinTech business models and their respective benefits for FinTech organizations.
fintech-business-models-a-complete-guide | Binmile

The concept of the FinTech business models is not new.

The rapid evolution of FinTech, since the term was coined in 1971 (as per Merriam-Webster Dictionary) is now the fastest-growing industry. It empowers companies to explore avenues, such as cost reduction, productivity enhancement, and better risk management.

Moreover, it also accentuated the importance of a software development company to help FinTech startups stay relevant and ahead of the curve in growing market demand.

FinTech Business Models – Market Analysis Of FinTech

In 2022, the value of the global FinTech market was estimated at around USD 133.84 Billion, coupled with a projected value of USD 556.58 Billion by 2030. This means the anticipated growth of the same is at a CAGR (Compound Annual Growth Rate) of 19.50% over the forecast period.

The report, for instance, shows the increasing prominence of FinTech worldwide.

The number of FinTech startups in America was 10,755, and 9,323 in the EMEA region (Europe, the Middle East, and Africa). Moreover, in the Asia Pacific, the number totaled 6,268, as of 2021, according to the report.

number-of-fintech-startups-worldwide-from-2018-to-2021 | Binmile
Source – Statista

Also Read: Top Technology Used for FinTech App Products

What Defines The Concept Of the Fintech Business Model?

The FinTech business model is a strategic roadmap on which the success of your business toward its intended goal rests. It contains elements, from operating strategy and revenue sources to desired customer base.

Companies in the FinTech industry generally go for inclusive approaches to finance. Using such approaches, for example, helps FinTech organizations allow their customers to get seamless access to a broad range of financial products.

How To Choose An Ideal Fintech Business Model For Startups

  • FinTech startups need to determine their goals and objectives behind establishing the business
  • They should come up with a proper understanding of their target audiences. Products to be developed should align with customer expectations.
  • Understand comprehensively the core aspect of your business offerings. Also, determine key operational processes. They are important to consider before launching products, to say the least.
  • Consult with key partners, like strategic alliances, co-founders, and investors.

Read This: FinTech App Development Cost

List Of Top 6 Important FinTech Business Models

Model #01 – Alternative Credit Scoring

The alternative credit scoring model determines the likelihood of the creditworthiness of a borrower.

This means getting to the bottom of whether the borrowers will default on payment in the future based on data, like their digital footprint.

A FinTech startup can create a solid credit assessment of borrowers by synchronizing the result of numerous alternative data, alongside some traditional records.

One of the benefits of this model is allowing lenders to proactively improve their credit scores. However, FinTech businesses have access to the personal data of lenders.

Benefits Of Alternative Credit Scoring Model:

  • Allows bankers to make better credit assessments based on current parameters and historical data on customer behaviors.
  • It helps banks to expand their market reach to the unbanked population. In addition, the model helps loan applicants with more credit options and competitive interest rates on loans.
  • It is helpful for existing borrowers to refinance their loans at better interest rates. This happens according to the payment discipline in the past.
an example of telcos using an alternative credit scoring model | Binmile
An example of telcos using an alternative credit scoring model (Source – Experian)

Model #02 – Small Ticket Loans

This FinTech business model is catching up fast. It contains benefits, like helping borrowers build a credit history, a quick online process, and improved management of loans.

For most FinTech companies, adopting this model means targeting first-time borrowers. These people seek small ticket loans to cater to their immediate financial needs.

Benefits Of Small Ticket Loans:

  • It allows first-time borrowers to build a credit history, aside from meeting their immediate financial requirements.
  • Since it is a purely digital mechanism, customers can make a quick purchase of loan products. Moreover, they won’t have to wade through time-consuming paperwork.
  • It paves the path for actionable and impactful values for customers
  • It allows almost zero buffer time, allowing instant loan disbursal.
  • FinTech companies can use the model to ensure better tracking and management of loans.

Model #03 – Peer-To-Peer Lending

P2P (peer-to-peer lending) is basically a hallmark of liaison between borrowers and third-party lenders. An effective solution for borrowers having poor credit standing, P2P facilitates the speed of credit financing.

On the other hand, lenders get a solid ROI on their invested money.

Borrowers directly connect with investors through their websites to enable the transactions under different interest rates, terms, and an applicant’s solvency.

peer to peer lending | Binmile
Source – corporatefinanceinstitute.com

Benefits of P2P (Peer-To-Peer Lending)

  • Investors who choose the P2P lending model attain greater ROI on their invested money than other investment types.
  • Borrowers can get faster access to a broad range of funding options. Obtaining financial assistance through this model is relatively more convenient and faster than that of traditional banks.
  • This lending model helps borrowers get the required loan at an attractive interest rate, usually without wading through obdurate paperwork.
  • Funding through this model is available even for borrowers having a low credit rating.

Model #04 – A Smarter Insurance Roadmap

Under this business model, FinTech businesses need to capture both quantifiable and unquantifiable data. Here, quantifiable data refer to any information that can be measured or quantified.

An example of this strategy includes two policyholders having the same weight and height. They don’t drink or smoke. Both of them may get the same insurance policy value.

However, one of them might be an avid fan of fitness, whereas another one may spend his day on the couch, increasing the risk of heart disease.

Under a smarter insurance roadmap, an insurance company can efficiently capture a policyholder’s risk. It involves checking their medical history, lifestyle, or social signals.

Choosing this model would enable companies to weigh in all case scenarios and offer the premium that a policyholder deserves. Furthermore, this model will also prove innovative for optimizing FinTech business operations.

Benefits –

  • It helps FinTech companies prioritize policyholders based on actionable data regarding their medical history, etc.
  • It sounds fairer to consumers as well
  • It enables insurance companies to optimize their business operations

Model #05 – Digital Banking

According to this FinTech business model, accessibility to financial data is possible for users. They can also execute monetary transfers using their smartphone, desktop, and ATM devices.

It also facilitates executing payments through debit cards.

The model constitutes web-based services and efficient automation. It allows cross-institutional service for seamless banking services and transactions by integrating APIs.

The report says the value of the digital banking market globally was estimated at around $803.8 billion in 2018. The anticipated growth of the same is around $1610 billion by 2027, increasing at a CAGR of 8.9% during the forecast period.

The report sheds light on the growing significance of digital banking as an innovative business model for FinTech businesses.


  • Consumers can use it easily and remotely. The convenience of usage is excellent.
    24/7 banking service
  • Some financial institutions, that operate digitally, offer better rates and flexible repayment terms to consumers. They also offer lower transaction fees.
  • It allows both banked and unbanked communities to use digital wallets

Model #06 – Insurtech

It refers to an insurance digital business model that leverages digital technology. The aim of the model is to make the business process more efficient, processing large amounts of data at scale, and reducing risk. Moreover, the model also aims at minimizing operating costs and improving profit margins. Technologies driving Insurtech include Blockchain, Big Data, AI & Automation, and IoT.

Benefits of InsurTech:

  • It allows insurance agencies to automate tasks and improve underwriting and fraud protection
  • Managing and processing insurance claims becomes more efficient and streamlined using this model
  • Helps insurance companies with better risk assessment and identify fraudulent claims
  • It provides data-based insights that insurance companies can use to make personalized products and services

Other FinTech Business Models Discussed In Brief:

Transaction Delivery

FinTech companies can create free products (i.e., expense management apps). It aims at fetching data and then cross-pollinating them with the remaining group. It is used to gauge consumers’ repayment capacity against premiums, purchase mutual funds, etc.

Payment Gateways

These are platforms that allow users to make payments against a product or service on a merchant’s website. Using various payment methods, such as debit/credit cards, digital wallets, etc. separately involves enormous fees by banks to process the transaction. However, integrating them into convenient apps will allow merchants to easily afford and integrate the apps on their websites.

Don’t Miss This: Top 5 Payment Trends of 2024

Digital Wallets

They are secure payment systems with online transfer technologies. Combining mobile payment systems, it allows users to execute transactions using their smartphones. The significance of a digital wallet is that it nearly eliminates the dependency of users on physical cards.


A FinTech business model is a strategic roadmap that sets the course of goals of your business in the future. From revenue sources to operating strategy and intended customer base, it serves top FinTech companies distinctively. It is an intelligent approach for FinTech organizations to access a comprehensive suite of financial services and products.

We have jotted down some prominent FinTech business models. They are popular software development models with respective benefits. Traditional banks can adopt one of these models for automated efficiency in their internal business process.

Get innovative FinTech software solutions with Binmile!

We make available high-quality FinTech software development services. Our banking & finance industry-specific solutions help FinTech companies with better risk assessment, improved productivity rate and meet regulatory compliances.

Frequently Asked Questions

Fintechs employ various revenue models to make money, including:

  • Transaction Fees: Charging a fee for each financial transaction conducted through their platforms.
  • Subscription Models: Offering premium services or features through subscription plans.
  • Licensing and Partnerships: Earning revenue by licensing their technology or forming partnerships with other companies.
  • Data Monetization: Leveraging user data for insights or selling anonymized data to third parties.
  • Interest on Loans: Fintechs engaged in lending make money through interest on loans.
  • Crowdfunding and Investments: Earning fees from crowdfunding campaigns or managing investment platforms.
  • White Label Solutions: Providing customized financial solutions to other businesses for a fee.

These diverse strategies allow Fintech companies to monetize their services in the rapidly evolving financial technology landscape.

The business model for insurance apps typically involves the following key elements:

  • Premiums: Insurance apps earn revenue through the collection of premiums paid by policyholders. Premiums are the regular payments made by customers to maintain their insurance coverage.
  • Commission: Many insurance apps work on a commission-based model. They earn a commission for each policy sold through their platform. This commission is usually a percentage of the premium paid by the policyholder.
  • Partnerships and Affiliations: Collaborating with insurance providers and forming partnerships allows insurance apps to expand their product offerings. In some cases, apps receive a share of the revenue generated through these partnerships.
  • In-App Services: Offering additional services within the app, such as premium advisory, risk assessment tools, or personalized insurance recommendations, can generate supplementary revenue streams.
  • Data Analytics: Analyzing user data can provide valuable insights. Some insurance apps leverage this data for targeted marketing, risk assessment, or sell anonymized data to third parties, contributing to additional revenue.
  • Advisory Services: Providing advisory services, such as personalized financial planning or consultation, can be monetized either through subscription models or one-time fees.
  • In-App Purchases: Some insurance apps offer additional features or premium services that users can purchase within the app, contributing to incremental revenue.
  • White Label Solutions: Offering the app as a white-label solution to other businesses or insurance companies for a licensing fee.

By combining these revenue streams, insurance apps create sustainable business models that cater to the evolving needs of the digital insurance landscape.”

Binmile Technologies
Abhinay Kansal
Technical Project Manager

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