Have you ever thought about how fintech companies make money? How do they produce profits through a fintech web or mobile application? This question matters a lot when you are going to establish your own venture in the fintech industry.
If you are also one of those who want to understand how fintech works and makes money, I will explain it in this post. Being a fintech app developer I know how it is important to analyze different fintech business models so that you can choose the best model for your fintech platform.
So let’s explore them one by one.
1. Digital Banking
Digital banking is a trending business model in the fintech industry. It is the virtual model of the current physical banks that have many branches and infrastructure. Digital banking is a web or mobile-based fintech platform that provides all types of banking services online. People can open saving accounts, get debit/credit cards, manage other financial accounts and do a lot more.
Since digital banking solely works through online mode it eliminates the need for heavy infrastructure development. Customers don’t have to visit any physical branch to withdraw or deposit money. They can perform these tasks online through the web or mobile applications.
And therefore, the digital banking model allows fintech companies to offer highly lucrative banking services to customers. But digital banking is sensitive and needs to work seamlessly. You need to work with the best fintech app development company to build a secure and fast digital banking application.
2. Digital Wallets (E-wallets)
A Digital wallet or electronic wallet is the combination of a bank account and payment gateway. In this fintech business model, customers have to preload their virtual money into their wallets. And then they can use this money to make payments for purchasing goods or services.
At present when mobile shopping is acquiring a big space. The need for more e-wallets is increasing. These digital wallets make money by selling third-party financial services to their customers. And also through allowing relevant sales ads.
Famous e-wallets apps which are currently running in the market
- Google Pay
- Samsung Pay
- Square Cash
- Venmo
3. Crowdfunding
Crowdfunding is to raise money or donations for a particular financial purpose. It focuses on collecting money in smaller parts from a larger segment of the audience or target group. Many startups and non-profit organizations have to depend on Crowdfunding for collecting money for various financial purposes.
And to execute this, they use Crowdfunding platforms. A Crowdfunding platform could be either web or mobile application. Crowdfunding platforms make money through fees. The platform takes a certain percentage from the total raised money along with transaction fees.
So let’s say a Crowdfunding platform conducted 20 campaigns. Hence, the platform would take share from 20 campaigns along with a transaction fee.
4. Crypto-exchange fintech app
Due to rapid growth in the exchange of crypto and digital currencies, consumers are looking for fast, secure, and convenient web or mobile apps for exchanging cryptocurrencies. And this trend has given birth to this fintech business model-crypto exchange fintech app.
This application allows customers to buy, sell or exchange different cryptocurrencies at ease. The app makes money by charging a certain commission for every trade that customers make.
Today, the trend of cryptocurrency exchange is growing a lot due to the rising number of NFT and cryptocurrency marketplaces. Businesses hire blockchain developers to build cryptocurrency. So, if you own a crypto-exchange app, chances are they will need your app too.
5. P2P Lending
P2P lending is a quite new fintech business model which is gradually emerging. A P2P (Peer-to-Peer) lending platform allows people to borrow money directly from other people. There is no involvement of any middlemen, banks, or financial institutions.
The P2P lending model allows people to lend money at a more competitive interest rate since there is no intervention of any third party or intermediaries. This fintech business model allows money lenders to make higher profits.
So how does a P2P lending application generate profits? It works as a common platform for both lenders and borrowers. Debt seekers can borrow money from a wide list of P2P lenders at different interest rates. And the application will make the money by charging a certain percentage from a confirmed deal.
6. Asset Management
Have you ever used the Robinhood app? This is a kind of investment app that allows investors to sell their information related to stock & trading. Asset management is a widely used business model in the fintech industry.
Asset management fintech apps allow users to gather investment-related data. And enable customers to leverage this useful information to make a well-informed investment decision. For example, Robinhood helps customers to invest in stocks and trades by letting them learn from expert advice.
Asset management apps earn money from various methods like subscription methods, in-app ads, or charging certain shares from investment profit.
Conclusion: What’s Your Take?
So, did you find these fintech business models lucrative? There are still many business models in the fintech industry that you can adopt to your fintech app development project. These models are evolving at a faster pace.
Therefore, you would see a great number of fintech companies already working on some of the above fintech business models. So if you want to build your fintech business model successfully, then you should try to work with the top mobile app development company.
About the Author
Josephine Baker is a fintech app developer at MobileCoderz-a top-notch digital transformation company that provides best-in-class fintech app development services to global businesses. She holds a specialization in developing multiple types of fintech apps. Some of the apps developed by her have generated high values for clients. Aside from her tech life, She helps non-profit organizations in crowdfunding and writes inspiring stories for school kids.
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