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What are the different types of Fintech, and how do they make money?

What Are The Different Types Of Fintech, And How Do They Make Money?

Have you heard of Fintechs? If yes, you will know how Fintech technology is gaining widespread popularity these days and are welcomed by everyone with open arms. Financial technology helps automate different types of financial processes and streamline the businesses for the industries offering bank-related services. 

New business models are emerging in the finance industry and taking over the traditional banking and finance infrastructure. Banking and financial institutions are now using data analytics to digitize their operations, and financial technologies speed up the business processes and increase the growth opportunities for many financial sectors. 

You might have many questions in mind like how Fintech works, the types of Fintech, and how these Fintech businesses make money. Don’t worry, as this blog aims to clarify all these doubts and questions one by one. 

Let us begin with the most innovative types of Fintech business that are making all the noise these days. 

There are many innovative Fintechs in the industry currently, and with more and more businesses investing in Fintech, growth opportunities for Fintech seem quite promising and revolutionary. 

Let’s have a closer look at the most innovative types of Fintech- 

Credit Assistance  

Many banking and financial institutions struggle with quality credit score assessments. Due to this issue, many people don’t get access to loans. To tackle this, credit scoring methods are used to determine the credit score of a user as per their qualitative data. 

Nova Credit is a company that is currently embracing this trend. Nova credit is catering to the market with a new approach by consolidating the customer credit score data points such as social signals and percentile scoring. Credit scoring Fintech firms generate better credit scores and allow lenders to make smarter decisions.  With credit assistance, the lenders can decide whether to lend the money to the borrower or not. 

Insurance underwriting 

The life insurance premium is the same for every user with the same body measurements, health, and habits. However, no two people are the same. For instance, one user might be a fitness freak while the other might be lazy and ignorant of their health, which makes the latter more prone to diseases and illness. 

To tackle this inefficient premium calculation, Fintech companies like Carpe Data have developed an insurance computing mechanism based on factors like the user’s social signals, medical history, habits, lifestyle, etc. These Fintech companies can help insurance companies determine and calculate insurance premiums for the users as per their eligibility. 

Finance management 

Proper data management can be quite helpful as it provides detailed insights into the customer’s buying habits. Many Fintech companies have started creating free software solutions like expense manager apps. 

Apps like these collect the customers’ data, track customers’ expenses and merge the data with other crucial information. These apps are a great way to know whether the customers are capable of paying the premiums, investing in financial assets, etc. Most of the Fintech businesses developed with this business model rely on commission and sell third-party financial products. 


e-wallets are pretty popular these days. Everyone is familiar with e-wallets these days, especially after the COVID pandemic. The popularity of these e-wallets is that they are safe, convenient, contact-less, and an innovative way of making fast payments. 

Looking at the increasing demand and popularity of e-wallets, we can expect a promising cashless future soon. Some of the successful e-wallet apps are Square cash, Google Wallet, Samsung Pay, etc. These successful e-wallets apps inspire many companies to develop their own e-wallet apps in the industry. 

Neo banks 

New banks have changed the banking system significantly. With the introduction of neo banks, there is no need for physical infrastructure or banking operations. New banks have become quite popular among users as they are affordable, easy to set up, and safe to use. The best thing about Neo banks is that they are accessible 24*7 which means you can access them from anywhere, anytime. 

Neo banks like N26 are revolutionizing the banking sector and offering users hassle-free banking services. The success of existing Neo banks shows that these banks are only going to grow in the future. 

Payment gateways 

There are many payment methods these days, and still a need for more payment gateways in the industry. Payment gateways allow the customers to pay for any service online to transfer money safely. 

Generally, banks charge high fees for transactions, but Fintech companies like Stripe and iZettle are saving the customers some amount of money by making it cost-effective for them to make online payments with minimum or no transaction fee. Many online merchants are integrating multiple payment methods in their apps to offer flexible payment options to the users. 

How do Fintech businesses make money? 

After discussing the Fintech business types, the next big question is how do these companies make money. Generally, most Fintech companies make money through mediums like subscriptions, third-party financial services, and advertising. Shockingly, many Fintech companies, even the popular ones, are not breaking even yet. The question remains, how do they make money? We will tell you how. 

Subscription fee 

This is the primary monetization model for Fintech companies. In this model, the money comes directly from the end customer. In this model, Fintech charges a regular amount as a subscription fee from the customers monthly, quarterly, or yearly. The customers can enjoy the premium features of Fintech after paying the subscription fee. 


Advertising is yet another way. Fintech businesses make money. In fact, Advertising is one of the simplest forms of monetization for Fintech companies. This model works well for those not willing to pay any subscription fee to access Fintech’s products or services. An example of this model is NerdWallet. This website makes money from the ads and has partnered with third-party to promote its products and services. 


Many Fintech companies find third parties an effective source of generating income and making money. With this model, the Fintech companies partner with a third-party company and offer value via other means. A Fintech business also provides services like health insurance, credit scoring, and accounting services with the help of third-party institutions. 


APIs are also well-known among the monetization models of Fintechs. Although APIs are a recent addition, they offer Fintech organizations various opportunities to partner with other companies and share relevant data of features. APIs open banking APIs are new to Fintechs, and this model needs a slight improvement. On the bright side, Fintech experts believe APIs are practical and have room for improvement. 

Data collection 

Fintech companies have a huge collection of users’ data to supply to the third-parties. The companies gather the data to analyze the users’ buying habits, preferences, and salaries to understand the users better. They then sell this information to insurance providers. The insurance companies then use this information to make smarter decisions about offering insurance and other services to their customers. 

Summing it up 

Ever since the introduction of on-demand apps, many industries have been transformed. Thus, the banking and finance sector is no exception. Gone are the days of traditional banking systems. Today, Fintech businesses have taken over the traditional banking system for all good reasons. 

Many businesses are investing in Fintechs and if you wish to do the same, hire mobile app developers from a trusted mobile app development company. If you are in search of a trusted partner to help you with a successful Fintech app development, feel free to reach out to our team.  Our developers will take you through a detailed guide on project management and delivery milestones and assist you in every way. We look forward to hearing from you.

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What are the different types of Fintech, and how do they make money?