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How Does Fintech Make Money: Understanding Fintech’s Business Model

How Does Fintech Make Money: Understanding Fintech’s Business Model

March 4, 2022

2020 was a challenging year for most industries, and fintech was no exception. Fortunately, today the fintech industry is booming. However, many fintech businesses are more concerned with growth than profitability due to their young age. As a result, people have doubts that the fintech business model will ever succeed and are confused about how it operates.

It actually differs from one fintech to another. Let’s see some examples of revenue streams for fintech companies to know how does fintechs make money.

How Does Fintech Make Money


In mobile apps that we use daily, digital advertising has a place. One of the simplest ways to monetize an app is by advertising products. How does fintech firms make money with advertising? A fintech company receives payment each time an advertisement is clicked. They can collaborate with a specific group of financial service  institutions, including lenders, merchants, and banking professionals, to market your funding application.

Since customers need no subscription costs to access fintech’s products or services, this business model is effective for fintech startup. A user’s personal fintech app might generate revenue via banner and multimedia advertisements in this business model.


With this monetization strategy, how does fintech start up make profit by obtaining the revenue directly from the end user? The most popular business model for fintech companies is the subscription model. The fintech company charges consumers a recurring amount as a subscription fee, either monthly, quarterly, or yearly. A video streaming subscription, like Netflix, is a perfect example.

There are also free trials to enable customers to test the product before shelling out a premium, thus making this kind of app monetization highly successful for fintech.


How does fintech software development make money with robo-advising? They can generate revenue using robo-advisors, platforms for trading-based revenue. This method shows how internet banking and investment applications are becoming more and more common. The platforms create algorithms that efficiently manage portfolios using cutting-edge technology like AI and machine learning.

The customers pay a particular proportion of their financial assets for the robo-advisors service. But since they are not required to pay enormous sums of money, the cost is much lower. For instance, investment managers charge 1% or more for advisory services, but a business that offers these services charges only 0.25% annual management fees.


Startups can now offer comparable services thanks to technology, although banks traditionally serve as the go-to financial places. By embedding their revenue model inside a business model using APIs, fintech companies can develop solutions that will be sold to banks and other financial institutions.

Many fintech companies usually use APIs to improve their back-end systems. According to a survey from Salesforce, 88% of customers anticipate businesses to quicken their digital initiatives due to the COVID-19 pandemic.

APIs allow these corporations to collaborate with other businesses in the ecosystem and share pertinent data or features. These are made possible by an open banking environment. For instance, fintech A can use APIs to share a cool feature it has developed with fintech B.


In this approach, by collaborating with other external institutions to provide value through several channels. The third-party service provider receives payment/ money transfer for each transaction or offers a specific proportion to the fintech company. This is in exchange for fintech directing users to their services.

Only 26% of FinTechs, according to an Oliver Wyman analysis, depend on outside services. However, 43% of fintech targeting the mainstream market rely on third parties for income.

Overall, companies like in fintech industries’ worldwide funding reached a record of $91.5 billion this year, almost doubling what it would be in 2020. According to the State Of FinTech Q3’21 Report, 42 fintech unicorns were created over the past quarter, bringing the year’s total to 200.

So, you now understand how does fintech make money. By utilizing fintech easily using Ayoconnect’s open finance solutions, we can build an environment to facilitate synergies between digital banks, traditional financial institutions, and neo banks. As a result, all of Indonesia’s citizens now have simple access to high-quality financial goods and services.