How FinTech Companies Make Money

Many people may be wondering how FinTech businesses make money. Others may be contemplating on which area of FinTech to invest in. Do you fall in to any of these categories of people? This article is going to expound your knowledge on different areas of FinTech and how profitable and promising the FinTech sector is.

Let’s begin by getting to understand what FinTech is

What’s FinTech?

FinTech which stands for financial technology is the application of software, hardware, mobile apps and other technologies to improve and automate the traditional means for financial transactions. FinTech is broad. FinTech includes any technology that simplifies financial transactions for businesses and consumers, facilitates financial include. FinTech companies leverage on AI, APIs, big data, encrypted blockchain technology, and cloud technology to facilitate highly secure transactions.

FinTech Business Models and How FinTech Companies Make Money

FinTech companies make money by offering financial solutions using technology. The financial solutions services that fetch money for financial technology companies include:

  • Cryptocurrency
  • E-wallet
  • Loan Apps
  • Payments and settlement Processing
  • Money transfers and remittances
  • Savings/ Neobank
  • Croudfunding
  • Agency banking
  • Robo-advising
  • ATM service providers

One big stride in FinTech software development is invention and miming and trading of cryptocurrencies. Blockchain is making a great impact in financial sector. It has changed what we thing of money. However, its greatest potential is to challenge the traditional banking system.

Cryptocurrencies are today considered to be great investment opportunities leading to constant business expansion. Has as been increase  in number of startups emerging in FinTech software development and now account for a large share.

Many of the largest cryptocurrencies are now traded on some sort of marketplace. In 2021 Bitcoin was listed at the New York Exchange. Some of companies involved in cryptocurrencies  have even started issuing their own credit cards, which users can load with cryptocurrencies and use to make purchases. MasterCard recently announced that it will issue crypto payments card to its customers.  Blockchain technology provides these institutions with the infrastructure to conduct various forms of financial transactions. Blockchain technology is as well deployed in financial assets management. The cryptocurrencies are takeover the payments settlement system and is rapidly replacing fiat currencies as it well compatible with ecommerce. To play a catchup, many currencies are beginning to issues their Central Bank Digital Currencies (BDCs).

By utilizing decentralized systems, cryptocurrencies are making their mark in the world of FinTech software development. Business organizations can establish decentralization platforms with the blockchain, to enable them create new business models. Changing each element, the flow of transactions, profits, and growth contributes to ensuring success.  In addition to interest-earning cryptocurrencies, many businesses use dividend-paying exchange coins. 

Digital Wallets (e-wallets)

Digital wallet providers in the Fintech  sector are making much  money in the
FinTech software developers who specialize in payment gateways and no-frills bank accounts combine to form digital wallets. The business model involves creating a platform that enables conversion of real money into virtual money stored into e-wallets and use it to pay for goods and services online. Digital payments and cashless and economy are made possible by the emergence and use of e-wallets with more and more people leveraging  on them since the beginning of the pandemic.
The use of digital wallets in conjunction with mobile payment systems has become the norm, enabling customers to make purchases with their smartphones.

Transactions can be made using technology through digital payments, and the cost is largely charged to the vendor at a merchant discount rate (MDR). Also these payment platforms earn money by offering customer financial services to third party companies.

There are some e-wallet apps that are already successful and dominating the market. Some of them are Apple Pay, Google Wallet, Samsung Pay, Venmo, and Paytm. Webmoney. There are also others that operate in local markets in different countries/ regions.

E-wallet apps are constantly evolving and the market is expanding as more people continue to adopt it, which makes the future of cashless payments sound very promising. If you looking at investing in FinTech, you may consider investing in e-wallet software.

Loans/ P2P Lending

With the revolution in the FinTech software development, loan apps/platforms are gaining prominence.
There are two forms of FinTech loan solutions. One is loan platform. The business model in loan platforms involves providing people with platforms where they can get quick loans without paperwork. The FinTech companies charges interest on the money borrowed.

There is also peer-to-peer (P2P) lending solution. In peer-to-peer lending, individuals can borrow money directly from other individuals, bye passing the middleman and financial institutions. Through this people  earn interest on the money they lend to others while the FinTech software companies earn brokerage fees.

FinTech companies that adopt these business models are making cool cash, and it is very possible to get higher returns than what is obtainable in debt markets.
It is simplifying lending process for investors and streamlining borrowing process for borrowers.
Getting better returns than those offered on debt markets is possible with this model, which simplifies lending for investors.

Building platforms that match different lenders with borrowers and charge fees from the repayment process will go a long way in streamlining the commercial lending space and increase access to credit, especially in developing economies. There are many apps offering money lending solutions yet there is still room for more.

Payments and Settlement Processing

Payment switching and processing service play a critical role in financial sector of any economy as they provide solutions that enable seamless digital transactions and enhance financial inclusion.

These Fintech companies act as intermediaries, routing and processing payments between various entities, including banks, merchants, government institutions and consumers.

A payment switch companies take care of all the processes in a transaction, which include verifying accounts and approving or rejecting transactions.  It controls all aspects of payment processing, including acquisition, routing, switching, authentication, and authorisation of transactions through various payment channels leveraging Open Banking.

Fintech companies who operate payment processing and switching services charge processing fee, usually a certain percentage of the amount of payment processed.


Crowdfunding concept is another way FinTech startups make money. The concept of crowdfunding involves collecting money from many individuals to contribute to projects or financial institutions. The money collected  are usually smaller amounts of money from a broader audience which sum up to larger amount of money enough to finance the project. This makes gathering the total required sum of money much quicker than relying solely on few investors. The majority of crowdsourcing projects are conducted online, developing and managing a platform that conducts the fundraising is good investment.


Robo-advisor platforms conduct trading activities without human financial assets advisors.
Technological solutions manage their money automatically, and they can also trade commission-free. AI and ML technologies are deployed  to manage portfolios effectively.

Robo-advising platforms provide the same services traditional assets management companies provide but for lesser fees.

An investment portfolio management organization, for example, may charge a percentage of the total assets it manages. Robo-advisor platforms provide the same services for much lower fees, saving investors a lot of money. For robo insurance advisory and charges, users are not required to pay large amounts but do pay a portion of their assets as fees. Most investors find it more cost-effective to charge a specific percentage of their total assets. Investors, though, may pay a cost slightly above the actual stock price, but they pay will be much more low compared to trading fee they would have to pay via conventional methods.
These trends indicate the growing popularity of online banking applications for online investing. FinTech software companies such as Robinhood, Wealthfront, SigFig, Money farm,  Betterment are already cashing out in this niche.

Ikechukwu Evegbu

Ikechukwu Evegbu is a graduate of Statistics with over 10 years experience as Data Analyst. Worked with Nigeria's Federal Ministry of Agriculture and Rural Development. A prolific business development content writer. He's the Editor, Business Compiler

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