The fintech industry is growing rapidly and disrupting traditional financial services with new innovations and business models. From cost saving to seamless services, fintech offers several benefits to transform industries.
Over the past decade, fintech startups have transformed themselves by leveraging emerging technologies and meeting changing customer needs. Many companies have implemented unique fintech business models and achieved success.
In this blog, we’ll discuss some innovative fintech business models that have turned startups into successful fintech apps. You will gain an understanding of how each model works with its unique prepositions. Let’s get started;
Alternative Credit Scoring
In an alternative credit scoring model, borrowers determine lenders’ creditworthiness with the use of relatable, current, and easily available data such as their digital footprint. This fintech business model is crucial for companies willing to issue loans to individuals. Popular companies such as Nova Credit, Canopy, etc are already using this model through fintech software development.
Why You Should Choose the Alternative Credit Scoring Model?
- It allows bankers to make better credit assessments based on data on consumer behavior.
- It helps banks expand their market reach to the unbanked population by providing them with loans.
Peer-to-Peer Lending
P2P (Peer-to-Peer) lending is a hallmark of communication between borrowers and third-party lenders. This model is used to bypass traditional banks and offer faster loan approvals at competitive interest rates. These models have been successful because they allow borrowers to enjoy lower interest rates and provide better returns to investors. The examples are; LendingClub and FundingCircle.
Why Businesses Should Choose This Model?
- This model provides greater ROI to investors on their invested money than other types.
- It provides convenience and speed in obtaining financial assistance.
Digital Banking
This business model allows users to access financial data, make payments via debit cards, and initiate money transfers through mobile, desktop, and ATM devices. Some popular Fintech Apps such as Revolut, Chime, PayPal, and Stripe are using this model and they have achieved success.
Why Businesses Should Choose This Model?
- More than 31% of the world population is unbanked which could help in expanding business.
- It provides flexibility and convenience to consumers which results in reaching a new audience.
Insuretech
This model is reshaping the insurance industry with the use of AI, data analytics, and blockchain. It simplifies policy management, claims, and customer service. This model became successful by providing personalization and high-level security which is essential to foster trust. Apps like Lemonade, Oscar Health, and Root are using this model and achieving success.
Why Businesses Should Choose the Insurtech Model?
- This model simplifies employee benefits and corporate insurance processes.
- It allows insurance agencies to automate their tasks and improve fraud prevention to provide advanced security.
Investment Management
Consumers find it difficult to make investments and keep track of their assets accounts. Startups can take advantage of this model by developing a wealth management platform to allow investors to trade seamlessly from anywhere. The prime examples of successful Fintech apps using this business model are Robinhood, eToro, and Betterment.
Why Businesses Should Use This Model?
- This model attracts new investors which can result in the growth of fintech startups.
- A recent study by Gallup shows that more than 56% of the US population invests in stocks and a significant proportion of them are active traders. This data shows that this model will witness huge growth in the coming years.
Wrapping Up
We have explored the top 5 Fintech business models that Fintech startups can adopt to achieve success in the competitive industry. But an idea needs the right execution. That’s when you need to partner with a skilled fintech software development company. RipenApps is a leading mobile app development company in USA and India. We have engineers and designers with decades of experience in building cutting-edge financial apps to help businesses achieve success.
