What Is A Fintech Business Model? Fintech Business Model Examples

Fintech business models leverage tech and digital to enhance the financial service industry. Fintech business models, therefore, apply tech to various financial service use cases. Fintech business model examples comprise Affirm, Chime, Coinbase, Klarna, Paypal, Stripe, Robinhood, and many others whose mission is to digitize the financial services industry.

Some use cases comprise:


Fintech companies incorporate technology into financial services and in so doing, have changed the way financial assets are managed, created, and exchanged.

Compared to traditional financial organizations, fintech operations are more streamlined and manage risk in a different yet more efficient way. 

Many fintech organizations also adopt a more inclusive approach to personal finance, giving a broad swathe of consumers access to financial products and services. Furthermore, these products and services are typically available on mobile devices and do not have convoluted sign-up processes.

So how is the fintech approach different, exactly? This article will briefly explore some common fintech business models.

Digital banking

Fintech organizations offer individual and business bank accounts based on a complete digital infrastructure. 

While this model is more or less the same as a traditional banking institution, fintech companies save money on having to maintain physical branches. A portion of this saving is passed to the customer. 

Importantly, companies like Aspiration, Chime, and Varo are bringing simple digital banking to the North American market with elegant design and better customer experiences.

Alternative credit scoring

Self-employed individuals typically have difficulties securing finance from a traditional lender. To some extent, this trend has been exacerbated by the gig economy and the rising popularity of entrepreneurship

Instead of assessing strict credit scores, fintech companies are using social signal data in conjunction with AI algorithms to assess the creditworthiness of an applicant more accurately.


Most traditional financial organizations offer a suite of bundled products and services including investment banking, insurance, car loans, home loans, and credit cards.

Fintech companies are challenging the status quo by becoming specialists in just a few select services. This is particularly true of start-up fintechs who, because of their limited product offering, can focus value delivery more effectively.

Demographic-focused products

Some fintech companies are creating products based on the specific demographic of their target audience.

For example, True Link Financial offers fraud protection for elderly customers. Camino Financial offers lending designed for Latino-owned small and medium-sized businesses. Brex is a service designed for start-ups, eCommerce companies, and other smaller business segments.

Different fee structures

Robinhood is an investment application offering free stock trading. Instead, the company makes money selling retail order flow. 

Wise (formerly TransferWise) offers consumers who want to send money abroad the mid-market exchange rate. Using economies of scale, its fee structure is based on transparent transaction charges. 

Built on low-cost digital infrastructure, many neobanks have been able to turn a profit on debit exchanges and deposit brokering. These are options that would not be cost-effective for a traditional banking institution.


Many insurance companies are changing to the “insurtech” fintech business model – a portmanteau of insurance and technology.

This model utilizes AI, data analytics, and blockchain to help companies sell insurance using virtual branches and process claims more efficiently. It also has important applications in sales, distribution, underwriting, and lead management.

Key takeaways:

  • Using technology, fintech company business models are changing the way consumers access financial products and services. Consumers can now create accounts on handheld devices regardless of their physical location.
  • Specialized fintech companies that offer just a few select services are an example of unbundling. Specialization together with more elegant user interfaces increases customer value.
  • Fintech companies are also targeting a broader swathe of user demographics. Some companies offer fraud protection to elderly customers while others offer loans to Latino small and medium-sized business owners.

Connected Business Models

Afterpay Business Model

Afterpay is a FinTech company providing as a core service the “buy now pay later” solution. When a consumer purchases a product, Afterpay pays the seller and asks the consumer to pay 25%. The remaining 75% is paid in three, fortnightly installments that are also interest-free. Afterpay, in turn, makes money via merchant and late fees.

Quadpay Business Model

Quadpay was an American fintech company founded by Adam Ezra and Brad Lindenberg in 2017. Ezra and Lindenberg witnessed the rising popularity of buy-now-pay-later service Afterpay in Australia and similar service Klarna in Europe. Quadpay collects a range of fees from both the merchant and the consumer via merchandise fees, convenience fees, late payment, and interchange fees.

Klarna Business Model

Klarna is a financial technology company allowing consumers to shop with a temporary Visa card. Thus it then performs a soft credit check and pays the merchant. Klarna makes money by charging merchants. Klarna also earns a percentage of interchange fees as a commission and for interests earned on customers’ accounts.

SoFi Business Model

SoFi is an online lending platform that provides affordable education loans to students, and it expanded into financial services, including loans, credit cards, investment services, and insurance. It makes money primarily via payment processing fees and loan securitization.

Chime Business Model

Chime is an American neobank (internet-only bank) company, providing fee-free financial services through its mobile banking app, thus providing personal finance services free of charge while making the majority of its money via interchange fees (paid by merchants when consumers use their debit cards) and ATM fees.

How Does Venmo Make Money

Venmo is a peer-to-peer payments app enabling users to share and make payments with friends for a variety of services. The service is free, but a 3% fee applies to credit cards. Venmo also launched a debit card in partnership with Mastercard. Venmo got acquired in 2012 by Braintree, and Braintree got acquired in 2013 by PayPal.

FinTech Business Models

Fintech business models leverage tech and digital to enhance the financial service industry. Fintech business models, therefore, apply tech to various financial service use cases. Fintech business model examples comprise Affirm, Chime, Coinbase, Klarna, Paypal, Stripe, Robinhood, and many others whose mission is to digitize the financial services industry.

Read Next: Fintech Business Models, IaaS, PaaS, SaaSEnterprise AI Business ModelCloud Business Models.

Read Next: Affirm Business Model, Chime Business Model, Coinbase Business Model, Klarna Business Model, Paypal Business Model, Stripe Business Model, Robinhood Business Model.

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