This is the second part of our post about the different business models or categories that exist in the Fintech business. You will find the first post here.
Previously we have mentioned the Fintech categories: Consumer Credit or Lending, Money transfer, Bitcoin and Digital Banking. We move forward now with the following business models:
– Fintech category “Online Payments”
Diverse companies provide online payment processing: credit cards, online banking, prepaid cards, etc. Some are not truly innovative, but some go beyond and target previously uncovered territories or markets. It is these companies that really drive the innovation Fintech forward.
Fintech companies in payment categories cover the following: new markets (South America, South East Asia), new technologies (webcams, fingerprint, etc), simplified POS processing (CC processing with your smartphone), risk management from different perspectives, mobile payments, etc.
Online payments, however, is not a new industry. There are established giants that have the budget and power to test new technologies in a couple of weeks / months and discard or improve their services as they go. The new technologies or new features deployed by these giants, however, are not always well received by users and often do not succeed. One can see that there has hardly been much innovation in payment methods since the creation of the credit card.
– Fintech category “Personal financial management”
With the financial crisis in 2008, it is not surprising that this kind of business model has become really popular. The companies provide a service via an app, website or software that helps the user to better manage his / her money, expenses, income and personal finances in general.
Some Fintech companies with this business model need access to the user bank account and some other personal and private data. Some others do not.
Depending on how sophisticated the services are, these companies cannot only help manage the expenses, but also pay bills, help with tax declarations and deductions, etc. Some other services as investment, insurance, etc, could be part of the package.
– Fintech category “Funding”
The category of funding is tremendously popular and several companies have been created around this business model. Concepts like crowdfunding, are now part of the daily e-business lexicon.
There are, however, other types: such as one person founding one small project, or, like crowdfunding, many people funding a big project. It also mixes with other business models such as lending: I lend you the money to found your company / project, and you pay me back with the corresponding interest. The concept of funding a project online is not new, however, and it has its origins in the early 2000.
Funding being an old concept, (old in Internet years), it has reached different levels of sophistication and specialisation: funding start-ups, funding education in developing countries, funding small projects, funding products, etc, etc.
The idea, concept and evolution of funding online, is older than the concept of Fintech, making it difficult again to define what a Fintech company is and what it is not.
– Fintech category “Business Intelligence”
As with all other e-commerce verticals, there are also Fintech companies offering “Business Intelligence” services. They are targeting all other business models and categories, and offering the possibility to gather and analyze the data product of the services they offer to take better decisions.
If you want to know more about other categories of Fintech companies or business models, continue reading our next post with the 3rd part of the series, or read our first post if you have not done so yet.