Technology has been leaping to great heights with every new groundbreaking concept introduced in the industry. Financial technology is one such innovative idea that has kept the money market on the top of the economy’s list of wonders. Banking giants have started discovering more options to wipe out this technology since it acts as the kryptonite to these corporate projects. Several advancements to the services and products in the industry have helped the multiple facets develop with time. Transformation of the market has occurred over the past decade, helping humans equip their systems with more efficiency. Professional industries are being affected by the change in the workflow, further aiding the economy to grow through the existing conditions. As many companies have taken over the telecom industry, financial technology has found its place in banking to explore the untapped areas of businesses. Let us look at the most innovative Fintech business models.
1. Alternative Credit Scoring and Insurance Underwriting
Conventional bank loan screenings can be quite stringent and outdated for credit scores. The criteria could deter every applicant from acquiring a loan. Lending decisions get better when the qualitative factors are combined for intelligent interventions by the technology. Alternative data points are being considered by certain FinTech companies to improve the percentile scoring criteria. Social presence may give a clearer picture of the negative profiles of the applicants, and this could help the lender decide how to deal with loan recovery.
Multiple premium computing mechanisms are also being generated by the FinTech companies to properly understand the social signals, medical history, and lifestyle. Faulty premium calculations can occur due to several mistakes and flaws in the system’s functional design. Whether or not to give insurance to an organization can be a decision the lenders contemplate based on the alternative payment options offered by FinTech companies.
2. Delivery of Transactions
Insights into the wants of a customer are available in the current state of things, as data is being managed more efficiently these days. Free products are being created by numerous companies in the transaction delivery space, helping collect consumer data to map the right elements to greater potential for the investment options. Commission-based business models exist in real estate, mutual funds, and insurance to promote the financial technology used in the development of the systems.
3. Peer-to-Peer Lending
This is a practice where two individuals are involved in the deal, and the business model may have money flowing in from these two sources based on the system’s working model. Platforms are created by FinTech companies to match lenders with borrowers for the proper repayment.
4. Digital Wallets
Payment gateways and bank accounts are merged on these platforms to create digital wallets. A certain amount of virtual money can be pre-loaded by the user by making use of this business model. Online or offline transactions can be made with merchants who have enabled this particular technique with the various digital wallets available in the market.