We will tell you how fintech can be financed.
How to monetize financial technology? This question is often asked by aspiring entrepreneurs.
Of course, there are many ways to monetize, but the investment firm Omidyar Network has reduced them to three main types. So, fintech financing can come from:
In addition to the sources of funds, players in the fintech industry also need to understand how payments will be structured. Having researched various fintech companies, the authors of the report divided payments into the following types:
Collecting payments from consumers is by far the most popular monetization model: 65% of companies use this approach. Models based on third-party sellers (33%) and third-party beneficiaries (26%) are also used by many startups.
Most fintech companies start with a single revenue model and add new ways to monetize over time. That said, three quarters of financial health assessments in the market today rely on a single source of income.
Companies with multiple sources of income, on average, raise twice as much funds from investors and are usually more mature.
Experts and entrepreneurs offer a simple explanation for this trend: creating a monetization model takes a lot of work. It often involves trial and error; the process requires close management attention and additional effort beyond the development of the main product.
Therefore, most entrepreneurs save resources and choose one source of funding, which they focus on first.
Usually, as startups develop, additional resources appear, which are used to add new functions and develop complex solutions that diversify sources of income. Thus, fintech startups must not only determine the financing model at the initial stage, but also imagine how it will develop in the future.
Since most fintech startups charge consumers directly, whether directly to the public or sellers, monetization strategies can have a major impact on customer attitudes. The right strategy makes them feel like the service is serving their interests, while hidden fees and excessivecan lead consumers to think they are being used and cash in on them.
Here are some of the key risks that users believe can lead to a decrease in startup confidence:
In this report, Omidyar Network experts examine current monetization patterns in the financial services environment, highlighting trends based on a survey of 350 fintech startups, analysis of 11 industry studies and recommendations from founders and investors, focus groups and online diaries of dozens of consumers from different regions and income levels.
The study helps to understand how to integrate a commitment to maintaining financial health into a company’s core strategy and how to mitigate the risks to buyers associated with the monetization model. The idea is to inspire mass-market entrepreneurs and provide a foundation that will enable them to succeed while benefiting society along the way.
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