Best Business Models for Startups: 2024 Prediction

The fintech sector in 2023 has experienced unparalleled expansion, marking its prominent role in the worldwide financial landscape. 

As per EMR’s data, the global fintech market reached a significant valuation and is projected to expand at a
CAGR of 16.8% during 2023-2028, targeting a market size of USD 492.81 billion by 2028.


Expert Market Research

The rise in online transactions, the growing appeal of mobile banking, and the emergence of blockchain technology stand as a testament to this fintech metamorphosis. The shift towards a cash-free society and the urgency for on-the-spot financial solutions
further fuel the appetite for cutting-edge fintech offerings.

Such rapid expansion naturally breeds intense competition. The fintech startup arena is now a thriving environment, overflowing with visionary entrepreneurs set on reimagining the financial service sector. As of May 2023, the Americas alone boasted

11,000 fintech startup registrations, with a staggering 26,000 recorded worldwide.

However, amidst the enormous promise the fintech realm presents, there’s a core principle to bear in mind: the longevity and triumph of a fintech startup are predominantly influenced by its selected business strategy. This encompasses the firm’s unique value
offering, target demographic, scalability, and, crucially — revenue generation.

Recent studies indicate that fintech startup profitability might not be as rosy as perceived. Analysis from 2022 reveals that around

400 Neobanks globally catered to nearly a billion users. Yet, a mere 5% of these innovative players achieved the breakeven point.

In this comprehensive guide, I aim to illuminate the most viable business strategies for fintech startups in 2024 based on data from previous years. 

My mission is to arm you with knowledge, ensuring your venture’s long-term growth and triumph in a sector that’s not hitting the brakes anytime soon.

A Comprehensive Guide to Choosing the Right Business Model for Your Fintech Venture

So, you’ve landed here with a groundbreaking startup idea. It’s unique, it’s cutting-edge, and you’re convinced it can redefine the industry landscape. But the question arises: how can you mold this idea into a profitable business structure?

Embark on this detailed guide to navigate the path to the ideal business model for your startup.

1. Deciphering Your Market and Client Preferences

Let’s kick things off by identifying your audience. Delve into comprehensive market analysis to truly grasp your intended clientele. Move beyond mere age and location demographics; dive into their lifestyles, habits, necessities, and challenges. 

The crux is to pinpoint a distinct issue your startup is poised to resolve, ensuring you’re attuned to that challenge to drive profitability.

2. Navigating the Regulatory Landscape

The fintech arena, regardless of being situated in the US, UK, or elsewhere, is often bound by stringent

regulations. Familiarize yourself with both global and local regulatory mandates that may intersect with your operational framework. 

For illustration, the guidelines governing open banking can differ widely across borders. A strategy that’s viable in Canada might hit a wall in Switzerland due to regulatory nuances.

3. Assessing Your Tech Blueprint

Your technological framework transcends merely crafting an app or digital platform. It’s about ensuring adaptability, fortifying security, and delivering an impeccable user journey. It’s vital that the business model you opt for dovetails with the tech backbone
you possess or intend to develop. 

Say, if you’re leaning towards an API monetization strategy, your APIs should be fortified, agile, and expandable to meet anticipated requirements.

4. Gauging Funding and Financial Resources

Distinct fintech business structures demand varying levels of capital commitment. Some may necessitate substantial initial capital, while others could be more cost-efficient. 

Evaluate your fiscal health and your capacity to secure investments, opting for a model in sync with your financial roadmap.

5. Strategizing Alliances and Collaborative Ventures

In the fintech domain, partnerships can pivot your business trajectory. Whether it’s teaming up with traditional banks for data insights or joining forces with tech giants for seamless integrations, such affiliations can reshape your business blueprint. 

As an example, forging a partnership with a big bank might make strategies revolving around API access charges or transactional fees more enticing.

Leading Fintech Business Models to Choose in 2024

1. Interchange Fees

An interchange fee is essentially the charge paid by the merchant’s bank to the cardholder’s bank when cards are used for payment. Neobanks, like U.S. neobank Chime, heavily rely on this model. 

Typically, interchange fees range from 0.3-0.4% in Europe to 2% in the US. This fee varies based on several factors, including the type of card, the transaction mode, and the bank size.



Visa &
Mastercard: Propose interchange rates for affiliated banks.

Square &
Stripe: Navigate traditional card network rates and transfer these costs to users.

2. Subscription Fees (SaaS)

Drawing inspiration from magazine or media streaming, the SaaS model in fintech offers subscribers access to niche financial services periodically, making revenue flow predictable.


Robinhood: Offers its Gold premium subscription monthly.

Betterment &
Revolut: Provide premium subscriptions for financial services annually or monthly.

3. Transaction Fees

Under this model, every time a financial transaction is processed, a fee is applied. This can either be a uniform rate irrespective of the transaction size or a percentage that scales with the amount being transacted.


PayPal: Charges for its payment services.

Wise: Specializes in transparent fees for international money transfers.

4. Trading Fees

With the rise of retail investors and trading platforms, fees associated with the act of trading financial instruments like stocks or bonds have gained prominence.


eToro: Known for its social trading, with varied fees for different assets.

Interactive Brokers: Provides trading tools and a volume-based fee structure.

5. API Connection Fees

In a world where integration is key, businesses often rely on APIs to tap into fintech capabilities. This model charges them for such accesses and the value they derive from them.


Yodlee & Truelayer: Offer APIs and charge depending on usage or the service provided.

6. Third-party/Referral Fees

Here, the game is all about networking and alliances. Platforms earn commissions by channeling users to other services or platforms.


Credit Karma &
Mint: Promote financial products and earn from referrals.

7. Interest

At its core, this model leverages the age-old principle of earning from interest rate differentials – the gap between rates at which platforms borrow and lend funds.


SoFi, Revolut &
BNPL Affirm: Utilize interest differences for profit.

8. Inactivity Fees

A somewhat polarizing model, it penalizes account dormancy. While it spurs user activity, it also compensates platforms for potential revenue losses due to inactivity.


eToro & Interactive Brokers: Have levied fees for prolonged account inactivity.

9. Investing Customer Balances

A more passive approach where platforms use the aggregated funds they hold (deposits, rewards balances) and invest them in avenues promising higher returns.


Starbucks: Notably, its rewards program holds significant funds, which are then invested.

Chime &
Wealthfront: Use customer balances to invest and yield interest.

Prediction for Fintech Trends in 2024

As 2023 unfolds, the fintech domain is experiencing significant transformations. Here’s a concise guide for startup leaders:

  • Shift from Growth to Cost-Efficiency

The era following 2008 saw fintech companies predominantly focusing on growth, aided by favorable factors such as low lending rates, controlled inflation, and moderate wage increase. However, with the current inflationary trend, there’s a notable shift towards
emphasizing cost-efficiency. 

Businesses are predicted to lean into strategies that bolster financial stability, enhance operational prowess, and incorporate cutting-edge technologies.

  • A Surge in Mergers and Acquisitions

The deceleration in growth has set the stage for mergers and acquisitions (M&A) to be a key strategic move in the fintech sector. Companies that have vulnerable financial statements or those strategically positioned to expand their market dominance might
lean towards M&A. 

The industry could see a combination of consolidation aimed at scalability and financial durability as both private and public entities engage in tactical acquisitions to strengthen their market positions.

  • The Rising Importance of Compliance

With the continuous evolution of fintech, there’s a heightened focus on regulatory adherence and internal safeguards. In the backdrop of increased oversight and potential sanctions for non-adherence, all players — traditional and fintech — must uphold the
strictest regulatory benchmarks. 

This unwavering commitment, especially pertinent to fintech-bank partnerships, cryptocurrency, and P2P platforms, aims to protect consumers and maintain a solid financial infrastructure.

  • Advancements in Real-time Payment Systems

Modern payment technologies, including Tap to Pay, are revolutionizing transactional experiences for enterprises and end-users alike. The process is becoming increasingly swift, often culminating in mere seconds. 

This expedited, straightforward, and frictionless transactional journey is fast becoming the norm, and the horizon promises further breakthroughs, particularly benefitting those in developing regions.

  • The Growing Influence of Embedded Finance

Embedded finance, enabling non-finance entities to effortlessly integrate financial services into their core offerings, is poised for more widespread acceptance and innovation. 

Ranging from construction sectors to open banking, this integrative approach presents vast opportunities for optimized services and enriched user experiences.


Opting for the appropriate business model transcends mere immediate financial gains; it’s about constructing a resilient base capable of withstanding market fluctuations, seizing emerging prospects, and cultivating enduring ties with clientele and collaborators.

Each model mentioned has its distinct advantages and complexities. From what I’ve gathered in my journey, the ability to adjust revenue stream strategies according to market trends isn’t just beneficial; it’s imperative for long-term success.

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This post originally appeared on TechToday.

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