At the Global Fintech festival 2023, CRED’s founder Kunal Shah spoke to Shereen Bhan of CNBC-TV18 and shared insights on India’s financials services revolution, future of fintech and his aspirations for CRED. He also highlighted how UPI is changing the game and his focus on top-end customers with good credit scores and a credit card.
Edited excerpts
What do you aspire for CRED to be? Today, when a phone company is trying to be a bank, a bank is trying to be a fintech, what is it that you wish to be?
The Internet has enabled many companies to become platforms; platforms which can host many businesses. Now with all the digital infrastructure that has happened in the last 10 years and that is going to be built in the next 10 years, we are all in position to build interesting businesses on these platforms. It’s not surprising to many Chinese companies; Tiktok happens to be the largest ecommerce company now and it is probably going to be the largest lender in China. For most Chinese it’s not shocking or surprising.
When you can establish trust with an audience, the ability to build multiple businesses is going to be easy. CRED’s view has been simple. Reward financial behaviour. Most of us in our generation have made significantly more money than our parents did and they were not our coaches for money. We are finding coaches on YouTube and everywhere. Good financial behaviour is required; there is a floodgate of credit going to open with UPI coming into the scene.
We focus on the top end of customers and also on good financial behaviour. If you want to build a high quality engagement platform, you have to focus on things that make people feel joy and if you happen to be selling financial services over there, so be it. Our view is to make a lifestyle first company. It’s unfortunate that we are known for how we make money but that’s’ not who we are.
Financial services can make money. But when?
In the unicorns, the majority of companies that have managed to cross 100-200 million dollars are all fin techs and financial companies. We focus on credit cards and since then the whole market has changed. Covid was an accelerant to credit pay. We are seeing now with credit on UPI, these things will become better. Companies make money and large scale revenues and profits based on the capital support they get.
When do you feel you will be able to turn off that advertising and marketing switch to get to profitability?
We have significantly reduced our marketing spends. Our focus is on customers who currently have good credit scores and a credit card. Today, we have 35-37 percent of the market share; we want to get to 50—55 percent. Today we are operating at 1/10th of the customer acquisition cost compared to when we started our market acquisition.
We have been frontloading the brand investments, like IPL investing and advertising. In financial services, consumers require to trust that you are somebody with some credibility. This requires some amount of brand investments. Today, the capital environment has dried up and consumers are way more savvy digitally. We launched UPI and we have already seen ourselves get to the number 4 spot with simple focus on a very small customer base. Credit card customers do more transactions on UPI than they do on credit cards in terms of count of transactions. That obviously was not our roadmap to B2B. We realised the credit card customers playing an outgoing role – they spend a lot of money on UPIs and transfer money. Many UPI handles are on the incoming basis. Soon, they are going to become outgoing as well. We are going to be seeing waves of growth in UPI in cohorts which is going to be exciting.
What is the aspiration you have over the next 5 years?
I want to create more things that this cohort of customers values. We have built a small shopping platform helping D2C brands host their products, we have a zero commissions store. As a company we don’t have a philosophy to be first in everything but to be right. We want to build a cohort that is more discerning.