CRED’s Evolution
CRED, the Bengaluru-based fintech giant, is making significant moves in 2023. It is expanding its product offerings and shifting towards a fintech super app model. This evolution is driven by changing demographics and a growing user base. Thus, it makes CRED’s journey an intriguing one to follow.
Demographic Shift: From Premium to Inclusive
CRED’s primary audience has traditionally been premium credit card users. However, a significant shift is happening in the credit card landscape. The total number of credit cards issued is nearing 100 million as of August 2023, compared to 57 million in August 2020. This growth is driven by a long tail of ‘low value’ credit card holders. CRED aims to tap into this user base, expanding beyond its premium niche.
Initially, CRED focused on niche products from premium to mid-tier D2C brands, along with travel bookings. This strategy aimed to capture a substantial portion of credit card spending by its primary user base. However, recent reports suggest that CRED is shifting towards a high-volume play in e-commerce, expanding beyond its exclusive focus on premium D2C products.
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CRED has positioned itself as a one-stop destination for payments and credit cards, targeting new users. While UPI may not be a premium monetization play, CRED is actively embracing it. The company is now the fourth most used UPI app, processing over 8.5 crore transactions in August 2023, double the number in April 2023. This expansion aims to cater to users who do not have credit cards or a credit history, broadening its reach.
When was the last time you used an ATM?
— Kunal Shah (@kunalb11) October 3, 2023
Financial Performance
CRED’s FY23 unaudited financials reflect substantial growth. The company reported a total revenue of INR 1,484 crore, a remarkable 251.6% increase from the previous fiscal year. Although losses also increased slightly by 5%, expenses grew significantly. Notably, CRED claimed that one-third of credit card bill payments by value occurred on its platform during the year, with the total payment value reaching INR 4.4 lakh crore.
Introducing CRED Garage
CRED’s recent launch of ‘CRED garage’ added to its expanding ecosystem. This platform allows users to manage vehicles, offering services like concierge support, reminders, document management, insurance claims, FASTag support, and spending insights. While some features may provide discounts, others generate commission-based revenue, such as auto insurance claims and FASTag payments.
Future Challenges and Opportunities
CRED’s challenge lies in encouraging ‘garage’ users to transact across its various verticals. This product-driven challenge requires a blend of technology, design vision, and talent. As CRED continues its product expansion, it seeks to increase Average Revenue Per User (ARPU), a crucial factor for platform plays.
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The company is adapting to demographic changes. It is also targeting a broader user base while expanding its product offerings. CRED appears to be on the right track, embracing a new vision for the fintech market.
