The CRED Bubble: An Iconic Workspace and Kunal Shah’s Influence
In the dynamic landscape of Indian tech, the year 2023 marked a pivotal chapter for CRED, symbolizing the maturation of its product lineup and a robust financial trajectory. Anchored by its visionary leader, Kunal Shah, the startup now proudly occupies an entire block on Indiranagar’s 100-foot road, encapsulating what has been dubbed the “CRED bubble.”
CRED’s journey has been characterized by a patient and deliberate approach, to answering long-standing questions about its business model. Having completed five years in 2023, the company is finally unveiling its intricacies, though not without a touch of awkwardness.
CRED’s Broad Canvas: Crafting a Unique Fintech Narrative
Distinguishing itself from the crowded fintech arena, CRED sets its benchmark not against conventional rivals like Paytm or PhonePe but against global giants like Apple and Mercedes. The startup’s meticulous approach to product development centers around maintaining a delicate balance between an all-encompassing fintech app and preserving its unique product ethos.
For CRED, the primary challenge lies in choosing what to do next, a luxury afforded by the capital raised over ten rounds in five years. This patient approach, according to a company spokesperson, stems not just from financial strength but also from Shah’s reputation as a founder who has seen significant exits.
Delta-4 Experience: The Journey to CRED Garage
CRED Garage, a surprising yet fitting addition to the CRED portfolio, stems from the overarching goal of building an ecosystem around high-trust individuals, defined by objective credit scores. The origin of Garage traces back to a year-long ideation process, aiming to address the problem statements faced by the premium layer of users owning credit cards.
Unlike traditional acquisitions, Garage stands out as a wholly unique proposition, reflecting CRED’s commitment to innovative, in-house product development. Building backward from the customer persona, CRED is looking to intersect with the digital commerce and lifestyle journey of its users. Besides, the company is also eyeing the investment tech vertical as the next area of growth.
Strategic UPI Play: A Gradual Approach to Dominance
In the dynamic world of fintech, where UPI is synonymous with payments, CRED entered the game later than its counterparts. However, its gradual approach, launched half a decade after competitors, has proven strategic. The success of CRED’s UPI venture lies in understanding users’ different signals for various transactions, coupled with a focus on speed, safety, and privacy. CRED’s ability to offer rewards and delight has propelled its ascent to becoming the fourth-most used UPI app in the country. The UPI product has been key in converting the user base from low-frequency actions for credit card payments to high-frequency actions like daily small-ticket purchases.
Building Revenue Momentum: FY23 Performance and User Engagement
CRED’s FY23 performance marks a turning point, witnessing a remarkable 251.6% increase in total revenue. Despite marginal increases in losses, the startup achieved a significant milestone — higher engagement from its users. An average CRED monthly transacting user now opens the app more than 20 times a month, a notable industry benchmark.
One-third of the credit card bill payments by value were done on CRED, showcasing the platform’s increasing influence on users’ financial transactions. On a unit economics level, CRED spent INR 2 to earn every single rupee from operations, a substantial improvement from the INR 4.3 spent the previous year.
Looking Ahead: Shaping the Future Like Apple or Mercedes
As CRED continues to evolve, it remains steadfast in its commitment to financial prudence. The startup, having earned positive CM1 and CM2 for several quarters, showcases a measured approach to growth, prioritizing unit economics over rapid expansion.
Drawing an analogy with industry titans like Apple or Mercedes, CRED positions itself as a company that takes its time to push the envelope on products, earning the right to claim the largest share of profits and goodwill among customers.
In conclusion, 2023 marks not just a coming-of-age for CRED but a strategic evolution that blends innovation, financial prudence, and a commitment to user trust. As the fintech landscape continues to unfold, CRED stands as a testament to the value of patience, precision, and a clear vision in navigating the competitive tech ecosystem, shaping the future of financial technology in India.
