More stability and clarity emerging in fintech regulation: CRED founder Kunal Shah

CRED will focus on leveraging its community and brand to monetize through a variety of products, Shah said.

Fintech unicorn CRED’s founder and CEO Kunal Shah said there is more stability and clarity emerging on the regulatory front in India, days after the Ministry of Electronics and Technology blocked a number of lending and gaming apps over alleged Chinese links.

“We’re at a stage where you have to complain more, there are a lot of clear rules that exist, and as we become more compliant, this (going to ban apps) will fall. I don’t see this continuing,” said Shah in a conversation with select journalists in Bengaluru earlier this week.

As it happens, PhonePe founder and CEO Sameer Nigam also backed the government’s move, highlighting money laundering concerns swirling around gambling apps.

Founded just over four years ago, CRED started out as a credit card and billing app that rewards users for good financial behavior. It made a conscious choice to focus on the top 30-40 million households in India. It has since expanded its offerings to include lending and trading, and currently offers products such as CRED RentPay, CRED Cash, CRED Pay, CRED Store and CRED Travel Store.

“The first chapter was about building the community and the brand. It is very difficult to build trust in financial services unless you build a brand. We are creating a platform for multiple products,” Shah said, adding that the earnings journey so far has been promising.

“We earn revenue from multiple products like payments, e-commerce and lending and they all continue with a healthy mix of revenue… We have no winner, all products contribute to our revenue,” Shah said.

The company said leveraging growing member engagement and product maturity for monetization will be the focus going forward. It currently has over 11.2 million members.

“The journey with revenue generation has been great. We increased monetization by 4.4X in 2022 and we are seeing good response for our products. We see significant revenue opportunities for each of our products,” Shah added.

CRED also sees strong growth through cross-selling.

“The core product is bill payments and on bill payments the core use is utility and reward, we don’t make money from that, but a customer ends up using other products through one product and that’s how we get engagement,” Shah said. While not giving specifics, he said cross-selling percentages are seeing very healthy growth.

While CRED had a total income of Rs 422 crore in FY22 compared to Rs 95 crore in the previous financial year, losses during this period came in at Rs 1,279 crore compared to Rs 524 crore in the previous financial year. It raised $80 million as part of its Series F funding round led by Singapore’s sovereign wealth fund GIC at a valuation of $6.22 billion in June last year.

“We have always been well capitalized and have several years of runway. Losses are not a challenge as monetization has started,” Shah said.

In 2023, the company will focus on increasing revenue per employee and building a talent pipeline.

Talking about the current macroeconomic situation and the freeze on start-up funding, Shah said that the company is well placed and has the support of the investors.

“We’ve seen strong support from our investors, with each fundraise we pretty much watered the company down and we chose to grow in a certain way … Even now if we wanted to raise capital and there’s strong support for that,” said Shah.