Understanding Cred’s Journey: A Mix of Growth Challenges and Opportunities
In an evolving fintech landscape, Cred has seen a unique trajectory. Despite its efforts to diversify offerings and engage users with high-profile marketing campaigns, the platform’s new-user growth has hit a plateau. However, not all news is bleak as Cred finds optimism in its increasing influence in the UPI payments space.
Growth Narrative
Cred’s journey began with a focus on credit card bill payments, branding itself as a platform for the affluent with high credit scores. Despite expanding its range of services to include wealth management, e-commerce, and more, its monthly active users (MAU) count has remained constant at 13 million over the past 18 months. This stagnation occurs amidst vigorous advertising efforts, particularly during the Indian Premier League (IPL) series known for its high viewership.
The Silver Lining: UPI Payments
Amidst the slowdown in user growth, Cred’s UPI transaction volume share witnessed a significant increase. From a modest 0.5 percent in the previous year, it grew to 1 percent in the early months of 2024, while its share in the UPI market value saw a rise from 1.5 percent to 2.3 percent within the same timeframe. This growth is particularly notable as it places Cred alongside market leaders like PhonePe and Google Pay in terms of UPI share expansion, a fact that underscores Cred’s potential in the digital payments arena.
User Acquisition and Market Strategy
Initially, Cred maintained an exclusive approach by catering only to users with CIBIL credit scores above 750. However, attempts to widen its customer base by including those with lower scores didn’t yield significant increases in transactions or engagement on the platform. This led Cred to revert to focusing on its core demographic of affluent customers, despite facing challenges in attracting this group at the scale anticipated.
Challenges in Attracting Affluent Customers
The company’s customer demographic has skewed heavily towards Android users, which is intriguing given its focus on the affluent. Data indicates that although there are millions of potential affluent customers using iOS devices in India, only a small fraction have engaged with Cred. This gap highlights the challenge Cred faces in appealing to its target demographic amid concerns over data usage and perceived value of rewards offered.
Expanding Services Beyond Payments
In its quest to become a comprehensive fintech platform, Cred has significantly expanded its product offerings. From introducing UPI merchant payments to acquiring a wealth management firm, the company has diversified into several new areas. Nonetheless, the increased usage for smaller transactions has led to a decrease in the average value of UPI transactions, underscoring the need for Cred to balance its broader service offerings with maintaining its appeal to high-value customers.
Financial Landscape and Future Prospects
Despite the stagnant user growth, Cred reported a substantial increase in revenue for FY 23 alongside a marginal increase in losses. The company has been efficiently managing its customer acquisition costs while bolstering revenues through lending services among other channels. With significant funding and a strategy focusing on premium users, Cred remains a noteworthy player in India’s fintech sector.
Conclusion
Cred’s journey encapsulates the challenges and opportunities within the fintech domain. While user growth has plateaued, the company’s gains in the UPI payments sector and its expansive product and service offerings position it prominently in the evolving financial landscape. As Cred continues to adapt and innovate, its ability to attract and engage affluent customers will be crucial to its sustained growth and success in the competitive fintech ecosystem.
