“Credit card customers do more transactions on UPI than they do on credit cards,” says Kunal Shah, founder of CRED, a credit card payments app, at the Global Fintech Fest (GFF) 2023.

At a time when startup ecosystems are shifting goalposts to profitability from cash-burning, Shah states that without the existence of loss-making fintech companies, the fintech ecosystem would not be witnessing the level of growth that it is seeing now.

CRED registered a net loss of ₹1,279 crore in FY22, nearly doubling its losses from ₹524 crore in FY21. However, growing by approximately 340%, the revenue of the company increased from ₹95 crore in FY21 to ₹422 crore in FY22.

Shah says he believes that a bulk of the UPI growth has come with the help of such companies as they create distribution and a positive change of consumer behaviour. He believes Covid-19 was an accelerator to credit behaviour.

Shah says that CRED’s view was to build a company that promotes good financial behaviour and focuses on top-end customers. As a matter of fact, the concentration of profit pools is skewed towards the top 30-35 million customers in the startup ecosystem space.

“Our priority was to focus on customers who currently have good credit scores and a credit card. Today we have 35-37% of the market share, we want to get to 50-55% market share soon,” says Shah.

Charting a path to financial wellness

“When you can establish an audience, (build) trust with that audience, then the ability to build multiple businesses on top of that is easy to do,” says Shah while talking about developing profitability in fintech companies.

He believes that whether it’s large-scale revenues and profits – making money is a choice that companies make based on what kind of capital support they can grow to match their ambitions. He acknowledges that as much as insiders love fintech and financial services, the average consumer hates it, “Because money causes anxiety amongst people.”

To an average customer, the process of working through a fintech app is as enjoyable as going to a gas station. Go in, get your work done, and leave as soon as possible, Shah draws a parallel.

Further, he also discussed India’s growth trajectory and how the country is yet to go through the per capita income growth challenge. “The per capita is not going to happen until female participation of labour increases in the workforce,” he opined while adding, “We cannot magically expect the $5,000 per capita to happen.”

With Indians becoming savvier with digital financing, he also expects that the country is going to see waves in the growth of UPI in cohorts with people becoming more outgoing than incoming as they develop more ease with scan and pay.

A majority of Indian unicorns that have managed to cross the $100-200 million revenue run rate, according to the CRED founder, are fintechs. He states that nearly 40% of 183 companies that have more than ₹1,000 crore PAT (profit after tax) in India fall under the umbrella of financial services.

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