Fintech player CRED has set foot on the market for vehicle management with the launch of CRED Garage. This new service provides CRED members with timely reminders for servicing and insurance payments as well as a handle to monitor maintenance records, expenses and access performance insights, all supported by a round-the-clock concierge service. The CRED app also offers integration with Digilocker, giving easy access to insurance papers, driver’s licenses, registrations, and other important documents. “From cards to cars — CRED members can now manage, maintain and engage with all on the app,” says Akshay Aedula of CRED.
Apart from financial services and payments, CRED has a store and travel vertical within the same app, aimed at a premium audience. But despite a 340% revenue jump in FY22 compared to FY21, the company posted a net loss of `1,279 crore, so this could offer the much needed pivot to expand.
So why has the company that started its innings with the task of streamlining credit card payments forayed into this highly unorganised space that is in the stranglehold of hyperlocal players? CRED has banked on its product sophistication and design to set itself apart, and getting into an unrelated market might mean higher costs and complexity and the risk of diluting its brand identity. So what gives?
Experts say fintech startups cannot rely solely on payments to scale up. As CRED hits its sixth year of existence, it needs to weigh new avenues to diversify and grow. An executive close to the firm says the business views this foray as a “natural extension” of its services, which straddles the “top 10%” of credit-takers (with credit scores above 700).
Says Lloyd Mathias, independent director and former HP Asia marketing head, “Platforms like CRED are looking at building alternate revenue streams — from lending to offering services. Investors are now demanding a more rational business with better margins and this may very well be a way to ensure that.”
Road to growth
The potential in the space is huge, points out Samit Sinha, founder and managing partner of Alchemist Brand Consulting. He says that while the concept is relatively new in India, it can do very well given that one out of every 12 households in this country owns at least one car. “While that may seem low in terms of automobile penetration, it is quite huge in absolute terms,” he adds.
Similar services do exist globally, such as Drivvo, Fuelio, and MyCar, which are some other car management apps. However, in India, the closest alternatives would be
the government’s M-Parivahan, CarInfo, SimplyAuto etc., but these provide limited services.
The company can benefit by being able to bank on its trust and credibility built over the years through both its product and creative advertising, says KV Sridhar, global chief creative officer at Nihilent Hypercollective. “The affluent now have multiple cars. Say one has three cars, all have to be serviced on time. Even individual service providers sometimes fail to provide reminders on time. The same goes for insurance. This can prove to be a relevant app for that. Just like how American Express is widely trusted for travel, CRED can become a bankable destination for automobile upkeep,” he opines.
Sridhar adds that as a fintech company, the app may be able to garner more credibility than other platforms, as people also trust it with sensitive information such as their credit card details. Apart from charging money as listing fees from businesses, CRED can also use the large amounts of highly valuable consumer data generated and eventually monetise it, points out Sinha. Subhabrata Sengupta, partner, Avalon Consulting adds, “What is also intriguing is that CRED will provide information related to traffic challans. If they pull this data from government portals to make it available on their dashboard, it will bring a lot of value to the customer.”
Challenges ahead
While there are several positives, the company also faces a lot of roadblocks on its journey to success. This includes privacy issues, says Naresh Gupta, co-founder of Bang In The Middle. “I don’t think what they are doing is revolutionary. Between a UPI app and Digilocker, you get most services. Moreover, the app will require multiple permissions from the user to function well. They might want to sell the user all kinds of things, ranging from FAStags to insurance, and this can be a problem. It becomes a way to profile people based on their ecosystem, from their cards to their cars. Not everyone will be comfortable with that,” he says.
Moreover, being the first in a space is no guarantee of market leadership as has been seen with many tech companies, adds Alchemist’s Sinha. One needs to be the most useful and far-reaching, he points out.
Finally, seeing that CRED only caters to the “cream of the crop”, it will be restricting its customer base even further. It may be difficult for it to attract new users as existing penetration levels are already quite healthy (35-37% market share). Becoming an umbrella app for such services will thus be a long journey.
Speed bumps
The app may require multiple permissions from the user to function well, which can raise privacy concerns
Being the first in a space is no guarantee of market leadership, so it needs to be the most useful
Since CRED only caters to the “cream of the crop”, it will be restricting its service base