Indian start-up CRED. CRED founder Kunal Shah, he starting CRED in 2018. it is based in Bangalore. CRED valuation is now 6.4 billion. How does CRED achieve so many valuation numbers, within 4 years?
This is because of CRED’s unique, problem-solving business idea. Mainly we are discussing in this article the CRED business model.
What is CRED
CRED helps you pay your credit card bill. When you have multiple credit cards, you forget the bill payment date after spending on the credit cards. For that, you have to pay a heavy penalty which is 40 to 50 percent. CRED solves this problem. For this, CRED takes your email and makes the payment itself from your wallet. If you make the first credit card bill payment on the CRED app, you get rewards, like flight tickets discount, brand discount coupons, cashback of one thousand rupees, etc.
This is a simple starting CRED business model.
CRED’s valuation is not 6.4 billion just for this simple concept.
CRED Business Model-
Here are also CRED runs 2 types of businesses.
1. CRED Stash- CRED provides personal loans with the help of credit cards. Usually, we have to give many documents to take a loan. CRED makes it easy and you can transfer your money from your CRED wallet to your bank account within 2 minutes. Because the CRED app has created a club where your credit score is above 750, you can join the CRED app. A credit score above 750 is only when a person pays his loan and EMI timely. Due to which the CRED user’s profile is already good, companies and banks are confident that CRED users will make loan payments timely.
So they give loans through credit cards. CRED does not give any loans by itself CRED only takes good customers and has partnered with some banks like IDFC Bank. And does all the process himself, to give loans to his customers.
For this, the CRED origination fee is received, which is 1 to 2 percent, which is very low. So CRED acquired Newtab Technology, which is a non-bank financial institution. From now on, CRED itself will be able to provide loans to its customers. Earlier, the loan origination fee from other banks was 1 to 2 percent. It will now get 10 to 12 percent with the loan itself.
CRED users are premium users with credit scores above 750. So these brands are premium brands, and these brands can easily run their marketing and selling through the CRED platform.
CRED’s business model has 5 unique income sources.
- E-commerce Discover- Here CRED users can know about new premium brands. These are different sectors, like The Man Company, Mivi, Blue Tokai, Etc.
- Brand Platform Win- You can buy these products, and CRED offers coupons for them, CRED gets a commission of 10 to 20 percent if the product is sold. CRED is collaborating with brands like Puma, OnePlus, Nike, etc.
- Rent Pay- From this, CRED users can pay rent to the landlord. You can pay rent through credit card from this feature of CRED. Here CRED gets 1 to 1.5 percent transaction fees.
- CRED Pay- Basically, CRED partners with companies like Man Matters, and The Man Company. If you buy their products, you can use CRED pay. You can pay with one tap. CRED has partnered with Visa and Razorpay for this.
- Selling Own Products- CRED is selling masks and t-shirts on its platform.
This is the CRED Business Model.
CRED Future Planning-
Companies like Newtab Technology buy and give loans through credit cards. Then they want to sell the stock investment, wealth management, and insurance in the future, for that stock investing help company like Smallcase intends to take over CRED.
Then Kunal Shah wants CRED’s app users to be more engaged with CRED. Created CRED pay for this, So CRED is offering credit card payments on apps like Urban Company, ES.
CRED acquired HipBar company. HipBar is an alcohol delivery company with a prepaid instrument license. So that CRED can start a mobile wallet business, for this CRED buy HipBar company.
Mainly CRED wants more users to come to the mobile app.
CRED Marketing And Advertising Strategy-
CRED Doing Much Marketing And Ads Campaigns, Here Are Some Results
- Cake Marketing– 2020 when someone first paid their credit card bill with CRED. Then CRED company used to send cake to him and send it to the office because there are many people in the office, marketing becomes easy and everyone tries to get such a cake.
- Reward Marketing- CRED users get many rewards for joining, like your mobile cover, discount on flight tickets, cashback, etc.
- Emotional Advertising- A special cricketer Rahul Dravid is teasing people on the streets and fighting, such ads are shown in CRED. But he is not angry at all in real life. Indians have great emotion in cricket.
If you want to expert in marketing read more.
How you learn from Kunal Shah-
Kunal Shah, a founder of CRED, is the perfect example of how new ideas can help to solve problems in ways that you may not even have thought about before. Rather than looking at the big picture, Kunal saw the problem in the smallest of details and was able to put his background in finance to good use to create a successful business. Kunal is a great example of how anyone can create a successful business by looking for problems that need to be solved and finding a great solution for them.