In a major development for the fintech space, Kunal Shah’s CRED, along with Newtap, has announced plans to lead a ₹550 crore investment in the NBFC arm of CRED. This strategic investment will help CRED strengthen its presence in the financial services market while diversifying its offerings to cater to a broader customer base.

kunal shah

PC: CNBC TV18

Background of the Investment

CRED was founded by Kunal Shah in 2018 as a platform that rewards users for paying their credit card bills on time. Gradually, its portfolio of financial products and services includes loans, credit lines, and investment options for the consumers and businesses alike. Hence, it is the most advanced step in the evolution process of CRED, enabling it to lend directly to consumers and businesses.

The partnership with Newtap is likely to extend the operational scale and reach for CRED. Newtap is a financial services company specializing in digital lending solutions and has experience in the fintech sector. By combined shared resources and expertise, these companies are looking to create a solid financial ecosystem based on utilization of technology while improving the customer experience.

Objectives of the NBFC Arm

The primary aim behind the NBFC arm is to provide various kinds of lending products catering to the needs of Indian consumers. It includes personal loans, business loans, and other credit facilities aligned with CRED’s mission to promote responsible financial behavior. It will also allow for the creation of sophisticated technological solutions that streamline the lending process, making it more efficient and user-friendly.

CRED’s foray into the NBFC space comes at a time when the demand for digital financial services is on the rise in India. With a rapidly growing middle class and increasing smartphone penetration, the potential customer base for digital lending solutions is vast. CRED aims to tap into this market by offering transparent, accessible, and affordable financial products.

Market Implications

This investment not only cements the position of CRED in the fintech landscape but also showcases the increasing trend where tech houses are entering mainstream financial services. As competition grows among the fintech players, being able to offer a full spectrum of financial products will be the ultimate benchmark for success.

CRED could thus control the entire customer journey-all acquisition and servicing-by launching its own NBFC. This in turn would improve customer loyalty and reduce the churn rate. More users would then be attracted to the CRED platform, further increasing its user base and engagement, as such investment is expected to attract more users to the CRED platform.

In conclusion, the Kunal Shah-led CRED, along with Newtap, will make significant ripples in India’s financial services market by investing ₹550 crore in an NBFC arm. This strategic initiative encompasses a diverse range of lending products and improvements in customer experience through technology-driven solutions. 

As CRED continues to innovate and expand its offerings, it places itself firmly as a significant player in the fast-changing fintech landscape. The collaboration is not only a big step for CRED but also a testament to the growing convergence of technology and finance in India.