Kunal Shah-led Cred, which offers payments, lending, insurance, and wealth management, is now looking to add stock broking to its suite, as part of its strategy to build a full financial services platform.
Cred has applied for a stock broking licence via its subsidiary Spenny, sources told Moneycontrol. The development comes almost a year after the fintech unicorn acquired the Y Combinator-backed micro-savings and investment platform for an undisclosed amount.
Cred declined to comment on the development.
With the latest move, Cred could be positioning to enter the aggressive and highly competitive stock broking space, dominated by players such as Zerodha, Groww and Angel One.
The company’s interest in this market stems from the significant revenue surge seen by stock broking platforms in the recent years.
However, instead of its core business, Cred is eying stock broking as a natural extension to its anticipated strategy of a full-fledged financial services platform.
After it was founded, the company has gradually expanded its offerings beyond its initial credit card bill payment service.
Its wealth management portfolio was bolstered by Kuvera, a wealth management platform acquired in early 2024. Cred is expected to offer investment products like direct mutual funds, fixed deposits, SIPs, and digital gold to its user base along with financial planning tools leveraging the same.
Kuvera once explored stock broking through its subsidiary but the application was withdrawn, perhaps setting the stage for Cred’s current bid via Spenny.
While wealth management services are yet to be synced into the app, the fintech’s major revenue driver, as of now, remains lending.
Shah had previously spoken about Cred’s cautious approach to launching new products, saying, “We have been able to demonstrate our ability to cross-sell different products. Customer monetisation in financial services is easier.”
“We will never launch a product that is speculative or promises quick returns. We will never sell high-interest rate loans or products that could be detrimental to our customers' financial health.”
Beyond broking
Cred's entry into the stock broking space would bring additional revenue opportunities from transaction fees, account management and potentially advisory services. The broking segment has become a major growth area for Indian fintechs, as illustrated by FY24 data.
Leading brokerage Zerodha reported revenue of Rs 8,320 crore with profits of Rs 4,700 crore, while Groww's brokerage unit recorded a 308 percent increase in net profit.
A new entrant, Dhan also turned profitable while revenue jumped 600 percent on year, driven by a surge in brokerage income from its growing active customer base.
With the total number of Demat accounts in India reaching 175 million in September 2024, and growth trends indicating further expansion, the stock broking market offers strong potential. Brokerages’ revenue is expected to take a hit in the near term, as the Securities and Exchange Board of India (SEBI) tightens the noose around speculative retail trading in futures and options (F&O) segment.
Cred could leverage its affluent, financially engaged user base of around 1.3 crore users and 1.1 crore monthly transacting users (MTUs) to cross-sell products — an approach it follows for personal loans, Buy Now, Pay Later (BNPL), and vehicle insurance products (Cred Garage).
The competitive landscape
Breaking into the stock broking space won’t be easy. Established players such as Zerodha, Groww and Angel One dominate with large market shares and diversified services.
New entrants, such as PhonePe, are also aggressively pushing to enter the brokerage space, while big names like Jio Financial Services and BlackRock plan to together launch wealth management services.
Groww leads with a 12.3-million-strong client base, followed by Zerodha at 8 million. Cred's focus on affluent customers may shield it from some of the competition but would still demand a high level of product differentiation to lure existing clients.
In FY24, Cred reported a revenue of nearly Rs 2,500 crore, a significant threefold increase in just three years. It managed to cut operating losses by 41 percent to Rs 609 crore. Now, as it approaches its sixth anniversary, Cred is eyeing profitability and looking to optimise revenues from core segments: payments, lending, insurance, shopping, and investments.
(Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.)
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