Unsecured lending will always remain a serious problem: Cred founder Kunal Shah

Bengaluru: Despite headwinds - lower funding and regulatory issues - impeding fintechs’ growth in India, Cred founder Kunal Shah remains confident of a cyclical revival coming up.

. “Every time the next cycle is even bigger than the previous cycle. It is just a matter of time. Evaluating the market right now, in its first turbulent period, may not be ideal,” Shah told DH on the sidelines of a company event on Tuesday. Cred is currently valued at $6.4 billion.

. “About 35-40% of India's market cap is actually financial services. Out of that, 80% of the revenue will be lending only,” he said, adding that India can become a developed nation through greater push for credit.

. Currently, fintechs including Cred, primarily serve the affluent classes. When asked about how such companies can increase market penetration, Shah responded, “The bulk of India will be largely served through secured loans (like gold loans), when we do not have organised businesses and income sources. An unsecured business becoming big for that is hard to imagine, as they require consumers to have income stability and income tax presence.”

.Connekkt Media acquires Hollywood marketing agency Mob Scene. It is important to have the capability to underwrite and collect from these customers when offering credit, which is currently not there, he explained. Still, the majority of fintechs are participating in merchant lending.

. “We will see many of these things become quite normal now, where the model of lending will be more secured and cash flow type, versus unsecured type. Unsecured will always remain a top 10 problem but when it comes to secured behavior, it will become more prevalent because now we have the infrastructure,” he stated.

. Cred is primarily a reward-based credit card payments app, though it has forayed into home loan repayments and short-term loans. In spite of the slowdown in credit card additions in 2024, Shah said that credit card spend and user base are growing. He added that the friction to be able to get a card in the first place is declining due to fintechs making it easier to get access to cards.

. “As that happens, we will only see more and more. My prediction is that in ten years, imagining $1 trillion of credit card spend a year, is a given,” he declared.

. During an earlier media briefing, Shah said that about 52% of customers have missed paying their credit card bill on time in 2024 alone. Under Cred Protect, just last year, the company detected over Rs 11,000 crore in hidden charges.

. The company launched Cred Foundation, a non-profit aiming to drive financial inclusion across India. The company has contributed 1% of its valuation into the foundation.

. Cred aims to create greater financial literacy in partnership with the Reserve Bank of India, cybercrime departments, and other stakeholders.

Unsecured lending will always remain a serious problem: Cred founder Kunal Shah

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