broad level question – this looks like similar to AMC industry the high margin – high expense ratio led businesses of active management got replaced by very low fee passive fund management.
Initially, everybody pictured the doomsday scenario for AMC’s in market then bcoz of unprecedented shift in saving pattern in india recently the sheer volume of move to index fund compensated for it and also cost rationalization help AMCs recover margins and back to growth path.
Can Credit Card industry see the same fate? the easy money business model of charging high interest on revolvers is gone. All fintech’s like CRED , Paytm etc and fin influencers have disrupted it by continuously reminding user about the late fee and charges now revolvers are going down. All companies are left with is
a) EMI products (somebody buying online on EMI using card)
b) Annual Fee on credit cards
c) Cut backs on cashbacks and offers.
This i believe will have temporary impact on earning but eventually this is highly healthy business model but hard to gauge here how fast this shift is happening and what steady state growth we will see over a long run.
I welcome your thoughts here let me know ?
| Subscribe To Our Free Newsletter |
