My 2 cents based on personal experience
I am a Credit Card holder with HDFC Bank which had given me a Credit Limit of a very generous 5x monthly cash income. Most of my colleagues at work had the same card (Jet privilege) / similar card (Regalia) from HDFC Bank.
In the last 1.5 years I have purchased the following items online
- Iphone : Rs. 46000
- Moto G : Rs. 13,000
- 2 Laptops for : Rs 26,000 each
- Most of my clothes, accessories - ~ Rs. 20,000
All of these items were purchased through HDFC Credit card. Plus my major expenditure on Travel was again made through this credit card.
I would like to believe that the present ‘No cost EMI’ scheme is very similar to credit cards (Financing Company recovers the interest charges from the supplier)
Now TBH if some other Company like BFL or SBI gives me similar credit card or EMI card - I wouldnt switch even if they gave extra 1% cash back or extra incentive to supplier.
That tells me that one of the biggest ‘Moat’ in this business is Customer Acquisition. Once a customer is with you, he / she will most likely stay with you until say service quality falls drastically.
All other CD financers like Banks offering Credit Card - mostly try to acquire customers on traditional points of contact: For eg: Salary account in Corporates, Online websites like Bankbazaar
Bajaj Finance has a differentiated offering here wherein a consumer can get an EMI card at the point of purchase i.e. a CD Store. Processing is also quick with minimal paperwork.
That is why I feel Bajaj has been able to build a customer base at a very fast and rapid pace. Having presence in so many stores across India for customer acquisition is the real Moat of BFL.
Till the time others are able to develop a similar customer acquisition strategy - I think the Moat will remain and growth will continue at present levels. Conversely, if an HDFC Bank or a Kotak Bank offers instantaneous financing facility at offline and online stores - Bajaj’s pace of customer acquisition will slow down.