For Curve's foreign currency spending feature, how should we weigh offering competitive exchange rates against generating revenue through currency conversion fees?

Introduction

The trade-off between offering competitive exchange rates and generating revenue through currency conversion fees for Curve's foreign currency spending feature presents a critical strategic decision. This scenario involves balancing user value with business sustainability. I'll analyze this trade-off by examining product dynamics, metrics, experimentation, and decision frameworks to provide a comprehensive recommendation.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking Curve's revenue model might heavily rely on these fees. Could you share how significant currency conversion fees are to our overall revenue?

Why it matters: Helps understand the financial impact of potential changes Expected answer: 20-30% of revenue Impact on approach: Higher percentage would necessitate a more cautious approach to rate changes

• User Impact: Based on user behavior, I suspect frequent travelers might be our primary target for this feature. Can you provide insights into the user segments most affected by our current exchange rates and fees?

Why it matters: Identifies key user groups to consider in our decision Expected answer: Business travelers and digital nomads are primary users Impact on approach: Would focus on retention strategies for these high-value segments

• Technical Feasibility: Considering the complexity of real-time currency markets, I'm curious about our technical capabilities. How quickly can we adjust our exchange rates to match market fluctuations?

Why it matters: Determines our ability to offer competitive rates Expected answer: Near real-time adjustments possible Impact on approach: Faster adjustments allow for more dynamic pricing strategies

• Resource Allocation: Given the potential impact on revenue, I imagine this might require significant resources. What's our current capacity for implementing and monitoring changes to our foreign currency spending feature?

Why it matters: Assesses our ability to execute and manage changes Expected answer: Dedicated team available, but limited data science resources Impact on approach: Might need to prioritize simpler experiments initially

• Timeline Pressure: Considering market competition, I'm wondering about the urgency of this decision. Are there any upcoming events or competitor moves driving the timeline for this analysis?

Why it matters: Helps prioritize this decision against other initiatives Expected answer: Increasing competition from neo-banks entering the market Impact on approach: Might need to accelerate our decision-making process