Is it better for Luno to focus on increasing trading volume or expanding into new financial services?

Introduction

The trade-off between increasing trading volume and expanding into new financial services is a critical decision for Luno's growth strategy. This scenario involves balancing short-term revenue gains against long-term diversification and market expansion. I'll analyze this trade-off by examining key business factors, user impact, technical considerations, and resource allocation.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm assuming Luno is a cryptocurrency exchange platform. Is this correct, and are there any specific market conditions or regulatory changes we should be aware of?

Why it matters: Helps frame the decision within the current crypto landscape Expected answer: Yes, primarily crypto exchange, facing increasing competition Impact on approach: Would influence the urgency of diversification vs. doubling down on core business

• Business Context: What's our current revenue split between trading fees and other services, if any?

Why it matters: Understand the potential impact of focusing on trading volume Expected answer: 80-90% from trading fees, small portion from other services Impact on approach: High dependence on trading would suggest caution in rapid diversification

• User Impact: Can you share insights on our user segments and their primary pain points?

Why it matters: Aligns strategy with user needs and potential growth areas Expected answer: Mix of retail and institutional traders, pain points around fees and service range Impact on approach: Would help prioritize which new services to consider

• Technical: What's our current technical capacity for integrating new financial services?

Why it matters: Assesses feasibility and timeline for expansion Expected answer: Modular architecture, but limited experience with traditional finance integrations Impact on approach: Might suggest a phased approach to new service introduction

• Resources: Do we have the team expertise for new financial services, or would we need to hire?

Why it matters: Impacts speed and cost of expansion Expected answer: Core crypto expertise, would need to hire for specific financial services Impact on approach: Could lean towards partnerships or acquisitions for faster expansion