Is it better for Revolut to focus on expanding to new markets or deepening product offerings in existing markets?

Introduction

The trade-off between expanding to new markets or deepening product offerings in existing markets is a critical decision for Revolut's growth strategy. This scenario involves balancing the potential for rapid user acquisition against the opportunity to increase engagement and revenue from the current user base. 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 Revolut is currently operating in several markets with a core set of financial products. Could you confirm the number of markets Revolut is currently in and the primary product categories?

Why it matters: Helps gauge the current scale and potential for expansion or deepening. Expected answer: Operating in 10-15 markets with core banking, investments, and crypto products. Impact on approach: Fewer markets might favor expansion, while more markets could lean towards deepening.

• Business Context: Based on Revolut's current growth trajectory, I'm thinking revenue diversification might be a key priority. How does our revenue split look between different product lines, and what's our year-over-year growth rate in existing markets?

Why it matters: Indicates whether we need to focus on new revenue streams or optimize existing ones. Expected answer: 60% from core banking, 30% from premium subscriptions, 10% from other services. 50% YoY growth in mature markets. Impact on approach: High growth in existing markets might favor deepening, while plateauing growth could suggest expansion.

• User Impact: Considering user acquisition costs, I'm curious about our customer lifetime value (LTV) in mature versus newer markets. Can you share any insights on this?

Why it matters: Helps assess the potential return on investment for expansion versus deepening. Expected answer: LTV is 3x higher in mature markets due to product adoption and engagement. Impact on approach: Higher LTV in mature markets would support deepening product offerings.

• Technical: Given the complexity of financial regulations, I'm wondering about our technical readiness to expand. How modular is our current platform for adapting to new market requirements?

Why it matters: Assesses the feasibility and resource requirements for expansion. Expected answer: 70% of our platform is modular, but 30% requires significant customization for new markets. Impact on approach: High modularity would favor expansion, while low modularity might suggest focusing on existing markets.

• Resource: Thinking about our team structure, how are our product and engineering resources currently allocated between market expansion and product development?

Why it matters: Indicates our current focus and capacity for either strategy. Expected answer: 70% on product development, 30% on market expansion preparations. Impact on approach: Current allocation might suggest a bias towards deepening, but could be adjusted for expansion.