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eToro: What is Next for the World's Largest Social Trading Platform?

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The case allows students to explore the speed with which investors are adopting social trading platforms and the issues surrounding global regulation of this growing phenomenon using eToro as an example. As the world’s largest social trading platform, eToro has more than 8 million registered users across 140 countries as of early 2018. This case study examines how eToro developed an alternative investment channel for millions of retail investors and semi-professional investors, compared to conventional channels such as mutual or hedge funds. eToro’s case illustrates several core claims undergirding the recent fintech trend, including democratization of investment entries, disintermediation between investors and traders, and, ultimately, financial decentralization with numerous, easily set up, small funds. The instructor can encourage students to think about how new social trading platforms and copy trading fundamentally differ from conventional investment approaches, how fintech startups’ technologies and business models challenge existing regulations, and how eToro can further grow its business to the next level. The case can be used as part of a postgraduate-level business strategy or financial technology course or for undergraduate entrepreneurship and innovation courses.

Learning Objective:

The concepts and theories to be explored with students using the eToro model case study include a double-sided market model, strategic responses to regulatory issues facing fintech startups, patenting as a firm strategy, and international expansion.

The teaching objectives of the case are:

  1. To provide students with a basic understanding of social trading as a new business model, particularly a double-sided market model.

  2. To summarize the key components of a social trading platform and to examine how these characteristics differ from conventional funds.

  3. To explore issues affecting both informal social trading platforms and formal mutual and hedge investment fund solutions.

  4. To discuss the regulatory issues facing social trading companies and the potential solutions.

  5. To analyze the strategic use of patents and how to apply them to add value to a startup.

  6. To examine how a fintech startup expands globally with various marketing and strategic actions.

Year of Publication: 2018
Ref. No.: 18/603C
Discipline: Strategy & General Management
Industry: Consumer Finance
Country: United Kingdom
Company: eToro Ltd
Languages: English
Pages of Text: 10