This is how the neo brokers earn their money

In last year there was an almost unprecedented trading boom in Germany. In the previous year, 1933 billion shares were traded on German trading venues. In 2019 there were “only” 1,415 billion shares. Many were new and young investors who ventured onto the virtual floor for the first time. They use apps like the one from the neobroker Trade Republic, which promise, for example, to enable a trade only for the price of one euro, or buy a deposit with the numerous cheap brokers. That works, Trade Republic has a rapidly increasing number of customers and is now the most valuable fintech in Germany. The competition is also growing. But how does that fit together, on the one hand almost free trading and on the other hand brilliant business?

Trade Republic is certainly an exception. He is a neo broker, which means that all business can only be carried out using a smartphone. It is primarily aimed at younger, tech-savvy customers. This initially narrows the target group, but it also has a major advantage: The technical and regulatory effort is reduced, which translates into – the costs are low. So-called “onboarding” is also less time-consuming, and interested parties can become customers in just a few steps. It is therefore cheaper for Trade Republic to operate the platform and easier to acquire customers – despite the smaller target group.


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