Neobroker Trade Republic says it is on a mission to help European citizens save for their pensions. During a trip to Luxembourg, country manager for Luxembourg, France and Belgium Matthias Baccino explains its strategy for becoming “one of the largest financial institutions in Europe.”
For a company that is conservative with its marketing budget, Trade Republic has been dominating fintech news feeds in the last 6 months.
Two years after it was established in June 2022, it received €250m in series C extension. That injection helped it expand into 15 countries, including Luxembourg in October last year. Furthermore, last week, it announced the launch of a 2% interest rate on savings to “complement the pension system”.
“We are building the operating system to close the European pension gap. We believe the first brick of this operating system is stocks, ETFs and savings plans,” Baccino, who was appointed in September 2021, explained. “We all cancelled our Christmas holidays at Trade Republic [to enable the 2% ]. This is how committed we are to our mission.”
“An astonishing success”
Although Trade Republic does not communicate figures on its customer reach, Baccino described its Luxembourg expansion as “truly an astonishing success”.
It appears that the firm’s tools are serving an unmet need from younger European citizens, by lowering fees and easing access for retail investors to some 1,500 stocks, 2,000 ETFs and 50 cryptocurrencies.
It is highly competitive compared to rivals like Swissquote (formerly Keytrade) when it comes to transaction fees. As for Cyprus-regulated eToro, a low-fee trading platform which focuses on copy trading (copying the portfolio of someone else), Baccino implies that the rival lacks the pedagogic approach of Trade Republic. “We empower everyone to make their own investment for the long term. We believe that following someone else for your own investment is not a good idea.”
Who are their customers?
According to Trade Republic, half of its customers had never invested before joining the neobank and 80% of them are aged under 35. A survey revealed that almost three-quarters of customers joined to save for their retirement. “There is this mega trend where society understands that the European welfare state is being weakened by an ageing population. And young people are anxious about the future,” Baccino said.
Crypto access
Not all of Trade Republic’s tools are available to Luxembourg citizens. Unless the neobank finds an interim solution, crypto trading will not be accessible from the grand duchy until the European Parliament adopts and implements MiCA, harmonising rules for crypto-assets at the EU level.
It has not all been good news at the fintech. Like many tech employers in 2022, Trade Republic axed jobs in May. Baccino did not share the exact number but said it was an organisational decision related to an overly rapid expansion–from 150 to 700 during the pandemic. “We got too big too fast and we needed to reorganise. It was not about the money because otherwise, we would never have raised the €250 million more,” the country manager said.
Word-of-mouth
It’s not only the strength of the recent news that is driving Trade Republic media exposure. Baccino explained that the growth strategy was centred around word-of-mouth, through financial literacy social media channels. “We are trying to build a European network of digital coaches,” he says, adding: “To be independent, people need to learn and the states are not doing that job. You don’t learn to save efficiently in school.”
