FinTech: Trade Republic, The German Fintech Heavyweight, Wins EU Banking Licence

December 6, 2023 | FinTech, News

“If you’d told me at the beginning that it would take four years to get a banking licence, I would never do it again,” – Cofounder Christian Hecker.

Berlin-based neobroker Trade Republic has secured a full banking license from the European Central Bank, marking a significant milestone for the fintech. This license empowers Trade Republic to both hold customer deposits and venture into the lending business.

Trade Republic’s attainment of a banking license enables it to diversify revenue streams, particularly crucial given the impending EU ban on payment for order flow (PFOF), a mechanism integral to the fintech’s revenue. (Sifted)

Previously, the company relied on partnerships with banking entities such as Solaris AE, Deutsche Bank AG, JP Morgan SE, and Citibank Europe plc to manage customer funds. With a valuation of $5.3 billion after a major funding round in 2021, Trade Republic boasts over 2 million customers across 17 European countries, offering commission-free trading for retail investors and a monthly ETF savings plan through its collaboration with BlackRock (NYSE: BLK). International VC firms including Sequoia, Accel, TCV and Peter Thiel’s Founders Fund participated in the 2021 funding round.

While the neobroker faced regulatory challenges, co-founder Christian Hecker emphasized the importance of navigating these hurdles for substantial growth.

Hecker has actively lobbied against the ban, recognizing its potential impact on Trade Republic’s business model.

Related Story:  Eyeing A UK Banking License, Revolut And SoftBank Bury The Hatchet On Share Structure

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