Why Trade Republic Is Facing Massive Challenges

Often, the problems of a company are barely visible from the outside for a long time, until they suddenly flare up for the public’s eyes at certain moments. In the case of the neobroker Trade Republic, it was the recent scandal surrounding delayed dividend payments that provided a deeper insight into the internal difficulties of the Berlin fintech star.

As the “Wirtschaftswoche” reports, Trade Republic has apparently been struggling to deal with customer inquiries since autumn 2023. The attempt to defuse the situation through generously paid overtime – up to 50 euros per hour – indicates a certain helplessness in dealing with its own growth. The fact that, in addition to dividend payments, the execution of savings plans and the possible delisting of cryptocurrencies were also accompanied by difficulties suggests deeper operational problems.

Trade Republic customers angry about lack of communication

Many customers have been waiting in vain since the beginning of June for the dividends to be credited to their Trade Republic accounts. According to the company, the payments should actually be made on time on the respective due date.

Investors are particularly annoyed by the lack of response and communication from Trade Republic. Support often only responds to customer inquiries with automatic replies without providing an explanation for the delays. One frustrated user writes on Reddit: “The lack of response from Trade Republic is the worst, a disaster.”

Against this background, the decision not to expand the company’s own customer service but to outsource it completely seems remarkable. This may save costs in the short term, but it carries the risk of losing control over a key business area. This step could backfire, particularly in the sensitive financial sector, where trust is the most important asset.

Trade Republic must not only grow, but also deliver

The appointment of former Bundesbank board member Joachim Wuermeling to Trade Republic’s audit committee can therefore be seen as an attempt to stabilize the situation. It remains to be seen whether this will be enough to restore the trust of customers and the supervisory authorities – Bafin has also intervened in the meantime .

The coming months will show whether Trade Republic has learned the right lessons from the past few months. It will be interesting for customers, investors and regulators to see whether the company can adapt its internal structures so that it can not only offer favorable conditions in the future, but also provide excellent service. This is the only way it can justify the trust placed in it by millions of investors in the long term.

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(Featured image by Adeolu Eletu via Unsplash)

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First published in DAS INVESTMENT. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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