Neobrokers Disrupting Markets
In 2020 the world is a very uncertain place. I call it the era of breakdowns and shakeups. The world appears to be upside down, a swiftly changing environment, the shifting sands after a spring tide. The Covid breakout showed us all how quickly life can change. Fragile we are. And brittle.
Artificial intelligence is looming and threatens to change our lives forever. Will we have jobs in the near future? Electric vehicles are on their way. The list goes on and on.
However, amidst these significant shifts, some compellingly positive developments also result in the leveling of the playing fields and allow for more widespread participation in areas that have not always been accessible nor inviting to newcomers.
One such shift lies with Neobrokers such as Nextmarkets.
What is a NeoBroker?
A neobroker is a finance trading app that allows users to trade in stocks with limited or no broker fees. The innovative use of technology is used to facilitate the trade. Neobrokers are smashing traditional trading models and revolutionizing the industry.
The markets have been made accessible to everyone through innovative mobile applications. Neobroker apps have seen an avalanche of new traders enter the market due to the lower barriers to entry, such as low or nominal fees.
Who is Nextmarkets?
Nextmarkets is a neobroker company founded in 2014 in Cologne by two brothers, Dominic and Manuel Heyden. The partnership works exceptionally well, with Dominic providing the technical skills on the IT side and Manuel taking care of the product and investment sides of the business.
The company was formed to address two main factors which the brothers had identified as problematic for traders. Firstly, the brothers recognized that most traders act irrationally and allow greed, fear, and arrogance to affect their stock judgments. The brothers saw a need to pair up new traders with more experience traders who have learned that irrationality is a sure recipe for disaster when trading.
The second major issue was identified as exorbitant broker fees that were traditionally charged and prevented many people from entering the market. Utilizing their extensive experience in the financial industry, the brothers developed a neobroker application to address both of these problems.
Neobroker Apps and Coaching – the Trading Revolution
Besides providing a platform in which no deposit fees are charged, the brothers went further. They are providing training and coaching to all of their customers, thereby assisting them to avoid many of the pitfalls of new traders.
They did this by employing more than 20 investment coaches. The coaches provide free market analyses, which are available in real-time to customers on their apps. In addition, they provide app users with vital up-to-date information.
Customers can then decide whether to proceed with the coach’s recommendations or not. More passive investors can set their profile to automatically follow a particular coach’s advice, in which case the trade would happen automatically. Should the coach reduce his stop-loss at any stage, the customer’s stop-loss would automatically also be reduced.
Nextmarkets has 65 employees. Clients can also trade more than 7 000 shares and 1 000 ETFs per month at no charge whatsoever, which the brothers pride themselves in. Their 22 stock market coaches churn out up to 300 free market analyses per month to assist their clients.
Manuel Heyden, the CEO of Nextmarkets, presents their innovation as follows:
“Nextmarkets differentiates itself from most other providers through its coaches. Above all, however, because learning and further education also play a big role here – not just trading itself.”
When questioned in an interview with Brokertest on how he sees the competition between traditional banks and brokers versus fintech and neobrokers playing out, Manuel answers wryly:
“Personally, I don’t make a clear distinction here, because every FinTech sooner or later faces the same challenges in terms of regulation, compliance and reporting. In other words, having a fancy app is only half the battle.
But if I have the choice between a very modern front-end, good execution quality and EUR 0 order fees and a rather outdated user experience and EUR seven order fees, then the question is answered quickly.“
Conclusion
One word lingers– Disruptive.
Nextmarkets bring to the industry a new way of trading. This affordable option has free coaching, a kind of insurance policy against the school fees that inevitably are paid when newcomers enter the confusing world of stocks and shares.
Reducing risk is the ground rule for investing. The coaching option goes a long way to achieving this.
The eradication of fees is the cherry on top of this offering.
Success is reflected in the company’s growth figures of 207 percent in their first two and a half years of going live.
We are seeing disruption play out. But, at least this time, it is positive.