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Neobroker
A digital-only securities broker without a branch network, offering equity and crypto trading via app or web at very low or zero fees — funded by PFOF, interest margins and subscription tiers.
Definition
A neobroker is a digital-only securities broker without a branch network, offering equity trading through a smartphone app or web interface at very low or zero fees. Unlike traditional direct banks, neobrokers do not run their own banking operations (current accounts, lending) and focus exclusively on securities and crypto trading.
The business model rests on three pillars: payment for order flow (PFOF) — payments from market makers for routing orders, interest on uninvested client cash, and premium subscriptions with extended features.
Players in the DACH region
The leading providers in Austria and Germany:
- Trade Republic (Berlin, BaFin-licensed) — market leader with more than 4 million clients, €1 per trade, savings plans from €1, crypto trading since 2022.
- Scalable Capital (Munich) — hybrid broker plus robo-advisor, free trades on the PRIME+ subscription (€4.99/month).
- Bitpanda Stocks (Vienna) — fractional shares and ETFs from €1, same interface as the crypto platform.
- Flatex (Frankfurt) — older player with neobroker-style pricing but a broader product range including derivatives.
US pioneer Robinhood entered several EU markets in late 2024, although it is not yet officially live in Austria.
Regulatory pressure: the PFOF ban
The EU's 2024 MiFIR reform bans payment for order flow across the EU from July 2026 — the result of intense lobbying by traditional exchanges and consumer advocates who see PFOF as an investor-conflicted practice. Neobrokers will have to adapt: some (Scalable, Trade Republic) are already experimenting with wider spreads, order fees or subscription models.
ESMA and national regulators (FMA in Austria, BaFin in Germany) are monitoring the transition. For investors the practical takeaway: actual execution prices and hidden spreads should be compared against alternative brokers more carefully from July 2026 onward.
A tax trap for Austrian investors
A crucial point: most neobrokers do not hold an Austrian custody licence. They therefore do not automatically withhold Austrian KESt for the tax office. The investor must declare the income separately in their annual income-tax return (Anlage E-1kv) — an administrative effort that is widely underestimated.
Bitpanda Stocks is an exception: as an Austrian company under FMA supervision, it withholds KESt directly and provides the convenience of a domestic bank.