The Future of Finance May Leave Banks Behind

Platforms like Codex are filling the needs of banking—just without predatory fees and interest rates. Will traditional banks catch up with the rapidly changing industry?

Alex Gordon-Brander of Codex believes the future of finance will no longer require traditional banks. Even though Codex isn’t technically a banking service, it fulfills all the same needs that a bank does.

“I wouldn't say that we were doing banking because that's a different thing and there's FDIC and all that. But when all of the services of a bank are provided by open-source code, sitting on a blockchain and a decentralized pool called FDIC Dow are ensuring the accounts … like at a certain point,” Gordon-Brander said.

Gordon-Brander said bank executives should pay attention to the current landscape and trends of digital finance, as the future may swiftly change. Gordon-Brander recalled a time he recently had dinner with a friend of his—who serves as a board member for a bank in London—where he was explaining the concept.

“I was just talking Greek to him. I was trying to explain, and he's like, ‘oh, blah, blah.’ I'm like, ‘your institution is not gonna exist as you know it in, like, three years and you have no idea.’ He is chief risk officer, so this is interesting,” Gordon-Brander said.

Many banks are shuttering and closing down, with dwindling clients and very few in-person visits. The traditional ways of banking have only hurt poor and impoverished people worldwide.

“If you are in Africa and in India, you are paying 25-30% interest to start a business. That means in 30 years’ time, you owe back a thousand dollars for every dollar you borrowed,” Gordon-Brander said. “If we can collapse, kind of, credit spreads around the world and capital access around the world—’cause we're just saying, ‘you know what? Chop down all that infrastructure’—then so much more becomes possible.”

Gordon-Brander said society is at a fundamental transformative moment where people are questioning the current state of how money, finance, and ownership.

“The way that we organize reality and concepts of money and ownership and value and truth—they're not just concepts,” Gordon-Brander said. “They're fundamental to the construction of our reality.”