In 1961, Popular Science magazine envisioned self-driving cars. The reality arrived sooner than anyone anticipated, before safety regulators could adapt, and autonomous vehicles brought new risks that legacy rules never considered. Banking is headed down the same road. And it’s being driven by the technology behind decentralized finance, or DeFi. But just as the original rules of the road protected us from other drivers, so our current bank regulations exist mainly to prevent human failings.
Could regulators ensure self-driving banks properly serve their communities? Absolutely. Their greater efficiency would free significant amounts of capital that is lost to operating costs today or slowed by decisions dependent on human grey matter. Of course, algorithmic banks would change the nature of employment in the financial sector — with far fewer bank tellers and more coders. But creating better compensated and value-added jobs may prove a societal benefit in the long run.