Shaking Up Global Finance

Banks are suffering a crisis of confidence. Following the 2008 crash, public trust in the financial sector sunk and has remained low as a steady stream of stories about corruption and price rigging emerge.

Attitudes measured by U.S. poll company Gallup showed a trend of around 50 percent of people with a “great deal” of confidence in banks before the 2008 crash, but this sunk to around 25 percent in the years that followed.

This could be attributed to specific scandals, like Libor rigging or HSBC’s tax avoidance in Switzerland, which the company’s finance director Douglas Flint has called “horrible reputational damage.”

But what if there was something wrong with the system as a whole?

Bnk To The Future, a global online investment platform, was founded to disrupt what might be called legacy finance. CEO Simon Dixon left a career in investment banking in 2006 to set up the company, which uses digital currencies like bitcoin to invest in financial technology—FinTech—start-ups.

But although Bnk To The Future was founded in 2006, it wasn’t until 2015 that the company officially launched.

“I spent three years fighting regulators to try and allow people to invest online in the U.K.,” said Dixon. “I gave up on that battle eventually and moved to Hong Kong and set up a company in the Cayman Islands because you couldn’t do it anywhere else.”

His description of the structure underpinning Bnk To The Future is of its time, something only possible because of the Internet. It’s no wonder regulators had trouble keeping up.

“We have to have a load of registered companies in order to get jurisdictions and laws, but the reality is our investors come from everywhere, our companies come from everywhere, we have staff dotted all around the world, and we never come to an office in order to meet—we meet on Skype. We don’t fit the traditional map of the world; we live in the Internet,” he said.

Bnk To The Future has had more than £44 million invested through its platform since April 2015, according to Dixon, with 16,000 high-net-worth investors and dividends that pay in realtime rather than every year.

The key to this, Dixon says, is bitcoin.

“Bitcoin is a bank where entrepreneurs can build anything on top of it for free with no permission. It does to banking what the Internet did to information: it can do things in a vastly superior way, it can do things for next to nothing, and it can include anyone that’s got an Internet connection.”

About 5 percent of investment in bitcoin companies has come through Bnk To The Future, including funding for Uphold, Halsey “Salesforce” Minor’s money transfer company; payroll company BitWage; and African money transfer and trading platform BitPesa.

All of these are highly disruptive to the traditional financial world, with Uphold allowing people to send money as easily as an email, BitWage enabling global, automated payroll, and BitPesa eliminating the need for Western Union for remittance in some of the poorest parts of the world.

All of them make use of bitcoin’s decentralized and transparent “blockchain”—a kind of global database that isn’t owned or controlled by anyone.

If that sounds a little “utopian,” bear in mind that everything in bitcoin is considered high risk at the moment.

“It’s about knowing the time horizon,” asserts Dixon. “These companies are going to be worth billions or nothing. If bitcoin continues on the growth path that it is, there’s no cap on the price.”

Of course Dixon is erring on the side of “billions,” and his plans for Bnk To The Future are correspondingly ambitious.

“I’d like to take the things that venture capitalists would have invested in and open it up to our investor community,” he said. “In 2017 I’d like to be able to offer some innovative markets that allow all our investors to exit their investments. That’s going to be disruptive to the IPO market.”

Plus, he says, there’s an unusual advantage to being an entrepreneur in the Internet age.

“You can now play governments off against each other,” he said with a grin. “There’s a global arbitrage where you can keep governments honest by going somewhere else. Bnk To The Future would never have happened if that opportunity didn’t exist.”

Follow John Smithies on Twitter @jdsmithies