Rubix: “Not your keys, not your coins”

A couple of years ago, I wanted to open a bank account for my newborn daughter. The challenge I had was tracking down a bank that was open when I was available (not 9am–5pm), and then making an appointment with the one person in the branch who was able to open an account for me.

When I asked for what I needed to bring, there was a list of requirements a mile long. This was even before COVID turned in-person financial services completely on its head.

It was enough of a hassle that I ended up giving up and opening a Sharesies (sharesies.nz) account for her digitally. I just give these account details to family whenever they want to gift cash, rather than paying to a traditional bank account.

Changing bank accounts (or opening new ones) is a hassle and has now become a mission akin to trekking through rough terrain for a waterhole back in cave-person times.

It gets just as difficult when looking at purchasing a property. Mortgage brokers identify this and will normally approach your existing bank for their best deal before spreading the net more widely if the terms aren’t great.

Now at Rubix we see a future where you do not need to worry about where your mortgage sits or where your bank account sits. We want to give options and tools to invest, save and spend from anywhere you want to keep your money.

We aren’t saying account opening controls are bad, or unnecessary. Friction is necessary at times to protect, and regulations are in response to real issues.

We believe you should be able to choose new, exciting financial experiences without the friction of closing and opening new accounts. Bank account portability is the goal.

Can banks be removed from the equation completely?

Not yet.

“Not your keys, not your coins” is a saying that I first heard when treading lightly into the world of Crypto. It relates to when your funds are pooled with others in a centralised account, such as a bank or crypto centralised exchange (CEX) like Binance or Crypto.com.

The other day I saw a slew of complaints come across my newsfeed about a CEX pausing withdrawals of customer funds. This seems to happen quite often in times of extreme volatility where they are likely protecting their own liquidity. Makes sense from their point of view, but it could be disastrous for a customer. What happens if you had a crisis and really needed those funds?

Centralised financial systems have a few historical issues:

1. Money doesn’t necessarily flow in real time.

There may be delays (e.g. 3 days for BACS in the UK) before the cleared funds arrive in the recipient’s account.

2. Money can only be accessed when the centralised system is open for business.

Traditionally if I wanted a loan I needed to wait for a human to be available, call or visit them and wait for their approval and settlement processes to get the money in my account.

3. Money can be stopped from being liquid (like pausing withdrawals in the example above).

This is the big one. When you don’t hold the funds in your own wallet there is a risk (albeit small) that it won’t be there tomorrow. This is why there are FDIC insured deposits in the USA, and similar protections globally. In the past, banks have gotten themselves into trouble with a material impact on customer deposits.

Decentralised blockchain protocols are able to solve all of the above challenges to a degree.

Right now, I could transfer $100 to the other side of the world in around one second using a Layer 2 Ethereum solution (METIS Andromeda network, surprisingly fast, #1), borrow $100 against my Ethereum tokens at about 4% APY (Aave, #2), and do all of this at 3am with no risk of being shut out of my account (#3).

Despite all of this I still need a bank account for now.