The contemporary call for the “democratization of finance,” widely championed by FinTech firms, proponents of decentralized assets, and even the President of the United States is founded upon a fundamental political deception. It substitutes technical access to markets for structural power, the collective capacity to control the allocation of credit and capital. Rather than being an engine of universal, equal representation, it functions as an optimized, efficient mechanism for transferring wealth from retail participants to a highly concentrated oligopoly of financial giants. The “democratization” movement, therefore, is anything but democratic.

The proponents of this narrative, echoing figures like Yale finance economist Robert Shiller, define democratization simply as “the opening of financial opportunities to everyone.” This market-centric ideology frames increased individual market participation as the ultimate form of equality. Yet, finance is globally dominated by titans: in the U.S., the top 10% of households own 67% of household wealth. The reality of wealth concentration in America combined with the ethos of “access” over equality of ownership makes a mockery of the concept of democracy. The critical question is not how many people can open an account, but rather, who controls the creation and circulation of money and capital?.

Access is Not Sovereignty

The mission to “democratize finance for all” serves a crucial ideological purpose: it provides essential rhetorical cover for deepening financialization by predatory brokers and financial elites. By defining democracy solely in terms of technological convenience and access to financial instruments, discourse is successfully diverted away from structural critiques about control over the underlying capital.

The framing of access as sovereignty echoes similar calls in the health care and educational sphere (sometimes by liberals). But like large corporate health insurers, FinTech platforms are designed to extract rents from their users, not to deliver wellbeing to their customers. For platforms like Robinhood, the lowering of trading “friction” and commissions serves the primary business goal of increasing platform engagement and trading volume, regardless of whether that activity benefits the individual investor. This structural dependency on high-frequency retail engagement allows the continued concentration of power among the established financial elite—the market makers and asset managers—that already dominate the global economy. True democratization would require subjecting the allocation of credit and investment to collective decision-making and public participation, a step the current movement intentionally avoids.

The Zero-Commission Myth

One potent piece of evidence that this movement is extractive, not democratic, lies in the market mechanism that underpins the “free” trading model: Payment for Order Flow (PFOF). PFOF is the compensation wholesalers, or market makers (such as Citadel Securities or Virtu), pay brokerage firms for the right to execute their customers’ trades. 

Brokers claim that PFOF allows for tight spreads and efficient execution, but the reality for the retail investor is often one of hidden costs. Market makers make their money on the spreads between buy and sell orders executed by retail investors. They then willingly pay large sums to firms like Robinhood, for the right to execute these orders. Robinhood, for example, earns 65-80% of its quarterly revenue from PFOF. 

PFOF has not fostered broad competition but has instead led to a dramatic re-concentration of power within the execution layer. Estimates suggest that two wholesale firms, Citadel and Virtu, handle nearly 70% of all retail investor orders. This extreme oligopolistic control is structurally predictable. Wholesalers must invest aggressively in sophisticated technology, high-speed trading systems, and robust risk management capabilities to handle volatile order flows—a massive upfront investment that serves as a large barrier to entry for smaller competitors and encourages concentration to improve “efficiency.”

Furthermore, the brokerage revenue model actively directs retail participants toward the riskiest, most speculative financial instruments because the economics of extraction are far superior in these asset classes. Two-thirds of all PFOF revenue is derived from the options market, where PFOF rates are significantly larger than in equity markets. The extractive model is magnified even further in the crypto asset space. PFOF in crypto markets operates with significantly less transparency and generates fees that are astonishingly high—estimated to be 4.5 to 45 times higher than those in traditional equity markets.

The Gamified Architecture of Addiction

FinTech platforms also rely heavily on Gamification and Digital Engagement Practices (DEPs)—including attractive app designs, social media-style features, push notifications, and celebratory animations (such as confetti upon completing a trade). These features are designed to leverage intrinsic psychological rewards, provide immediate feedback, and establish clear, hedonic goals, thereby increasing platform engagement and, crucially, trading frequency.

The deployment of behavioral economics is not benign; it is a mechanism for revenue maximization. Since the brokerage profit model relies on high trading volume to generate PFOF revenue, gamification is the primary tool used to capture cognitive biases. Empirical studies confirm that these tactics significantly increase trading frequency and risk-taking. One experiment demonstrated that offering participants virtually worthless reward points led to a 39% increase in trading activity compared to a control group. Furthermore, platforms emphasize “trending stocks” using attention-grabbing mechanisms like push notifications, directly incentivizing attention-induced trading and risk exposure.

These very same DEPs are now being deployed in prediction markets, encouraging users to bet on everything from interest rates to football games to the outcome of elections. The sports betting industry alone has grown to $17.9 billion, with the bulk of that from online gambling. Users can even “parlay” their bets, combining two or more individual wagers into a single bet, offering a higher payout than placing each bet separately.

The result is a calculated democratization of risk, not wealth—in fact, the system extracts wealth through execution costs and self-destructive trading behavior. Furthermore, regulatory bodies, such as the UK’s Financial Conduct Authority (FCA), have found that these DEPs disproportionately harm vulnerable groups, including younger participants (aged 18-34) and those with low financial literacy, pushing them toward riskier investment decisions. 

Decentralization Without Democracy

The concept of decentralized finance (DeFi), often conflated with “democratization,” offers a technological bypass of sorts. Yet, in practice, it creates a novel form of unaccountable, centralized power. Advocates of decentralized systems claim they empower ordinary people by allowing them to bypass extractive financial and public institutions. 

However, this focus on technological disintermediation is a political evasion. Even when intermediaries are removed, the core problem of finance capitalism remains untouched. The critical decisions about the allocation of credit and investment are still made privately; collective decision-making and public participation are nowhere to be found

DeFi, as it has been practiced, simply replaces publicly regulated, centralized power with technologically opaque private control. While these systems promise “trustlessness,” the lack of regulated intermediaries leads to significant market failure and consumer harm. Control is often re-centralized among large token holders (“whales”) and developers who retain administrative keys to smart contracts.

Reclaiming Financial Democracy

If the current movement is merely the financial engineering of extractive market access, true democratization requires a revolutionary structural transformation: the return of the power to issue credit and control capital to the people through genuine democracy.

True democratization of finance requires renewing public power to control borrowing and money creation. This is not a new demand; during the Great Depression, socialist movements pressed the case for public banks in response to widespread failures and mismanagement. The objective must be to subject financial flows to democratic processes and accountability, ensuring that credit allocation aligns with public needs.

Socialized banking and active citizen oversight would institutionalize democratic control. It could take the form of nationalized or public investment banking. Yet another model would imply shared governance, with various stakeholders exerting democratic oversight in balance with one another. Another outcome might be worker or member-managed banks like credit unions.

Whatever form it takes, the model of democratic finance must navigate the dual challenge of delivering social mandates while ensuring democratic governance. It must incorporate mechanisms for transparency, accountability and public engagement to prevent the system from drifting toward authoritarian modes of social control.

True financial democracy is not an end in itself, but a necessary precondition for realizing economic democracy. Zero-commission trading, gamification and decentralization do nothing by themselves to reclaim control over the commanding heights of finance and, therefore, are irrelevant to “democratization.” Only by establishing socially governed financial institutions and implementing shared worker-citizen oversight can finance be reliably democratized.