The Promise and Peril of Digital Finance

When digital trading platforms, ranging from mobile apps to decentralized exchanges (DEXs), first emerged, they carried the bold promise of democratizing finance. Built on new technology, from intuitive mobile interfaces to blockchain-based protocols, these platforms offered everyone direct access to markets once dominated by institutions. In theory, the playing field was finally level. Everyday retail investors—those trading on their own behalf—were on equal footing with Wall Street professionals.  

Despite the hope of more egalitarian trading, the outcome has so far not lived up to expectations. Marius Zoican, associate professor of finance at UCalgary’s Haskayne School of Business, indicates the gap in financial outcomes between professionals and retail investors not only persists, but may be widening.  

Based on his career studying high-frequency trading, Zoican suspects there are behavioural biases at play. With new funding from the Social Sciences and Humanities Research Council (SSHRC), he is setting out to investigate this tension between the "democratization" promise of digital finance and the behavioural biases holding back individual investors.  

From High-Frequency Trading to Inclusive Digital Markets 

Zoican, who holds a Canada Research Chair in Financial Technology (FinTech), began his journey studying high-frequency trading before the term FinTech had even been coined, much less applied to blockchain and online trading. Through his studies, Zoican developed an understanding of the structural inequalities in modern financial systems, where large firms used speed and infrastructure to gain market advantages. 

“Large firms have both infrastructure and informational advantages, allowing them to tip the scales in their favour while also building "moats" to protect their operations and keep other investors out.” 

Zoican found the promise of decentralized finance appealing, and what it would mean for smaller investors. Using the same automated codes, all investors have access to the same information and should be able to realize similar returns. So why, he wondered, isn’t that happening?  

Behavioural Biases in the Blockchain Era 

Central to Zoican's research is the hypotheses that retail investors—often using mobile apps—are more susceptible to behavioural and cognitive biases than their professional counterparts. These biases can lead to poor decision making, especially in fast-moving, complex environments.  

Technology alone isn’t enough to erase inequality. By taking a closer look at individual investor behaviour, Zoican’s research looks to answer key questions such as:  

• Can individual traders effectively provide liquidity on decentralized exchanges?
• Do retail traders understand the value of privacy as well as their professional counterparts?
• Are comparatively inexperienced investors easily swayed by the gamification of trading apps with flashy interfaces and reward systems?
• Is the ease of trading on their phones making it easier to invest, or easier to make impulsive mistakes? 

Zoican has already raised concerns about the risks of gamified investment apps, and this new research project seeks to understand what other behavioural and cognitive biases could be hindering the success of retail investors. The answers could have significant implications for market design, investor education and regulatory policy.  

“There’s a real opportunity here to close structural gaps,” Zoican explains. “If we can understand how retail investors behave—and where they struggle—we can build systems that support better decision-making and enhance financial literacy at scale.” 

A Broader Vision for Financial Wellbeing 

While Zoican’s research is focused on digital finance, the fintech pioneer sees his work as part of a larger effort to guide the design, communication and evaluation of social and environmental initiatives in finance.  

“By helping these efforts succeed,” Zoican explains, “the research ultimately supports communities, employees, future generations—and the long-term health of both human and natural systems.” 

As decentralized finance and digital platforms continue to evolve, this kind of inquiry is essential. The dream of democratized investing is still alive, but it will take more than automated code to achieve it. It will require a deep understanding of human behaviour, thoughtful design and a commitment to equity.  

Dr. Marius Zoican is an associate professor of finance at the University of Calgary's Haskayne School of Business. He studies the impact of technology on investor behaviour and securities exchanges, using game theory and controlled experiments.