Headless banking: DeFi as the catalyst for a paradigm shift in the financial world

Patrick Schueffel

Chapter 8 in Research Handbook on FinTech, 2026, pp 142-172 from Edward Elgar Publishing

Abstract: The financial industry is witnessing a transformative evolution with the rise of “Headless Banking,” a decentralized model challenging traditional hierarchical banking systems. Further driven by decentralized finance (DeFi) protocols, Headless Banking enables more efficient, transparent, and inclusive financial services. This paper evaluates whether Headless Banking represents a Kuhnian paradigm shift – fundamentally altering the conceptual framework of finance. Using Kuhn's theory, the analysis explores the limitations of traditional banking, such as high costs and limited accessibility, and how Headless Banking can address these challenges through decentralized solutions. The impact of DeFi on financial inclusion, regulatory implications, and the potential societal shift toward DeFi autonomy are assessed. The results indicate that DeFi serves as the catalyst ensuring that Headless Banking will evolve into a Kuhnian paradigm shift, fundamentally transforming the financial industry.

Keywords: Headless banking; Decentralized finance; DeFi; Paradigm shift; Distributed ledger technology; DLT; Banking-as-a-service; BaaS; Open banking (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035321414
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