Beyond Bitcoin, Secco wants to build a new generation of "block tree" bank

     Three months ago, Chris Gledhill was working as an innovation technician at Lloyds Bank, the largest bank in the UK. Although the job was enviable, Gledhill often felt powerless. The huge scale of the banking industry allowed Gledhill to clearly see the various problems and challenges in the financial system, but he felt that he was powerless to change the financial system.

     So he quit. Today, Gledhill and three other partners are launching a new kind of bank inspired by blockchain: Secco.

     Secco's goal is simple: "To eat up the banking industry from the outside, not from the inside."

Bitcoin Finance

     Like many other technological and financial products, Bitcoin was created by the financial crisis of 2008.

     Although the original Bitcoin users hoped to use this new currency to replace the "broken" financial system, ironically, six years later, Bitcoin technology is in the hands of its original enemy, the banking industry.

     Last month, 13 more banks (Lloyds was not among them) joined startup R3CEV in a project to establish industry standards for data blockchain.

     But Gledhill believes that various related efforts, including those of venture capital startups, have not had much effect. He is generally disappointed with the level of innovation within and outside the financial system:

     “Innovation is there… People are always saying ‘let’s add blockchain to this product’ and so on, but no one is really stopping to think about whether this is the best solution for financial services.”

     “Even outside (the banking industry), the fintech industry is just innovating on existing financial solutions – making them cheaper, faster, better,” Gledhill said. “But no one is reinventing them.”

     These include loans, mortgages and cash accounts: services whose contracts are often very old, some dating back hundreds of years.

     Gledhill admitted that these products cannot be transformed immediately, but some blockchain-related startups and R&D teams have begun to work on changing that.

     ItBit's Bankchain and Blythe Masters' Digital Asset Holdings target digital financial assets, while startups such as Everledger target physical products in the supply chain.

How Secco works

     What is so special about Secco? First of all, Gledhill said that Secco is different from any bank you can imagine.

     Of course, Secco does not have branches like a bank (of course, general banking competitors do not set up branches either). In addition, Secco does not have a mobile app or a user interface.

     On the contrary, we can use Secco unconsciously on the social platforms and apps we use every day. "We hope to reduce customer interaction." Gledhill said.

     “Right now it looks like we are heading towards self-destruction because Secco’s model is deliberately the opposite of the banking model. But I believe somewhere in the middle it will balance out.”

     Of course, it’s not all about money. Secco plans to turn users into “data managers” who can consume, borrow and invest in data.

Secco and the user each hold an electronic key, and confirmation from both is required in the transaction, and the electronic bank will charge a partial handling fee.

     Electronic banking will be built around a distributed database, similar in function to the Bitcoin blockchain. The entire bank's data is distributed across all users' phones, meaning that bank data belongs to everyone and no one at the same time.

     Gledhill calls the technology “blocktree.” It is currently awaiting patent review. He said the technology will solve many of the problems caused by Bitcoin technology.

     “ Blockchain is a linear structure, which is very rigid. Block tree allows users to split small blockchains, conduct offline transactions, and then merge them later.”

     Due to patent application requirements, Gledhill could not reveal more specific technical details, but he hinted that the platform will be open to the public and welcomes suggestions from all walks of life.

challenge

     In recent months, a number of so-called banking rivals have emerged to challenge the UK's big four banks (Lloyds Banking Group, Royal Bank of Scotland RBS, HSBC and Barclays).

     Although industry insiders believe that this has greatly shaken up the traditional banking industry, it is clear that it will take a long time for user habits to change.

     Statistics from the UK Competition and Markets Authority show that 37% of consumers have kept the same bank account for 20 years or more. In 2014, only 3% of users changed banks.

     If customers are so reluctant to switch banks, how could they be willing to switch to a bank alternative that has neither a mobile app nor physical stores?

     Gledhill acknowledged that this will be a huge challenge, but now that Secco has received interest from investors, he is confident that the company will not fail.

     Next year, Secco will launch an initial application called Aura, which will allow users to trade data with other users within a 60-meter range using location-based information.

     For example, users can get restaurant coupons or other non-financial transactions by posting tweets.

     "Ideally, Secco needs to help users understand the concept behind the app bit by bit through the Aura app," Gledhill said.

     "Users can't just throw away all their money overnight and turn themselves into data managers. It's a gradual process. We need to guide them little by little."

     “People may not understand what we are, but I believe this is a start, and anything that can differentiate us from traditional banks is a good thing,” Gledhill said.