Since the fallout of the financial crisis almost 10 years ago, there has been an almighty push to reinvent the banking industry. New and innovative technologies are being developed by FinTech firms to optimise banking processes that were previously seen as inefficient and time-consuming.

However, Chris Gledhill, CEO of location-based, financial social networking app Secco, believes that 95 per cent of FinTech firms are just making “leaner, nicer looking versions of current banks” and not actually reinventing the sector. Gledhill wants to “change banking from the outside in, rather than the inside out”, in the same way that Uber and Airbnb have revolutionised their respective industries.

Gledhill left his innovation technologist role at Lloyds Banking Group 18 months ago along with former Lloyds senior innovation manager Vicky Barton to develop Aura – a proximity-based social app where users create value tokens based on interactions they may have with others in the Aura community. Recognising that people have an online persona as well as a physical persona, Gledhill sees Aura as “a way to digitally augment your physical self”, supplementing your real-life personality through the app.

Users build their reputation with every interaction they have – whether they pay someone a compliment on the bus or donate a token to a charity collector on the street.

As part of the development process, the Aura team completed an experiment in London where they set up in coffee shops with a physical aura, encouraging people to come over and chat with signs such as “I’m a designer, ask me a question”. Gledhill said that they were surprised to find how many people approached them to spark up a conversation, stating that he wants Aura “to encourage real-life conversation between users”.

Customers can upload as much information as they like to their Aura profile, such as employment information or personal interests. The more information added to the user’s profile, the more valuable it becomes, essentially earning currency for the individual based on how interesting they are. For instance, a university student could trade lecture notes for tips on how to use the washing machine, or they could receive a coupon in return for complimenting someone on their new hat. Users build their reputation with each interaction they have, which in turn leads to a more valuable Aura profile.

Gledhill is hesitant to call Secco a challenger bank, stating that it would not be going down the same route as banks such as Tandem and Monzo in acquiring a banking licence, suggesting that the margin for innovation is small once you gain a banking licence, labelling it a “straitjacket of a model”.

Secco will not require a banking licence as it does not hold anybody’s money. Instead, individuals are in possession of their own personal data bank. Each user has their own individual programming interface, or IPI, allowing customers to be in control of their own ‘currency’ and data – and they decide what to share.

The London-based startup has also incorporated many emerging technologies to build the Aura platform. Labelling blockchain technology as “architecturally inefficient”, Gledhill noted that a distributed ledger system requires a lot of computer power to validate a transaction. Instead, Secco has developed ‘BlockTree’, where transactions can be completed both online and offline. Gledhill described the new development as a “pragmatic compromise between the clinical nature of blockchain and the reality of how people want to transact”.

The Aura platform has used the Internet of Things concept to build a Pokemon Go-esque hyper-location channel, where users can see and interact with other users through augmented reality. Secco is also going one step further than fingerprint or eye verification, looking into the development of behavioural biometrics, such as the rhythm of a user’s pocket or handbag that contains their mobile device – which is a lot harder to replicate than fingerprint technology.

To help develop the app and utilise new technologies, Secco has enlisted the help of technology consultancy Thoughtworks. The firm’s client director, Amol Punekar, says of the partnership: “Given Secco challenges the very premise of banking and the notion of currency, we thought this partnership was a natural fit. With its first product Secco Aura, the venture is attempting to bring age-old concepts of bartering into the digital era.

“It attempts to create a proximity-based social network where people exchange digital tokens and replace money in some of their real-world transactions,” he explains. “In doing so, it hopes to reinvent commerce as we know it and create a social network of sorts based on digital peer-to-peer currency.”

Secco is currently in the process of raising Series A funding, with a target of March this year for a public beta launch. Pilots have been agreed for offices, campuses and shopping centres in the coming months – spaces that naturally have many people within close proximity of one other.

Gledhill adds that the new platform currently has three business models for generating cash flow. The first offers corporate firms the option to buy their own coins for a small fee; for example, allowing a coffee shop to release coins as part of a loyalty scheme. Secondly, the app will also incorporate affiliated marketing, where users can rate other people’s outfits or find out where a particular bag is from. That shop will then gain a new channel for sales, while the person wearing the outfit gets a referral bonus.

Finally, the biggest idea for revenue growth is through Secco’s ‘reverse marketplace’ concept, which uses people’s personal data to sell marketing tokens to companies. For instance, ski firms would be interested in purchasing the email details of people who have expressed a specific interest in going on a ski trip.

Gledhill concluded: “We saw a real opportunity for someone to come into the market with a proper conceptual rethink of what it means to be a bank and what money, wealth and value is. We took a step back and saw a huge opportunity to properly reinvent things. At the same time, there were a lot of new technologies such as blockchain and Internet of Things maturing, coupled with a switch in consumer attitudes around privacy, security and data.

“And finally, we are based in London, which is the FinTech capital of the world – so it was a case of planets aligning to make a change. Because if money makes the world go round, then changing the money means that you can change the world.”

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