• Friday, February 23, 2024
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Revolutionizing Finance: A Journey with Uzoma Dozie through the Evolution of Banking and the Sparkle of Digital Innovation

Uzoma Dozie is a luminary in Nigeria’s financial domain, serving as the last Group Managing Director of Diamond Bank Nigeria. His illustrious career spans various domains, including financial advisory, economics, technology, and entrepreneurship. Uzoma has spearheaded innovative technological solutions to foster sustainable economic reforms throughout Africa’s financial and technology sectors. His latest venture, Sparkle, epitomizes his dedication to leveraging technology for widespread financial inclusion. As a mobile-first platform tailored for Nigeria’s retail sector, Sparkle seamlessly integrates Uzoma’s extensive background in both retail and financial services. Through Sparkle, Uzoma continues his mission to empower individuals and businesses across Nigeria, cementing his legacy as a visionary leader driving positive change in the financial landscape. In this interview with the Founding Editor of the BusinessDay Weekender, Lehlé Baldé, he talks about all things digital, finance, and Sparkle.

Excerpts from the interview

Lehlé Baldé: Looking back at 2023, a year marked by dynamic shifts within the financial services sector, could you share some of the significant milestones that have shaped your journey in Nigeria’s financial landscape? What were the highs and lows that stood out to you?

Uzoma Dozie: Certainly, reflecting on the highs and lows of 2023 from the vantage point of a CEO in Nigeria’s digital banking sector presents a unique perspective.

My greatest highlight of 2023 was the change in government. With a new president, we saw regulatory reforms that positively impacted financial markets, particularly the liberalization of foreign currency. This move aimed to deepen investor attraction and enhance transparency by addressing the complexities of multiple exchange rates.

Additionally, the removal of fuel subsidies signaled a commitment to restoring investor confidence and stability. Despite global economic challenges, investments trickled into the fintech space, demonstrating the enduring belief in technology’s role in driving socioeconomic progress.

We also grappled with challenges that tested our resilience. Distrust and uncertainty, pervasive in the African context, cast a shadow over our efforts. This climate of uncertainty led to the closure of businesses and dampened investor confidence, underscoring the importance of restoring trust in our financial ecosystem.

The prevalence of financial fraud posed a significant obstacle to our digital banking initiatives. Combatting fraud and enhancing security measures became paramount to fostering trust and driving the adoption of digital solutions among our customer base. 2023 presented both triumphs and trials, it reinforced our commitment to innovation, transparency, and customer-centricity. As we navigate the complexities of the financial landscape, we remain steadfast in our pursuit of building a more inclusive and resilient digital banking sector in Nigeria.

Lehlé Baldé: Give us a breakdown of the financial ecosystem in a few minutes. Let’s talk about trust issues and fraud. I think that’s a huge issue right now in the financial sector. What role is Sparkle playing in addressing trust and fraud issues?

Uzoma Dozie: Let me break down the financial ecosystem for you in a nutshell. At its core, trust is paramount. It’s about certainty and transparency. It’s about knowing that when you make a payment, it will go through as expected and that when you engage in transactions, you’ll get what you’ve been promised. This is especially crucial in today’s landscape, where trust issues and fraud are pervasive in the financial sector.

In the realm of small businesses, which are the engine of economic growth, trust plays an even more significant role. As individuals transition from cash-based systems to e-commerce platforms, they’re exposed to various risks. Take, for instance, buying something online – you see a product on Instagram, and make the payment, but it doesn’t meet your expectations, or worse, it’s a scam.

At Sparkle, we recognize the urgency of addressing these trust issues. Our mission is to build trust systems that remove the human element, mitigating risks for both buyers and sellers. One initiative we’re actively pursuing is the implementation of escrow services. Picture this: You’re interested in a product, but you’re hesitant to make a direct payment. With escrow, you can deposit your money, the seller delivers the goods, and only when you’re satisfied and the terms are met do you release the payment.

This approach not only safeguards transactions but also fosters confidence and transparency in the financial ecosystem. By proactively tackling trust and fraud issues, Sparkle is paving the way for a more secure and reliable financial future.

Lehlé Baldé: Looking back, what has been the most challenging part of building Sparkle?

Uzoma Dozie: Honestly, the initial phase was exhilarating. When you’re fueled by the belief that your idea can genuinely make a difference, it’s pretty thrilling. Building the team, seeing the excitement, and launching positive feedback, were the highlights. But then reality hits, and the challenges start to surface.

For us, the biggest hurdle has always been talent. You have this vision of where you want to go, and the skills you need to get there, but finding the right people in an environment where talent is scarce? That’s tough. Brain drain is a real issue, driving up costs and injecting uncertainty into everything we do. And let’s not forget the curveballs like EndSARS and COVID, they threw us off course, no doubt, but here we are, still standing, still growing. It’s a testament to our strategy, our people, and our business model. Sparkle was born amid tough times, and we’re thriving despite the odds.

Sure, 2024 is shaping up to be another challenging year. People are still recovering from dashed hopes and setbacks. But you know what? Challenges breed opportunities. We’re in the business of building, laying down the foundations for something solid and enduring. Like a skyscraper, you start with the groundwork, making sure it’s sturdy and resilient.

But because it’s challenging, it means that we have a better opportunity. For us, we are in the phase of building, we’re building a skyscraper and to build a skyscraper, you must build down first, the foundations must be strong, must be solid. We’re building foundations of the right type of people, the right type of culture, family, strategy governance structure, etc. Those are the ones that would help us withstand the challenges.

Still using the skyscraper analogy, when there’s high wind, rain, etc, that ten-story building is still going to be there, standing. In 2024, we are going to see a lot of collapse. We already saw them in 2023. So we are going to see more in 2024, but what we’re building at Sparkle is a safe ecosystem for people, a trust system. Trust that we’re still going to be here tomorrow, trust that we are going to be in an environment where your money is going to be safe, trust that you can invite people to join the club and they will say thank you for leading me on to a good thing.

Lehlé Baldé: Sparkle targets, from my observation, Gen-Zs and Millennials. Would you agree?

Uzoma Dozie: Predominantly, our customer base consists of 90 percent Millennials and Gen-Zs, with more Millennials than Gen-Zs actually, mirroring society. So we are engaging with the right audience.

Lehlé Baldé: If you could go back to when you were 24 years old, what financial advice would you give yourself?

Uzoma Dozie: Save more, just put something aside. Why do I think like that? There was no opportunity to do so, or it was cumbersome. But then again, banking today is completely different from what it was like back then, especially in Nigeria. At 24, I was in Nigeria, and to save. Back then, I had to physically go to the bank. If I wanted to save every single day, then every single day I had to go to the bank and give an instruction to do so. It was a laborious process, and I couldn’t easily track my savings. Moreover, the trust factor wasn’t quite there.

Additionally, banks at that time didn’t focus much on consumer services; they were more geared towards commercial banking. As consumers, we were somewhat neglected. Nowadays, everything has changed drastically. Firstly, you don’t have to physically visit a bank; your bank is right in your hand. Secondly, speaking for Sparkle, I save without even thinking about it. I set instructions to save a certain amount or a percentage of my spending, and it’s done automatically.

The money I use for donations, and the money I spend on parties and gifts all come from my savings. If I had started doing that at 24, I’d probably be much better off financially today.

Lehlé Baldé: Your career spans 25 years or more, allowing you to witness the evolution from traditional banks to digital banking. Looking back at the banking scene 15 years ago, what notable changes have shaped the industry to make it more interesting?

Uzoma Dozie: There are quite a few notable changes. I’d say the most significant one is in payments. The way we pay for things has undergone a dramatic transformation, particularly with the rise of mobile technology. While we had banks, branches, ATMs, and point-of-sale terminals, mobile technology revolutionized the entire landscape. It allowed banking to break free from the confines of physical branches, empowering people to make better financial decisions and access banking services more conveniently.

Mobile technology was a game-changer, forcing the financial services ecosystem to reimagine banking and extend its reach to include more people. We’re still on this journey, but with advancements in technology and collaboration among stakeholders, government, the private sector, and others we have a tremendous opportunity ahead of us.

Financial inclusion is a key goal, but it’s just one piece of the puzzle. There’s also identity inclusion, social inclusion, and ensuring that financial institutions cater to the needs of all segments of society. Mobile technology has played a pivotal role in reshaping banks and shifting mindsets.

However, we still have a long road ahead. Traditional banks, like the ones I started with, primarily focused on providing financial services to commercial and corporate customers, with consumers being somewhat of an afterthought. Now, we’re in a transition phase where new players are entering the market, fintechs and neo-banks.

The opportunity lies in learning from both the traditional and the new players. We can leverage the strengths of traditional banks, such as trust and capital reserves—while embracing the agility and technological prowess of fintechs and neo-banks. Experience is invaluable, and it’s something we’re leveraging at Sparkle.

While traditional banks boast trust and substantial capital reserves built over the years, newer players like Sparkle offer agility, knowledge of cutting-edge technology, and a customer-centric culture. Our customers may be older than Sparkle itself, but what we bring to the table is a deep understanding of the needs and preferences of today’s mobile, dynamic consumer base.

In this new age, where mobility and flexibility are prized over ownership, and investment is favored over traditional savings, it’s essential to blend the wisdom of the past with the innovation of the future. By embracing diversity of knowledge and learning from both old and new players, we can create a seamless and enriching banking experience for the modern consumer.

Lehlé Baldé: Talk about the connection or collaboration between Neo and traditional Banks. Could you discuss any stories of collaboration between Neo and traditional Banks and how widespread is the connection between the two or the competition?

Uzoma Dozie: There’s a definite element of competition. It’s akin to the dynamics between parents and children; each with their approach, but with the potential to foster harmony, friendship, and collaboration rather than just a hierarchical relationship.

In this analogy, traditional banks are akin to the parental figures, while neo-banks represent the younger, more innovative players. However, it’s essential to recognize that both traditional and neo-banks are integral parts of society.

During my tenure at Diamond Bank, I had firsthand experience of the opportunities presented by collaboration. We partnered with numerous fintechs to develop innovative solutions, particularly in the realm of financial inclusion and mobile-first strategies. This collaboration was born out of the recognition that traditional banking systems were ill-suited to address the needs of certain market segments, particularly in the retail sector where transaction volumes were lower, and demand was different.

Traditional banks boast significant trust and capital reserves, making them well-positioned to democratize services and bring down costs to more accessible levels. This creates a complementary relationship with neo-banks, offering various avenues for collaboration.

I have a fruitful relationship with Access Bank, particularly in areas such as infrastructure, capital resources, and back-end support. Large players like Access Bank often have excess capacity that can be leveraged by neo-banks, resulting in mutual benefits. By utilizing this excess capacity, neo-banks can reduce costs while large banks generate additional income without incurring additional expenses.

Moreover, collaboration extends to areas like cyber risk and fraud management. In today’s interconnected financial landscape, the strength of the entire ecosystem depends on the resilience of its individual components. Therefore, it’s crucial for primary service providers, such as traditional banks, to bolster the capabilities of neo-banks to ensure the overall security and stability of the financial system.

Collaboration between traditional and neo-banks is not just about competition; it’s about recognizing each other’s strengths and leveraging them to create a more robust and inclusive financial ecosystem.

Lehlé Baldé: As you mentioned, you’re collaborating with larger banks to fill some gaps and add value. Do you think this is a common experience for most digital banks, or do you attribute it to your background in traditional banking?

Uzoma Dozie: At 55, I may not have the same tenure in digital banking as some of my colleagues in their 35s or 40s, but my experience in understanding the market dynamics and key stakeholders has been invaluable. It’s not just about our bank and our customers; it’s about navigating a complex ecosystem that includes regulations, legislation, government bodies, neighborhoods, and of course, our customers. Having participated in this ecosystem for a while, we have a deep understanding of how these entities interact and influence one another.

While we’re continuously learning, particularly from our interactions with Gen Z and Millennials, we also understand the needs and behaviors of Gen X and baby boomers, having operated in that space. As a bank, our business model remains predictable: generating fees and interest income requires deposits to lend and facilitate transactions. While Gen X and baby boomers tend to be more focused on deposits, Millennials and Gen Z are more transaction-oriented. Therefore, achieving a healthy balance across these customer segments is crucial for our financial stability and attractiveness to investors.

This mindset informs our approach at Sparkle. Regardless of how we brand ourselves, the fundamentals of banking remain the same: addressing the basic inputs required to sustain the engine of our business. This can sometimes be challenging for those who have developed innovative solutions without considering the broader market dynamics and stakeholders.

For instance, at Sparkle, we recognize that our digital banking proposition can only scale effectively if we collaborate with key stakeholders such as regulators and legislators to adopt regulations and laws. This enables us to expand into new markets and drive adoption. Recent developments like open banking legislation and the introduction of e-currency are positive steps that signal to investors that the government understands the potential of digital banking and is willing to support its growth.

Nigeria’s pioneering efforts in implementing open banking and introducing e-currency showcase the country’s commitment to fostering innovation in the financial sector. It’s essential that we effectively communicate and market these positive developments to investors, focusing not only on challenges but also highlighting the opportunities and advancements in the industry.

Lehlé Baldé: You mentioned Gen X and Boomers; how have they adapted to digital banking in your opinion? Is that something they’re open to?

Uzoma Dozie: They are open to it, but I believe we need more disruptions to drive wider adoption. The catalyst for many was the COVID-19 pandemic. Initially, they were aware of digital banking, but true appreciation came during lockdowns when they realized its time-saving benefits. Tools like Zoom and Teams demonstrated that you didn’t need to commute for meetings. Additionally, cash shortages during the pandemic compelled even Baby Boomers and members of the Silent Generation to explore digital banking alternatives.

The challenge now is how to onboard them effectively. This transition requires a blend of human interaction and technological solutions. While consumers adapt relatively easily, small businesses face greater hurdles. This is an area we’re actively addressing, providing hands-on support to help them navigate the digital landscape.

Technology, particularly artificial intelligence and media advancements, plays a crucial role in this process. Our chatbot, Indy, for instance, can assume various personas and communicate in multiple languages, including pidgin English. This personalized approach makes financial education more accessible and relatable.

Financial inclusion is a key focus for us, and improving digital infrastructure and liquidity is fundamental. Sparkle serves as a conduit, showcasing the possibilities of democratizing finance. By leveraging biometrics and unique identities, individuals can self-include in the financial system. This not only fosters trust but also encourages social participation and tax compliance.

When individuals feel included and empowered, they’re more likely to contribute to society positively. Ultimately, facilitating financial inclusion isn’t just a matter of accessibility; it’s about building trust and fostering a sense of collective responsibility toward societal development.

Lehlé Baldé: We talked a bit about regulation, and you mentioned the cash shortage that Nigeria experienced right before the elections this year. How did that affect Sparkle?

Uzoma Dozie: Sparkle gained more customers during that time. Now, let’s shift our focus to regulation. How can we make regulations more reliable to ensure they benefit both policymakers and end-users?

I believe there’s been notable progress in this area. Various committees and forums now facilitate discussions between market players and regulators, seeking a middle ground. As chairman of the CEO committee of Fintech Nigeria, I strive to build trust in the Fintech industry by establishing standards that ensure all players adhere to the right rules. This ensures that new technologies and fintech’s are seen as essential components of the economy, garnering a level of trust even from traditional banks. Our ongoing engagements with regulators are part of this effort.

While legislation is crucial, there’s a need for regulatory support. Many laws governing the financial sector haven’t kept pace with technological advancements. Open banking, for instance, empowers customers by allowing them to dictate the use of their data. Fortunately, legislation on this exists, opening doors for us to unlock data for better customer insights.

Consider lending: traditionally, decisions are based solely on financial data. However, we now understand that non-financial data, reflecting a willingness to pay, is equally vital. Sparkle’s lending model, starting this quarter, leverages both financial and non-financial data. We aim to offer the pace of traditional banks at a price range they provide, combined with the speed characteristic of fintech’s.

This approach addresses a common customer dilemma: fintech offers speed but at a high cost, while traditional banks are slower but more affordable. By blending the strengths of both, we’re poised to deliver a superior customer experience. This requires the right blend of talent, culture, and technology, a blend we’ve invested in at Sparkle.

Lehlé Baldé: You’re about to launch your lending services, which is quite exciting. Can you walk us through what this will mean for the end user?

Uzoma Dozie: It is an exciting development for us. One of the key highlights is the seamless process we’ve designed. There’s minimal human intervention involved. For those already on Sparkle, the system does about 90 percent of the heavy lifting. Users will simply receive a notification indicating their eligibility for a short-term loan, typically around 30 days. From there, it’s as straightforward as pressing a button to proceed, and the loan processing begins immediately.

Our lending model emphasizes the importance of information. The more data users allow us to access, the better we can tailor their loan terms. We adopt a dynamic pricing approach, meaning that as we gain more insight into a user’s risk profile, we can offer more competitive rates.

It’s worth noting that lending is just one facet of our broader service offering. At Sparkle, we’re not solely focused on maximizing profits from lending. Instead, we view lending as an integral part of the overall user experience. By leveraging our unique economic model, we aim to provide additional value to our users, incentivizing them to stay with us over the long term.

Our approach to lending is rooted in our commitment to user-centricity and innovation. We’re leveraging our distinctive setup to deliver a lending experience that’s both seamless and beneficial for our users.

Lehlé Baldé: What trends do you foresee shaking up the global financial service sector, and how might this impact our local financial landscape? Could you paint a picture of the future of financial services, drawing from your extensive experience in banking?

Uzoma Dozie: Let us dive into the future of banking. It’s akin to the evolution of the mobile phone. Remember when phones were primarily for talking? Now, they’re pocket-sized computers that handle a myriad of tasks. Banking is undergoing a similar transformation.

Traditionally, banking revolved around storing money, facilitating transactions, and lending. But technology has shattered those conventions. In the future, individuals will have more agency over their finances. They’ll decide whether to park their money in a bank for safekeeping or explore investment opportunities like crypto or stocks.

Technology is democratizing finance. Supermarkets now offer loans, and platforms like Jumia provide payment solutions, challenging traditional banks. Tomorrow, individuals may tailor investments to their preferences—perhaps investing in commodities or indices based on anticipated market trends.

Technology is a game-changer. It makes financial services more accessible and cost-effective. What was once exclusive to the affluent will become mainstream. Imagine someone predicting inflation and deciding to invest in champagne futures to hedge against rising prices. This level of financial sophistication will become commonplace.

Consider lending. Rather than relying solely on banks, individuals might lend directly to peers through platforms powered by advanced algorithms. This personalized approach to finance will be facilitated by open banking, empowering users to make informed decisions based on comprehensive data.

At Sparkle, our platform is built on trust, simplicity, and transparency. We recognize that the boundaries of banking are blurring. In the future, individuals will seek solutions tailored to their needs. That’s why our focus isn’t just on saving or lending but on enabling users to achieve their financial goals. We’re not just a middleman; we’re a trusted partner in helping individuals navigate their financial journeys.

The future of financial services is user-centric, tech-driven, and empowering. It’s about enabling individuals to do what they want with their money, with platforms like Sparkle facilitating their financial aspirations without the usual complexities and opacity.

Lehlé Baldé: Earlier you talked about, building from the foundation up and going up. So, what does that building look like for Sparkle in 10 to 15 years?

Uzoma Dozie: First of all, small businesses are always going to be the fabric of society and we want to be the platform that supports the engine of growth of the economy. We don’t know what business is going to be like but what we do know is that understanding our customers, understanding what drives the economy, and understanding how we can use technology to help that, if we keep true to the values, when you say small business, when we say the engine of growth, Sparkles should be part of that conversation.

Lehlé Baldé: So where do people download Sparkle?

Uzoma Dozie: The app store and the Google store. Simple.

Lehlé Baldé: Thank you for your time.