Our blockchain technology allows payment issues resolution in real-time’
UCHE ELENDU is a software engineer and the co-founder of Appzone – a payment infrastructure company using blockchain network for digital payments in fiat and regulated digital currencies across Nigeria and Africa. In this interview with JOSEPHINE OKOJIE, he talked about Appzone blockchain technology and the Nigerian fintech industry.
We’ve seen many tech startups come into the fintech space, so what makes Appzone stand out?
Yes, we have a lot of tech startups in the fintech space, but they all play different roles. Lots of them focus on providing solutions to retail customers, and fewer focus on the financial service players. What then differentiates us from the few in the payment infrastructure space? We are the only blockchain-powered payment infrastructure in Nigeria and on the continent. With this, we can do many things that others can’t do.
You recently launched Zone – Africa’s first decentralized payment network; tell us more about this solution and how it has impacted the payment ecosystem since its launch?
Zone is a blockchain payment system. The first decentralized payment network that will allow inter-bank transactions to be processed directly between banks without the involvement of any intermediary. Typically, transactions will go from one bank to the central party and the other bank, but ours goes from one bank to the other bank directly, so it is faster, cheaper, and more reliable.
On impact, what we have seen from banks already using our services is that our services have been faster, and the quality and uptime have been high because it’s a lot more scalable.
Many Nigerians are still financially excluded and largely depend on cash transactions; how do you think blockchain technology can bridge this gap?
If you want to drive the adoption of digital payments, you need to look at customer experience and the quality of service. Once you ensure that everything is instant and done in real-time, customers will be satisfied and continuously leverage digital systems for payment transactions. Nigeria has done a lot in terms of empowering and banking the unbanked, but the problem still comes down to the quality of service. At Appzone, we leverage blockchain infrastructure to help solve the problem of quality of service. Our technology allows issues to be resolved in near real-time. The blockchain technology ensures that transaction data is visible to everybody, so the parties and the people that power those translations won’t be confused about what happens. You can treat complaints almost instantly as against what happened before, where they have to depend on the central body to resolve issues. Blockchain technology improves the quality of service, and we are getting it right with our products deployed across all 16 major banks in Nigeria.
By moving into the blockchain, what happens is that if there are issues with the payment infrastructure, it does not impact customers since finality and even balances stay on the blockchain
Over the years, we have seen that a significant challenge with the inclusion of technology in finance is usability. What is the assurance of a friendly user experience for the relevant stakeholders?
One thing to note about technology is that it won’t be perfect when you roll it out. This is not because the technology is bad, but because the market structure you sometimes target varies from your assumptions. This will require you to adjust and make some changes as you go. Off the shelf solution are typically less adaptable. For us at Appzone, we build our technology. This makes us nimble and agile, and we can adapt to cover changing needs, and consistently improve the quality of service. Also, we have a track record of leading innovation in different areas of financial services. For instance, we led innovation in the microfinance space by bringing proper banking infrastructure. In essence, we have the competence, the commitment, and the will to make things happen.
You participated at the Digital Pay expo recently and spoke about leveraging blockchain technology to process payments in fiat currency. How do you see this working in a country that is still reliant on cash transactions?
It has to do with the quality of service and the instant nature of payments. Blockchain ensures that payment will be instant. The other part of the problem is infrastructure. We believe financial institutions need to adapt and integrate blockchain technology into their operations quickly. By moving into the blockchain, what happens is that if there are issues with the payment infrastructure, it does not impact customers since finality and even balances stay on the blockchain. So, when the transaction is done, everything starts and ends on the blockchain. In addition to what we’ve done so far, we are integrating banks and other financial institutions into the blockchain, so they can leverage it and get value in real-time. With banks getting this right and customers getting real-time value, reliance on cash will continue to dwindle.
Appzone didn’t start as a blockchain company; what informed the decision to build blockchain solutions?
We started the payment segment in 2017. At the time, we built a retail payment product that works almost like WhatsApp. Imagine a WhatsApp where instead of sending messages, you’re sending money, and when it comes to the person, it comes as a message. Once the receiver sees the message, they know they’ve gotten money. We did a pilot with 500 users and noticed that about 10 percent of our users always have problems with payment daily. Ten percent is on the high side for such a small number, we can’t afford that kind of problem, and that’s when we started looking at the problem. Why is it happening? We began investigating and found that the infrastructure we taught we could rely on needed help. It needed to be revamped, and we started looking for a solution. We did the analysis and some testing and quickly settled on leveraging blockchain as a technology to solve that problem.
For many, blockchain is somewhat synonymous with cryptocurrencies. Does Appzone leverage cryptocurrency in its payment settlement processes?
No, we don’t do that. We are part of a larger ecosystem that has the Central Bank and all other parties involved. The first thing we are focusing on is fixing our ecosystem. We are in the industry, and we’re participating and collaborating with other parties in the industry to grow it. For cryptocurrency, we need to protect the economy from its influence and support the drafting of regulation that protects end-users and the ecosystem.
You employ the use of a decentralized payment network which will allow inter-bank transactions to be processed directly between banks without the involvement of any intermediary. How would this process improve the payment experience for the end-users?
It is how the customer measures the impact of what we’ve done. One thing the customers will quickly realize is that they have fewer issues. The issue would have been resolved before they complained about any payment transaction. We’re still rolling out, but by the end of the year, we will be in such a place where the influence of the platform will be felt across the industry. Also, customers will notice that their transactions will be faster even during holidays, the system will be up, and they won’t experience slow transaction processing. These are the things they will start noticing due to the increased scale of the blockchain system.
As a major player in the African blockchain tech space, what conditions will you say are necessary for the mainstream adoption of digital currencies?
I believe the number one thing is regulation. It has to be clear. It should focus on protecting users and stakeholders and not abolish it. The stakeholders need to come together with an understanding of what is at stake. I don’t think that AppZone alone can do that, somebody can drive, and we can always lend our voice in the conversation. Still, regulation protects everybody, including you, the service provider, and the customer. So, we need to come together and come up with regulations that will empower and protect at the same time.
What are the biggest challenges in the fintech industry, and how has your organization been able to overcome them?
One major challenge in the industry is the issue of infrastructure; for mobile internet banking, the internet penetration is not there yet, though it’s getting better. What we need to do is to double down on what we are currently doing. To further address the infrastructure issue, we created an infrastructure that is decentralized and leverages distributed computing against centralized computing. It’s much more scalable and is much more rugged and redundant, so you never have a situation where everything collapses during payment transaction processing.