OBI EMETAROM is the managing director and co-founder of Appzone – a fintech company with headquarters in Lagos, Nigeria that provides a blockchain platform for decentralized finance as well as digital infrastructure for banking and payment systems. In this interview with BusinessDay, Emetarom spoke about Appzone and Nigeria’s fintech industry.
Can you tell us about Appzone?
Appzone provides the next-generation digital infrastructure for banking and payment. Specifically, we have built a decentralized payment network based on Blockchain with an integrated omni-channel banking platform on the cloud.
What specific problem was Appzone created to solve and how has the success journey been so far?
Appzone was created to enable banking and payment service providers to effectively and efficiently deliver financial products and services to their customers in a fully digital and automated way. Appzone provides the digital foundation or backbone and the tools that banks and fintech need to function in a fully digital way. For instance, our blockchain payment infrastructure connects to all banks and OFIs so that these banks and fintech (as well) can initiate frictionless instant payments to and from any account in Nigeria. On the other hand, our state-of-the-art core banking platform allows any bank to run its operations in a fully digital and automated way with no need for physical branches or IT infrastructure.
There are lots of fintech software providers in the country today. What are you doing differently?
Most fintech companies focus on B2C offerings, meaning they leverage technology to provide services directly to the final consumer which may be an individual or a business. We, on the other hand, do not deliver financial services directly to the end-user, instead, we serve as an enabler by providing the technology tools and platforms that these B2C institutions require to service their end-users. Another major difference is that generally in Africa, fintech companies and companies predominantly license foreign software to run their operations and deliver value to customers. In Appzone, we have built and own all of the intellectual property for our products. This means that we don’t rely on any foreign “technical partners” to build or manage any of our platforms.
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Tell us about your expansion outlook?
Having plugged in most commercial banks to our blockchain payment network, we are now in the process of rolling out a payment gateway and API to allow fintech and OFIs to leverage the superior reliability, scalability, and cost structure that blockchain technology brings to payment processing. We are also rolling out our core banking system in 10 African countries while building out remittance functionality on our blockchain network to enable financial institutions and fintech in those target countries to make and receive instant cross-border payments. Finally, we have several affiliate companies which we have invested in, that are building out exciting and innovative offerings that leverage our core infrastructure. One example is the team deploying self-service kiosks where Bank customers can make their debit cards by themselves within 2mins at any time of the day and any day of the week.
What are the macro-challenges facing the payment solution business?
One clear issue is regulation. Payment-related technologies and operating models are evolving rapidly and even though regulators are making good efforts to keep up, there’s still the risk that the pace of regulation falls too far behind the pace of innovation which could potentially slow down the adoption of superior new technologies and models that can have major positive impacts on the industry. Two other areas are the cost of devices and reliable connectivity, especially in remote locations. These two factors affect the ability of end-users to adopt digital payment offerings. For instance, the smooth tap-and-go experience that can unlock user adoption of mobile payment at merchant locations requires an NFC chip that is only available in high-end mobile phones which are out of reach to a major segment of the population.
Recently we have seen some fintech companies expand their portfolio of services and some have rebranded as a result. What other services are you likely to provide in the future?
We intend to remain focused on providing this decentralized infrastructure for payment along with our integrated cloud platform for banking. Our focus, however, is to expand the capabilities of this payment infrastructure by incorporating various transaction types including ATM withdrawals, P2P transfers, agent cash-in and cash-out, merchant payments, direct debit, and B2B payments. As I mentioned before, we’ll also be launching remittance APIs to process cross-border payments between African countries as well as from the rest of the world into Africa. Finally, and relating to my earlier comments, we now have an arrangement where we can stay focused on our core business of delivering this infrastructure while our affiliate companies build out new innovative offerings on top of it. So, expect to see some of these in the coming months and years.
Do you think that the government and banking operators are promoting the cashless policy?
I believe they are doing quite a lot even though more can be done to accelerate the transition to cashless. For one thing, regulation can be further tweaked to encourage the deployment and adoption of innovative payment services. My view is also that strategies and policies adopted to achieve the cashless policy should be more organic as opposed to forced. What I mean is that since we assume the cashless economy is more convenient and valuable to end-users, then efforts should be directed at eliminating barriers to adoption like the market fit, required infrastructure, awareness/education, and cost as opposed to policies that try to compel adoption in an unsustainable way.
What is your prediction on what the fintech sector will look like in the next 5 years?
No one can tell about the future for certain but looking at a few trends it’s possible to extrapolate up to a point. First, there will be little or no need for bank branches so most bank branches will be shut down. Most payments in many African countries will be cashless as well. Also, sending money straight from a Banking app to a bank account or mobile wallet in another African country will be common. Most countries in Africa will have launched a CBDC like the e-naira and or approved/licensed private digital currencies for internal use. Finally, comprehensive regulation will be in place for decentralized financial products powered by blockchain.
Considering the pace of change, I expect to see several other radical developments but these are a few of the major ones I predict.
