By Prince Osuagwu

A few years ago, reaching out to the un-banked in the society was not even an idea, as financial institutions could only reach out to a specific segment of the country due to lack of adequate infrastructure and technology. Products and services were centered on this few due to lack of innovation or technology to drive financial services to the other segment of the country.

Today, reverse is the case. The high level of awareness built on financial inclusion by both the government and private sector has shifted the focus of the banks and the financial technology companies on the un-banked and under-banked in the society.  The quest to innovate and develop services that will cater to the needs of this group people has made Fintech companies even more popular.

AppZone is one of the leading fintech companies in Nigeria whose aim is to digitize the financial services industry.  By going against the status quo of the brick and mortar system, AppZone continues to create technologies that will revolutionize the financial services industry.

Driving the financial inclusion aspect of the company with a vision to make financial services universally accessible and affordable for all, Mr Emeka Emetarom, Executive Director, Business Operations/Expansion at AppZone Group, shares his thought on financial inclusion, SMEs and Innovation in this interview.

Your company has been in the forefront of developing products and technologies that help Small and Medium Enterprises survive, can we know some of these products and how they have been able to salvage SMEs operations?.

There is BankOne, the integrated core banking and electronic channels suite of applications targeted at small and medium financial institutions like Microfinance and Mortgage banks. There is also TradePort which is a Sales automation, stock and inventory, and financial accounting management platform for small and medium retail businesses. Both solutions are delivered via the cloud as a shared service, and clients are only required to pay for what they use, thereby giving them access to world class technology at an affordable cost.

Mr Emeka Emetarom,

The impact BankOne has had on the financial services industry is phenomenal. Before BankOne, delivery of electronic channel services such as debit cards, mobile and internet banking, etc, was a pipe dream for more than 95% of the MFBs in the country. Today, a single setup gives them access to ALL electronic channel solutions available to commercial banks, without the need to incur the typical costs associated with setting up such infrastructure. In the area of core automation, BankOne has enabled our financial institution clients very accurately determine their profitability position on a daily basis. Before BankOne, many of the microfinance banks were flying blind, in most cases declaring fictitious profits and sharing depositors’ funds in the name of dividends. Many of such institutions were saved from bankruptcy just by migrating to BankOne as the system is able to provide the true position of risk assets and liabilities in a seamless and automated fashion that brings the kind of visibility required for running banking operations effectively. The solution has also improved the productivity of our client institutions by automating many previously manual processes. One that comes to mind is the generation of the CBN monthly report. Before BankOne, it used to take some financial institutions over a month to generate the report. Some of them had to hire staff whose sole function was collation of necessary data and generation of the report on a monthly basis. On BankOne, generating the same report is a click of a button. This and similar automation enabling features have freed up spare capacity for all our financial institution clients.

SMEs contribute nearly half of Nigeria’s GDP and accounts for over 25 percent of employment in the country. Yet, they find it difficult to secure loans to keep their businesses afloat. How do you think government can come in?

The lack of access to credit that prevails in the Nigerian economy results from the high level of risk associated with lending. This also is a resultant effect of high rate of loan repayment default. Implementation of a unified national ID scheme will go a long way to address this. Once individuals can be uniquely identified, credit scores can then be applied to determine eligibility for loans. Borrowers will also be more compelled to repay their debt since it can be made to hunt them forever. And once the default rates come down, more and more financial institutions will be willing to lend which will increase competition and reduce borrowing rates.

Beyond loans, a lot needs to be done to build capacity within the SME segment of the economy. Initiatives like the Government Enterprise Empowerment Program driven by the Bank of Industry are a much needed step in the right direction. To optimize on this and other similar initiatives, effort has to be applied in the area of training for SMEs. A huge chunk of the SMEs in Nigeria are not well trained in the area of managing a business. Many of them are not fully aware of some basic concepts like “profit”…not “sales margin” but actual profit that is net of all costs. Without this fundamental knowledge, many SMEs will struggle to utilize the loans efficiently even if they were able to get them.

Micro-Finance banks are largely regarded as part of SMEs and your company has a robust relationship with them in terms of cutting edge technologies that draw them almost level with their commercial bank counterparts. How do you see their future in this recession?

The recession has hit the microfinance industry hard as it has all other sectors. The reduced economic activity almost directly translates to increased loan default rates for MFBs… all banks actually. However, I believe we are beyond the worst point now. The job losses, increased dollar exchange rate, and the general fighting spirit of the average Nigerian all combine to create an atmosphere of new opportunity as small cottage industries start to spring up again, producing local equivalents of imported items we can no longer afford. An example is a lady I was inspired by recently. She produces leather belts out of her backyard. The quality felt like the kind I would expect to see a “made in Italy” sticker on, but to my surprise and total delight, it said “made in Lagos”. Such start up ventures will find a huge market out there for their goods and will need the support of microfinance banks to grow. This will be a huge opportunity for the financial services sector, in general, and for MFBs in particular.


Are there products you are planning to introduce that can help leverage them in this period of recession?

We are working on a number of very exciting solutions at the moment. The on that stands out as most applicable to the MFB space is designed to enable them recover defaulting loans seamlessly. This, we believe, will enable MFBs become more ambitious with their credit drives and in going after borrowing customers. With better performing loans, MFBs will be able to attract more depositing customers to fund the loans, by offering them highly competitive savings and term deposit interest rates. With more funds, the capacity to give more loans will increase and the upward spiral will continue from there. I’m not at liberty to share details about our R&D efforts so you may just have to wait till the product launch which has been tentatively scheduled for the second quarter of this year.

You developed a robust service platform called Zone recently. Can we have update on it?

Zone is an innovative financial technology platform that makes use of social and other common smart phone features to solve problems that exist with cash and today’s electronic payment options thereby creating a friendly and interactive mobile payment service. Zone also provides merchants with more effective ways of connecting with customers to generate instant new or repeat sales. It is set to launch soon.

The financial Technology sector is being disrupted by digital only financial institutions. How positive is this development?

The FinTech disruption is definitely an interesting occurrence in the tech space right now. Digital only financial institutions operating at a tenth or less of the cost of traditional banks are able to provide not just super convenient services but also technologically sophisticated products that push the boundaries of possibilities. There’s the block chain technology that will change the face of secure data exchange across institutions and also machine learning advancements that have brought us chat bots, personal assistants, recommendation systems, etc. We strongly believe that the greatest evolution in economic transformation will be through technology driving all aspects of the economy and the financial services industry is no exception.


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