I was present when AppZone launched the ‘Zone’; Africa’s first blockchain platform for payment processing and I saw the kind of enthusiasm that people expressed in terms of the potential of that platform.
So, I approached Wale Onawunmi, Co-Founder and Chief Technology Officer of AppZone Group to tell us about the journey so far. It is already 10 months post-launch.
Wale is a graduate (Bachelor of Science) Computer Science with Economics from the prestigious Obafemi Awolowo University (OAU), Ile-Ife, Osun State, Nigeria.
But before then, he has always been a tech enthusiast. Wale told me that his first encounter with a computer was at the age 10 “and since then, I’ve always known that I was going to be involved in building software”.
This sort of shaped his path from then till where he is now. He did an internship at a company called Smashers & Technologies; a company that outsourced software development for a foreign company then. This was where Wale learned a lot of his coding experience initially, and this was while he was in school!
“When I left, I joined another company called Parkway Projects for roughly three to four years before venturing out with two partners to start AppZone. It was called Price & Network then; that was in 2008”, he said.
So, since 2008, Wale has basically been running in the capacity of CTO and Co-founder, for AppZone. This is just a very short summary of his bio.
The Interview:
TE: What has been your experience as Appzone’s CTO, knowing that you’ve been part of the team building products that are now empowering the biggest financial service players in Africa?
Wale Onawunmi: It’s been quite exciting, and we have come a long way from 2008. One of the interesting things is the fact that we’ve been able to, always, push ourselves; when it comes to technology, we try to innovate to find solutions to existing problems.
In my role, that has always been a core thing; how do we use the things that are happening now to find solutions to problems that we find in our society? We decided to focus on the financial industry; by building custom solutions on the cloud for financial institutions and that was how we started.
At that time, cloud technology was new, and there was a lot of skepticism about its workability, security and so many things around it. This is the same trend we see with blockchain and a lot of things we have done in the industry which is about pushing the boundaries of what technology can bring to the fore.
Technology is about breaking the norms, and cycles and improving processes so there can be good, reliable, and efficient operations generally.
My experience so far has solidified the fact that technology is a way to transform any society from the third world to the first world and we are pushing the boundaries of the industry, to get to where it needs to be.
TE: AppZone is actually a digital disruptor, but what was the acceptability rate in the industry when you first introduced the in your markets?
Wale Onawunmi: So, the interesting thing is this, like you rightly said, change is just difficult. Right? It’s inevitable, but then, people sort of need to be convinced. So, one thing we’ve been able to do, as a company, we always strive to provide value first. We don’t implement technology for the sake of technology, it’s actually the value that drives the adoption itself.
I’ll give you an example; when we started with the cloud service, which is our core banking on the cloud, it was different from what the norm was, for the institutions that were on it; either they had it hosted internally, or they had some software they were running, and they were driving.
But the reason why it caught on and it provided value, was because we looked at the problems that they had, they needed a solution that could cater to all their needs: a one-stop solution, something integrated into other systems that allow them to integrate third parties, and just all work together.
So, when we came up with our solution, that’s what we brought to the fore and even though it was different, the values it brought, and the fact that we did introduce those new things that were sort of the things that were the changes on their own, but they came with the value made them see that this was something worth trying.
And, of course, we’ve been fortunate to have clients; I call then partners, that are early adopters. They just want to take up new things and see how those things work. The same thing with our card issuance solution that’s in the market that was pioneered by GT, the first of its kind.
And then what you find is initially, everybody was a bit skeptical of exactly how it works, but the moment the value is there, and the ability for people to get their cards in two minutes, without intervention, or any middleman, anybody involved, also made it sure that on its own, it was enough to drive adoption, right.
Finally, with Zone, the same thing. The value Zone brings, even on the blockchain network, is the fact that it improves reliability over what is currently existing, and the fact that the back-office operations are seamless.
So, when you take these things, the values speak for themselves. What then happens is that the adoption is just natural because that’s like the next step and that’s what we’ve been able to do in the industry.
TE: How were you able to harness talents to achieve all this?
Wale Onawunmi: One thing that has worked and something we started early was to work with young talent. When I say talent; no experience, raw talent from schools and universities. What we started with earlier was investing in nothing but knowledge transfer; learning, and skills acquisition, for the new talents coming in.
So as far back as 2008, we went to schools to recruit the fresh graduates that were very sharp and had a flair for technology. Off the back of that, we already figured we would need to invest in doing a training.
We had a one-year program that had different curriculums, projects, and things we put them through to get them up to speed. Then, of course, it was a risky investment.
Luckily, we started off in 2008 already, thinking about how to grow talent. We invested quite a bit, in fact, that was the plan to invest in young talent, not necessarily experienced. So we went to schools, leveraging the fact that there were smart young individuals there that we could then train.
We had a one-year training program, which we’ve brought down to like six to eight months, that had different projects and courses. The whole idea was to invest in these young talents and bring them up to speed and then empower them with the ability to build the sophisticated things we work on.
It has paid off, of course, there has always been the risk of them leaving, again, wanting to do Masters or wanting to go to other bigger companies, those are just risks. But what we’ve seen is the pool of talent that we could always rely on to deliver on all the things, of course, we had some experienced hands, but then again, we keep a very healthy ratio.
TE: In 2008, AppZone was arguably ahead of its time with the cloud-based technology products you built for banks. Now, you have developed this Layer-One Blockchain Protocol. So why blockchain and why now?
Wale Onawunmi: As you mentioned, in 2008, the cloud was something new, and people didn’t understand it and they were skeptical. But now, it’s a common thing and is taken for granted. Something similar is happening with Blockchain and these are the only things, the same skepticism, and the lack of understanding.
But I will tell you something interesting about blockchain. So, the technology, without going into too much technical detail, is just a technology that allows parties that normally would only be able to work together with some intermediary or trust somebody providing a trust level, to work together directly.
Now, what that means is that typically, like in banking, you would have had bank A and B, sort of interconnecting with somebody in the middle, which is what we traditionally called a Switch to facilitate communication between them or transactions between them.
The reason why you have that is that somebody in the middle must provide a track record of how those transactions are going and settle the banks as things progress.
The interesting thing about blockchain is; Blockchain is basically technology automating that central role. So, what that has done is, the two banks can connect, without necessarily having somebody in the middle, because the technology already facilitates that. And that’s the interesting thing because this thing I’m saying doesn’t just apply to payments or finance or financial systems, it applies to almost everywhere you have two parties interacting with one another.
What you’re about to see is blockchain is just starting out like everybody’s sort of figuring out how it’s going to play in the industry, but what it does for us and the financial industry and for us as an infrastructure company is that it’s like the bedrock of like the next level of innovation and the full automation of the industry itself.
Again, what it does is everything else you have that’s based on middlemen or being in the middle trying to drive things to happen because the technology itself does not make it possible to automate that process.
With blockchain, what you have are parties interacting with one another directly with no need for manual intervention or a third party. That is the essence of automation itself. What you see is once that comes in, it drives down the costs of doing those things, because then you must invest in that central team.
The second thing it does is improve reliability, because then the failure points are lower, because you’ve removed the middle ones, therefore, everybody just interacts with everybody, right? That, in turn, is also a very significant value.
Now, why we are looking at that is because we’ve seen the future and we strongly believe that with this technology, the landscape can change, absolutely for the better.
As an infrastructure provider and an enabler, that’s what we’ve been doing since we started, enabling companies in the industry to better provide their service. We think it is just what we need to do, to sort of set the stage for this future where transactions are completely reliable. Everything is integrated and interoperable, the operations are seamless and frictionless, that’s how we see it.
So why now? It’s because right now, everything is in play, to make this practically usable for the industry and we’re just pushing it to make sure that we can stay at the fore and bring all the companies; fintech, and banks in the industry to the fore and one thing I’ve always been excited about is the fact that when it comes to payments and banking generally. This side of the world and African countries have been able to, especially Nigeria, dominate on the payment side, as far as innovation is. This is just a leap in that direction, to sort of push it even further.
TE: I know on the day of the launch about 20 banks were already integrated. I also understand Zone is being deployed outside Nigeria; you’re taking the advantage of the African Free Continental Trade Agreement (AfCFTA) in trying to connect some other banks in Africa. How far have you gone with your projections in the markets?
Wale Onawunmi: Yes, the idea is, of course, to expand across Africa and possibly beyond Africa. For now, we’ve been focused mainly on Nigeria in the short term, and in Nigeria, as you said, we signed up, virtually all the commercial banks.
Now, we’re not trying to exclude other financial institutions, one of the things we’re doing is the network is not just for commercial banks, the network is to include all financial institutions, that can participate and play on the network.
The way we like to see the network, this network belongs to everybody and one of the beauties of blockchain is the fact that you can set up a network that has all the participants as part of the network itself, a core part of the network. So, for us, our focus is to expand the network to include mostly all the financial institutions that are regulated, in it.
Yes, we’ve already gotten the commercial banks to sign up, but we also want to extend this to fintech, OFIs, and others, because we see them also playing a major role in financial inclusion and even the adoption of financial services in the industry.
Then subsequently, we are looking at expanding. We are also expanding a couple of partnerships with entities that can help expand that across the continent.
When we look at numbers, well, the numbers we have so far are more around commercial banks, which you already mentioned. But again, when it comes to OFIs, we have signed up a couple of them and that’s numbers here. I know a couple of them that are quite eager and interested in also leveraging this new platform to provide their services.
Fintechs are interested, we also have OFIs that are leveraging our core banking platform, which is Mile One, also interested in leveraging the network because then it just complements each other.
While we are currently pioneering on the network, we’ve pioneered our initial use case, which is facilitating ATM cash withdrawals across the network, which is if you go to Bank A with a card that belongs to bank B then that can be run through the network.
The other thing we’re also doing is expanding the use cases because the use cases are not just limited to one use case, any form of transaction that can happen between those banks, is a financial use case.
So again, what we’re also focusing on is expanding those use cases, and driving those use cases across the industry.
As I said, the major benefit number one, even with just what we have, is the fact that transactions are inherently more reliable, just by the nature of the network itself. So, the fact that the network doesn’t have a middleman in play, or a central hub makes it such that it’s more reliable because you reduce the failure points.
The second thing that’s very interesting is the fact that the back-office operations are seamless and frictionless. When I talk about the back office, some of the things that come to your mind is the fact that there’s always this issue of disputes and complaints; you try to use the ATM, your card gets stuck, and you can’t get cash, but then you get debited or something, then you go to a POS, you do a transaction and you get debited, but then you can get cash.
One thing we’ve also made sure; because the system already has the same record, like the way the blockchain is, basically we’re able to tell what the status of the transaction is, at any point in time.
What that has done is allowed us to provide a system that sorts of auto-resolves disputes. And what that in turn does is it makes the system more what would you call it more, more usable, friendly, and more reliable ultimately, because then what that means is that even when those things happen, because then you can do much about an ATM behaving, or a POS not getting transactions from the network, but you are relatively certain that the back end would resolve it in a minimal time as possible.
TE: Is there any way that regulation is happening in that direction to ensure speedy resolution of disputes? Do you have a timeline to ensure that these things are resolved?
Wale Onawunmi: Interestingly, from a regulatory perspective, there are already some things in to ensure customers get feedback and attention, I think currently it is 48 hours or so. What that means is that when you log a complaint, a bank is bound to treat it within those number of hours. You go to what we call your issuer bank and a complaint is lodged on your behalf against the other bank where you used the terminal, which could be the ATM or the POS and then they investigate and get back to see if it was valid or not because again, you don’t want a scenario where people just report falsely and you’re sort of reversing transactions.
So, all that must happen within a couple of hours, let’s say 48 maximum. But that’s also established by the regulators already. As I said, the interesting thing with our system is, what we’ve done is automate this. Again, the beauty of technology is that you can solve a lot of real problems with it and that’s the whole idea; with automation, we realize there’s no need to have a lot of manual input there when technology can serve its purpose.
So, what our system can do is make sure that this thing is resolved, really way before that time requirement. In summary, think of it like say, when those things happen, and your money doesn’t come out at the ATM, the system can detect those things, and automatically sends the reversal that needs to happen to the backend system.
It’s not something you need to complain about because that already happens. Now, if it is environmental, for some reason you still go ahead and complain, maybe you didn’t observe it, what then happens is that by the time the issuer bank tries to log the request, the system has already treated it. It also saves the acquirer bank from having to treat requests that have already been treated, the system automatically identifies that those things have already been treated, and then the banks can tell the customers that everything is fine.
The beauty of the system is the fact that it has automated things that people do manually at the back office, and are not able to do quickly enough, because they get overwhelmed with the issues coming in. So, imagine that you have the adoption, just like you said, there’s more adoption of POS on digital payments and things like that, and then that adoption is also increasing in numbers because it’s like a percentage.
There are several issues that come up and they get overwhelmed because it is a manual process that is happening at the back, they can then in turn meet the turnaround time that has been stipulated, but then this is all taken out when you have a system that can run this in an automated way and worst cases, all we have to do is just make sure the computing resource is sufficient, which is something that can just be bought, rather than having to worry about the human beings that how to make sure it works.
TE: What other services are you likely to provide in the future? What are the things to expect from AppZone?
Wale Onawunmi: In AppZone, we are looking at focusing now. One of the things we’ve done is, we started as a custom software development house in 2008 for financial institutions. We evolved from that to being a cloud servicing company with a product called Banking and Card Issuance, etc., and now evolved to a payment infrastructure company, which is a blockchain network currently.
But again, what it means is that in this focus, what makes us stand out, and when we believe strongly, is the ability to focus on what it is that we intend to deliver. We believe that for us the focus here is on the payments infrastructure, it’s the primary thing we are focusing on. So yes, we could have been involved in a lot of other things, but our focus is to push that to exactly where it needs to be.
Remember, what we’ve prided ourselves in over the years, is being an enabler of the industry. So, we’ll continue to do that and how we hope to do that is by establishing this network as a payment infrastructure that drives, empowers, and enriches the ability of those financial institutions to provide services and that’s what we’ll keep doing.
So, when you think of it, like what are the things we’re going to be working on or pushing out, there’ll be along these lines, whereas those Fintech companies are running our services or thinking of new ideas, we are providing the infrastructure to facilitate coming up with those new ideas of services. So, things around improving durability, reliability, and usability, are just empowering them to go ahead and innovate, because that’s what they need.
TE: Looking at the fintech industry in Nigeria, what are your predictions? What are things we’re likely going to see in the next five years?
Wale Onawunmi:Right now, there are a couple of unicorns here and there and it’s tied to the value that’s been brought into the system. We will see a couple more but not like an avalanche.
There are a lot of fintech companies out there and they would keep increasing. What is also helping is the fact that digital payments are growing fintech from a definition point of view is running financial services leveraging technology, and we expect that to grow.
Another thing you’d find is there will still be a couple of players that can utilize the technology and differentiate in the market.
Because there are lots of players, it’s going to be difficult to differentiate, it’s going to be a little bit saturated. Lots of players will stand out, especially when it comes to innovative stuff.
I see a future where blockchain is a driving force, a lot of things around leveraging the blockchain network to provide low-cost financial services from loans to even concepts like DeFi, which is a centralized finance, to allow people to have access to finance in ways that weren’t possible before because of the cost of providing such a service.
Another thing that has also shaped the landscape is the current economic climate that makes it such that what you now have is a lot more focused on the growth of the companies from a positive unique economic point of view.
Unlike people when companies were springing up and the idea was just about growth, not necessarily about the bottom line, now, there’s a lot more focus on the bottom line.
It has now about been able to generate and create value and cut your cost.
The companies that will still stand out are the ones that can provide the right unit of economics and at the same time leverage new technology.
TE: What do you make of eNaira? What do you think can be done to drive adoption?
Wale Onawunmi: There’s a lot of misunderstanding on the adoption of the eNaira but again, it’s what happens when a new product is introduced.
eNaira has been around for quite some time but it’s still relatively new and it’s something that’s still being figured out generally. One of the things that must be taken into consideration is the feedback from the industry; what are the things plaguing the adoption?
There’s a lot of potential from a CBDC. A lot more effort into providing those innovative touchpoints that drive the adoption is needed. Also, I see the need for a marriage of what the traditional Fiat is, and what the CBDC is. We need to have a network that connects all of them first.
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