MUDIAGA UMUKORO is the Managing Director and CEO of AppZone Core. In this interview with JOSEPHINE OKOJIEhe spoke on the role of microfinance banks in accelerating Nigeria’s financial inclusion goals.
In 2021, you announced the relaunch of BankOne with a focus on serving Africa’s leading fintechs – Neo bank and Challenger bank. Can you tell us how much of an impact you have had in this regard?
It has been very exciting since we created the focus and relaunched the platform with the fintech and Neobank target market in mind. Since then, we have facilitated the launch of several digital Neobanks with a “Go-Live” schedule that was about a quarter of their previous estimate. It has been very inspiring for us to see these banks deliver amazing innovative products from our platform with fruitful effects in terms of active customers.
How achievable do you think the CBN 2024 financial inclusion target is?
I believe that anything anyone puts their mind to is achievable. The CBN targets growth in financial inclusion from 64 per cent in May 2022 to 95 per cent in 2024. This is achievable if all stakeholders work hard towards the goal. The current proliferation of fintech products is certainly a good push in the right direction. The consolidation in the microfinance industry, which attracts larger players with better access to funding and technology, will also be instrumental when we look back, towards 2024. The industry as a whole will have to work hard on banking infrastructure and security though. We need to reduce fraud and unreliability in services to encourage underbanking.
Knowing that microfinance banks play a significant role in driving financial inclusion, how do you foster growth and drive impact among MFBs across the continent?
From the very beginning, we identified microfinance as the key to tackling the challenge of financial inclusion. That subsector knows its clientele more than any other. However, they are challenged by limited access to the right funding and technology. Fortunately, the CBN has put measures in place to tackle the funding challenge. The Bankone platform on the other hand is designed to cope with the technology. The platform is delivered in a Banking-as-a-Platform (BaaP) model that allows banks to outsource their entire infrastructure to us in a safe and affordable way. Financial institutions on our platform get the best of both worlds in secure, reliable banking infrastructure, at a remarkable fraction of the usual cost.
As Africa rapidly accelerates towards a fully digital banking future, we have also seen an increase in cyber theft, how does your organization ensure that financial institutions and even customers are protected?
Cybersecurity in banking must now be at least as intrinsic to a bank’s operations as its day-to-day operations. Financial institutions must maintain best practices in policies, technology tools and procedures to combat this monster. There is no shortcut to this rule. Even the CBN is taking this seriously enough to release a cyber security standard that OFIs must comply with by January 2023. Most FIs understand this, but the cost of being up to date with these standards is significant, which ends up deterring them. Fortunately, our banking infrastructure delivery model has a Security-as-a-Service component inherent in the delivery model. This greatly reduces the cost of subscribing institutions without compromising standards. In fact, by sharing costs across all institutions on the Bankone platform, we can stay far ahead of lone FIs and attackers at large
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What differentiates BankOne’s technology from similar technologies both in and outside Africa?
There are several ways in which Bankone is unique. First, it is the only cloud-based Core Banking application built from scratch in Africa and specifically tailored to African banking operations and use cases. Secondly, it is delivered in a Banking-as-a-Platform (BaaP) model – which is unique. This means that we not only offer the core banking application, but all other additional applications, services and partnership integrations required for a bank to function in today’s digital world. The model enables subscribing institutions to outsource 90 to 98 percent of their technology and engineering operations to us.
As a leading provider of technological functionality that enables digital banks to engage customers and deliver services without human interaction, where do you see traditional banks in the next few years?
This is a very interesting question because we are positioned to support both sides of the debate. Every financial institution needs our technology. Digital banks have innovative technology, but do not need to reinvent certain basic wheels within the banking technology stack, and therefore turn to us. Traditional banks on the other hand come from a background of outsourcing most of their technology to foreigners, but this is changing due to the Neobank competition factor. They are now reaching out to service providers like us to completely outsource, which when considered in depth is a master move. Traditional banks that succeed in combining the depth of their banking experience with outsourcing the entire technology stack to competent suppliers and collaborating with others may very well become the most successful digital banks of the future. So I guess the answer is time will tell.
We know BankOne has operations across Nigeria, Ghana, Gambia and Kenya, are there plans to scale to other parts of the continent and beyond?
Absolutely! The African continent has always been our target and most of our expansion into the listed countries has been reactive. However, the follow-up to our 2021 fundraiser identified the problem we have solved in Nigeria as a continental one and has begun proactive expansion efforts into East Africa among other African regions, and the feedback has been fantastic. Interestingly, there are pending unsolicited requests from the Caribbean as well as the Middle East. So we’re crossing our fingers.