1. of rising Generation Z age class. Replacing

1.   Business

is a financial technology company (FinTech) focused on developing solutions for
financial services business and the industry via cloud computing systems. It
aims to enable the digitization ambitions of banks in Nigeria and across Africa
through its homegrown solutions. The company was established in 2008 in Lagos, Nigeria.

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solutions currently services over 16 commercial banks, 300 commercial banks and
has a staff strength of over 119 people. Its solutions manage about 20 billion
in deposits from over 2 million accounts. Through its card management solutions,
an approximate 30,000 cards have been issued and used in processing 100,000
transactions daily1.

brief description of AppZone current products and proposed products are
highlighted below;


BankOne. It
automates retail banking/microfinance operations and also enables electronic
service delivery on a one-stop, central managed, pay-per use platform. Over 300
microfinance banks are enrolled on BankOne.

Teleios. This
solution enables the optimization of financial operations in medium-to-large organizations
through process automation and seamless interaction with Bank Systems.

CreditClub. This is
a technology solution geared at improving financial inclusion to remote and financially
excluded areas previously unbanked via branchless and agent banking.

Tradeport. This solution
enables small business (SMEs), medium sized organizations and retailers to integrate
operations such as sales, inventory and accounting automation, e-banking and
payment processing.

Prime. This solution
is a card management platform-as-a-service enabling integration, hosting,
transaction processing and end-to-end process automation for payment cards for major
local and international schemes.


Zone/ Zone switch. This solution works
like a mobile app built to power the virtual bank of tomorrow. It has functionality
for payment, commerce, and personal financial management.



is seeking to raise $7.5 million for further product development, working
capital and product licensing. This industry and market analysis aims to verify
the viability of its business structure and model.

2.   Market Analysis.


Characteristics and Trends


Costs and Risks of IT Upgrades.

Traditional financial institutions
own legacy systems that are mostly centralized. This systems are inefficient in
meeting the dynamic banking needs of millennials as well as members of rising Generation
Z age class. Replacing this legacy systems can be expensive and risky as well. A
McKinsey study reveals that less than 30 percent2 of legacy systems
were successful over the last decade.  Despite
this costs and risks, the study also revealed that successful upgrades will
lead to over 50 percent reduction in operational costs.


Artificial Intelligence.

Artificial intelligence
is capable of driving process automation, marketing, customer relationship
management and improving the customer experience in financial institutions. By optimizing
and understanding the data of its customers, banks have the capability to
create products, services and experiences tailoured for each customer. Implementation
of artificial intelligence systems would be dependent on enabling competencies
in data mining and analytics for engagement with customers. Artificial intelligence
may also be applied to other areas in chatbots to have conversational banking
with customers, initiate transactions for and behalf of the customer with
little need for human oversight for immaterial transactions.


Increasing API Access.

According to
IDC4, by the end of 2018, 50 percent of global Tier 1 and Tier 2
banks will offer at least five external APIs. API’s are fast becoming an
opportunity for banks and insurance companies within financial services
industry to efficiently acquire more customers, streamline service delivery to
existing customers and reduce overall operational costs. Banks are increasingly
partnering with financial technology companies via open APIs.


Cloud Solutions

There are
just a number of current technologies in the business space that do not require
some form of cloud solution for business support and solutions. Financial services
business is no exemption as well. Many banks have been previously reluctant to
host secure processes on public cloud mainly due to fears of breaches and
regulatory sanctions in such cases. With increasing improvements in
cybersecurity resources, banks are becoming more willing to expand to public
cloud services. A critical driver of these decisions are the inability of
private cloud services (which are mostly bespoke development for the bank) do
not support cross platform transactions and transfer.



A report by
Greenwich Associates in 2016 estimates spend on blockchain technology by Global
Financial Institutions at over $1 billion5. Directions of these spending
were invested in technology solutions that will enable banks better understand blockchain
technology and generate use cases for implementation within financial
institutions. This describes the biggest challenge facing the industry today where
there is scarcity of blockchain talent, not only from an application
development perspective, but also from a domain expertise angle. However, there
are significant rising solutions from startups such as Ripples, Circle, TransferWise
among others. Also, some banks in India such as ICICI Bank, YES Bank, Kotak
Mahindra Bank and Axis Bank have built similar blockchain solutions for money


2.2.      Demand Drivers



Financial exclusion rates in Nigeria
are high. The EFinA estimates about 42 percent of Nigeria’s adult population to
be financially excluded. This creates opportunities for extension of financial
services to underserved population of about 40 million people6.


service Infrastructure

Financial institutions are continually
seeking innovative and cost efficient technological solutions to deliver its
services to customers, private and corporate clients. This solutions are
powered by Information Technology Infrastructures from servers to card
management, to other core banking systems. This system must be capable of
delivering seamless and integrated banking experience to financial services



Nigeria’s population is largely uninsured.
According to National Health Insurance Scheme, just about 4 percent of Nigeria
are covered by insurance7. Insuretech companies are poised to take
advantage of this market due to their ability to provide basic insurance solutions
that will target core insurance needs such as insurance for a specific common
ailment. They will require technology to enhance this solutions for which the
business can develop for business operation or sell to insurance companies (and
insuretechs) on pay per use basis or any other sustainable revenue model.


Analytics and Credit Ratings.

Financial services institutions, including
banks, insurance companies, and the technology companies offering financial services
may achieve accelerated solution delivery by understanding the individual
customers. Financial technology companies in particular can boycott the
traditional credit rating process for the use of customer data from financial
transactions and other sources to calculate credit scores. Further insight may
be generated for application to other aspect of product development for these
financial services companies.


Portfolio Investing.

Financial services companies
offering savings, asset management, and direct capital market investing
capabilities have a unique need for technological solutions that meet global
best practices. One of such practice is the Global Investment Performance
Standards (GIPSs). This standards highlights how fees must be structured,
reporting of investment performance and ensuring transparency in transactions
which are critical for trust by end users.


Customer Profile.


as Users.

as users.

Success Factors.


Customer Experience.

Customer experience
refers to the overall feeling derived by a user when interacting with technological
solutions developed by the business either as mobile apps (or websites) in
terms of the ease of usage. The ease of use are facilitated by the UI (user
interface) which must also communicate security of user’s financial information.
Research shows that poorly designed mobile apps lose 80 percent of its users in
3 days of downloads8



Cybersecurity poses the biggest challenge as well as a critical success
factor for software technology businesses. A PwC survey in 20169,
revealed a year by year increase in cyber-attacks each year. The business (AppZone)
would need to have its technological solutions developed in line with industry
standards. Some standards include; ISO27001, PCI DSS among others.


Self-Directed Services.

The business technological solutions should be capable of initiating
transactions that enable participants and users have responsibility and control
in selecting aspects of service delivery in a person-centred planning process. Applicability
of the business solution for capability in self-services ensures that there are
minimum instances for continuous physical support to users of AppZone


Human Resources.


3.   Industry Analysis


3.1. Size.

than $50 billion has been invested into financial technology startups and
business (over 2,500 companies) since 2010. Innovations that have been funded range
from solutions in savings, borrowing, investing, payments and storage of money.
Technology giants in Google (now Alphabet), Amazon, Facebook, Apple and Alibaba
now offer some form of financial service in payments and also funds transfer.

categorizes investments within the financial technology industry to be in over
15 sectors. Some of this sectors are; Corporate Finance, Investment Research,
Trading, Risk & Regulation, SME Lending & Asset Finance, Asset Management,
Corporate Payments, Debt Capital Markets (DCM), Retail Investments, Retail
Lending, Retail Payments, Merchant Acquisition.

Lending, Retail Investments and Debt Capital Markets funding were classified as
sectors with high growth of investments while Retail Payments and Merchant
Acquisition were classified as being matured9.


the various sectors within the financial services industry, there are several
software technology needs that are required to power backend operations and optimize
processes. Grandview Research, projects the value of global third party banking
software to grow at a CAGR of 7 percent from 2016 to 202410. This growth
would be driven by increased necessity for productivity and operational efficiency
as volumes and value of transactions continue to grow.

oriented architecture (SOA) for software technology needs may be seen as the
future of banking. Such an architecture, which is cloud based, enable banks irrespective
of brand key into a central resource to build its own software technologies.
The SOA functions as an AppStore for banking software needs. AppZone Business
operates like one.





3.2.      SWOT Analysis.


The business has a unique value proposition
to the software technology market. It has no evident competitor offering
identical or similar software technology as Service Oriented Architecture
within the industry.
The business face no evident
threat of backward integration from incumbents, that is, traditional banking institutions.
Hosting private cloud solutions would come at significant costs to banks and
a deviation from their core banking business.
The business is a strong and profitable
company. It has an inherent ability to leverage its experience in current
products for future profitability in newer products.

The business is exposed to high
technology turnover as well as scarcity of human resources to drive current
software development and future innovations. It may suffer significant loses
in expenditure when talents leave for significantly higher remuneration
packages overseas.
The business operations and software
development process is driven by significant costs on research, development
and testing. This process may need to be replicated in several versions
before a successful product is lunched.

Several opportunities exists in future
solutions that the business may provide for the financial services industry
in Africa. They include blockchain, data analytics and retail investments
among others.

The rate of cyber attacks within
the global financial services industry would continue to increase. The business
may need



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