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   BusinessDescriptionAppZoneis a financial technology company (FinTech) focused on developing solutions forfinancial services business and the industry via cloud computing systems. Itaims to enable the digitization ambitions of banks in Nigeria and across Africathrough its homegrown solutions. The company was established in 2008 in Lagos, Nigeria.

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

Abrief description of AppZone current products and proposed products arehighlighted below;Currentproducts;             I.       BankOne. Itautomates retail banking/microfinance operations and also enables electronicservice delivery on a one-stop, central managed, pay-per use platform. Over 300microfinance banks are enrolled on BankOne.           II.       Teleios.

Thissolution enables the optimization of financial operations in medium-to-large organizationsthrough process automation and seamless interaction with Bank Systems.           III.       CreditClub. This isa technology solution geared at improving financial inclusion to remote and financiallyexcluded areas previously unbanked via branchless and agent banking.          IV.       Tradeport.

This solutionenables small business (SMEs), medium sized organizations and retailers to integrateoperations such as sales, inventory and accounting automation, e-banking andpayment processing.            V.       Prime. This solutionis a card management platform-as-a-service enabling integration, hosting,transaction processing and end-to-end process automation for payment cards for majorlocal and international schemes.Proposedproduct;I.             Zone/ Zone switch. This solution workslike a mobile app built to power the virtual bank of tomorrow.

It has functionalityfor payment, commerce, and personal financial management. II.           Ace.

III.          Recova.AppZoneis seeking to raise $7.5 million for further product development, workingcapital and product licensing. This industry and market analysis aims to verifythe viability of its business structure and model.2.   Market Analysis.  2.

1.           MarketCharacteristics and Trends 2.1.1.

  HighCosts and Risks of IT Upgrades. Traditional financial institutionsown legacy systems that are mostly centralized. This systems are inefficient inmeeting the dynamic banking needs of millennials as well as members of rising GenerationZ age class.

Replacing this legacy systems can be expensive and risky as well. AMcKinsey study reveals that less than 30 percent2 of legacy systemswere successful over the last decade.  Despitethis costs and risks, the study also revealed that successful upgrades willlead to over 50 percent reduction in operational costs. 2.1.2.  Artificial Intelligence. Artificial intelligenceis capable of driving process automation, marketing, customer relationshipmanagement and improving the customer experience in financial institutions.

By optimizingand understanding the data of its customers, banks have the capability tocreate products, services and experiences tailoured for each customer. Implementationof artificial intelligence systems would be dependent on enabling competenciesin data mining and analytics for engagement with customers. Artificial intelligencemay also be applied to other areas in chatbots to have conversational bankingwith customers, initiate transactions for and behalf of the customer withlittle need for human oversight for immaterial transactions. 2.1.3.

  Increasing API Access.According toIDC4, by the end of 2018, 50 percent of global Tier 1 and Tier 2banks will offer at least five external APIs. API’s are fast becoming anopportunity for banks and insurance companies within financial servicesindustry to efficiently acquire more customers, streamline service delivery toexisting customers and reduce overall operational costs. Banks are increasinglypartnering with financial technology companies via open APIs. 2.1.4.  Cloud SolutionsThere arejust a number of current technologies in the business space that do not requiresome form of cloud solution for business support and solutions.

Financial servicesbusiness is no exemption as well. Many banks have been previously reluctant tohost secure processes on public cloud mainly due to fears of breaches andregulatory sanctions in such cases. With increasing improvements incybersecurity resources, banks are becoming more willing to expand to publiccloud services. A critical driver of these decisions are the inability ofprivate cloud services (which are mostly bespoke development for the bank) donot support cross platform transactions and transfer. 2.1.5.  Blockchain.

A report byGreenwich Associates in 2016 estimates spend on blockchain technology by GlobalFinancial Institutions at over $1 billion5. Directions of these spendingwere invested in technology solutions that will enable banks better understand blockchaintechnology and generate use cases for implementation within financialinstitutions. This describes the biggest challenge facing the industry today wherethere is scarcity of blockchain talent, not only from an applicationdevelopment perspective, but also from a domain expertise angle.

However, thereare significant rising solutions from startups such as Ripples, Circle, TransferWiseamong others. Also, some banks in India such as ICICI Bank, YES Bank, KotakMahindra Bank and Axis Bank have built similar blockchain solutions for moneytransfer.  2.2.      Demand Drivers 2.2.

1.  Financialinclusion.Financial exclusion rates in Nigeriaare high. The EFinA estimates about 42 percent of Nigeria’s adult population tobe financially excluded. This creates opportunities for extension of financialservices to underserved population of about 40 million people6. 2.

2.2.  ITservice InfrastructureFinancial institutions are continuallyseeking innovative and cost efficient technological solutions to deliver itsservices to customers, private and corporate clients. This solutions arepowered by Information Technology Infrastructures from servers to cardmanagement, to other core banking systems. This system must be capable ofdelivering seamless and integrated banking experience to financial servicesusers.

 2.2.3.  Insuretech.Nigeria’s population is largely uninsured.

According to National Health Insurance Scheme, just about 4 percent of Nigeriaare covered by insurance7. Insuretech companies are poised to takeadvantage of this market due to their ability to provide basic insurance solutionsthat will target core insurance needs such as insurance for a specific commonailment. They will require technology to enhance this solutions for which thebusiness can develop for business operation or sell to insurance companies (andinsuretechs) on pay per use basis or any other sustainable revenue model. 2.2.

4.  DataAnalytics and Credit Ratings.Financial services institutions, includingbanks, insurance companies, and the technology companies offering financial servicesmay achieve accelerated solution delivery by understanding the individualcustomers. Financial technology companies in particular can boycott thetraditional credit rating process for the use of customer data from financialtransactions and other sources to calculate credit scores. Further insight maybe generated for application to other aspect of product development for thesefinancial services companies.

 2.2.5.  Business-to-CustomerPortfolio Investing.Financial services companiesoffering savings, asset management, and direct capital market investingcapabilities have a unique need for technological solutions that meet globalbest practices. One of such practice is the Global Investment PerformanceStandards (GIPSs). This standards highlights how fees must be structured,reporting of investment performance and ensuring transparency in transactionswhich are critical for trust by end users.

 2.3.           TargetCustomer Profile. 2.

3.1.  Businessas Users.2.

3.2.  Individualsas users.2.4.

           KeySuccess Factors. 2.4.1.

  Customer Experience.Customer experiencerefers to the overall feeling derived by a user when interacting with technologicalsolutions developed by the business either as mobile apps (or websites) interms of the ease of usage. The ease of use are facilitated by the UI (userinterface) which must also communicate security of user’s financial information.

Research shows that poorly designed mobile apps lose 80 percent of its users in3 days of downloads8  2.4.2.  Cybersecurity Cybersecurity poses the biggest challenge as well as a critical successfactor 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 industrystandards. Some standards include; ISO27001, PCI DSS among others. 2.4.3.

  Self-Directed Services.The business technological solutions should be capable of initiatingtransactions that enable participants and users have responsibility and controlin selecting aspects of service delivery in a person-centred planning process. Applicabilityof the business solution for capability in self-services ensures that there areminimum instances for continuous physical support to users of AppZonesolutions. 2.4.4.  Human Resources. 3.

   Industry Analysis 3.1. Size.

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

Accenture,categorizes investments within the financial technology industry to be in over15 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, RetailLending, Retail Payments, Merchant Acquisition. RetailLending, Retail Investments and Debt Capital Markets funding were classified assectors with high growth of investments while Retail Payments and MerchantAcquisition were classified as being matured9. Acrossthe various sectors within the financial services industry, there are severalsoftware technology needs that are required to power backend operations and optimizeprocesses. Grandview Research, projects the value of global third party bankingsoftware to grow at a CAGR of 7 percent from 2016 to 202410. This growthwould be driven by increased necessity for productivity and operational efficiencyas volumes and value of transactions continue to grow.

Serviceoriented architecture (SOA) for software technology needs may be seen as thefuture of banking. Such an architecture, which is cloud based, enable banks irrespectiveof brand key into a central resource to build its own software technologies.The SOA functions as an AppStore for banking software needs. AppZone Businessoperates like one.    3.2.

      SWOT Analysis. Strengths ·         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.   Weakness ·         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. Opportunities ·         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. ·           Threats ·         The rate of cyber attacks within the global financial services industry would continue to increase.

The business may need            

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