 We are glad to know that you're still there. We're going to take this small time that we have left to talk about safety in electronic payment system and how we can use homegrown solutions to do this. We are privileged to have in our midst Mr. Dallington Onyagoro who is the CEO Aladdin Digital. Good morning and welcome to the program. Thank you for having me. Good morning viewers Yeah, a lot of people want to do business, but they are afraid of electronic transactions So should they or should they not be afraid of this? Yeah, I can answer that both ways. I mean, they shouldn't be afraid of electronic transactions But that's the future and that's actually the present Going by what happened in February when there was a cash crunch and with the narrow design Everybody realized that the best way to go is to actually begin to patronize different electronic channels like POS terminers mobile wallets and so It comes with its own challenges, but Everything that has the good side also has the negative side. So they have to throw the baby and the bath water out You understand that so there are ways to mitigate some of these weeks which we're going to discuss subsequent Okay, but when you when we got to that time of a cash crunch We found out that the transactions were not even going What were the challenges? What are the challenges in Nigeria that made us to suffer the way we did? So first of all, we have to also appreciate the fact that Nigeria when it comes to payment It's actually more advanced than some countries in Europe and even in North America I'll give you an example We started enjoying instant payments almost like over 10 years right now In some of those North American countries when you do payments, it takes about two to three days to get to the beneficiary I have accounts in the u.s When I send those money back to my gtb account from my u.s account It takes 48 hours to 72 hours to get to gtb But today you can send money to somebody and in the next two three minutes The best in case they're not so the problem was that the system was overwhelmed All right because of the narrow policy and everything more people migrated online and Our system the infrastructure was not ready to accommodate That influx of new people new people that actually began to migrate to that system Or like what the cbn told us I think they underestimated the volume of people that actually needed to do transactions per day Which at much was around 49.7 trillion That was transacted in terms of cashless transactions in Nigeria Just in the month of March in the first quarter. I was around 127 trillion That was transacted so that influx between January and March The whole infrastructure and the wallet system the banking system was not ready for it So that led to massive failures But the system is adjusting right now and the levels of failures have started reducing also in the systems What about Homegrown tech companies like you you run Aladdin Yes, so what about what is your the role that you're playing now to make sure it stabilizes So most of the fintechs you have today they're actually pioneering what we call wallet to wallet transactions So why most of these failures occur is what you are doing interbank transactions You are moving from you know one commercial bank to the next bank or one system to the next system And that goes through a switch and when you go through a switch a switch is its technologies So there's the possibility of failure So for example, if I say some fintechs now have close to about 30 million users And those 30 million users can do wallet to wallet transactions at zero cost So because it's an intra transaction within an ecosystem the rate of failure is actually minimal So all those homegrown solutions in terms of wallet transactions in terms of even some of the contactless solutions They are bringing now it's actually aimed in improving adoption and also reducing the instances of failure that we see also When you talk about wallet to wallet I'm always thinking bank of course. I don't know how else to move money and to keep money So what do you do? Do you connect that to your bank account or something? How do you do it? So the beauty of wallet to wallet transactions is that you can actually fund your wallet in so many ways First of all, you can fund your wallet by what they call attaching your card Or in in fintech balance, we call it tokenizing your card So whether it's a master card, a visa card, a strawberry card, American Express or your Vef card You can actually attach it to your wallet and with the click of your button You can always fund your wallet from your debit card All right, or you can do some wallets have what they call virtual accounts that are attached to them All right, so you can also fund your wallet through virtual accounts But the beauty is that once that money enters into the ecosystem All right, and you have all that wallet users in that ecosystem It becomes quite easy for you to make payments in a time with At zero cost because the average cost for inter-bank transfer is between 10 naira and 15 naira, right? You know, based on CBN regulation and based on the amount that transfer it 150 So for example, if you have DPS transaction and you're going to do cash withdrawals I mean sometimes they charge you as much as 800 naira or 1000 naira depending on But but the fintechs are actually building an ecosystem not just within Nigeria But they are building an ecosystem within Africa and that's what people like us like Aladdin is trying to achieve Because you found out that payments within Africa is actually broken is as expensive as 15 percent Some corridors between Tanzania and Uganda to send payment is at as high as 36 percent So what we're trying to build is to build a pan-African wallet system Where I can easily send money to you in Kenya in Rwanda or in Ghana It's almost at zero cost and in two minutes because you are doing wallet to wallet transaction So that's where fintechs are actually innovating in that space So why there are other solutions that are trying to do inter-bank connections You know trying to connect CBNs across different jurisdictions, which is also prone to failure But the wallet to wallet transaction also reduces that you know incidences of failure And that's the kind of ecosystem that most fintechs are trying to build right now Can the banks take advantage of what the fintechs are doing? Yeah, but this is what about the man the fintechs cannot actually operate without the banks Because most of the banks are the the license one most of the most of the fintechs are relying on the licenses of the bank because they have to collaborate And the one answer is that some of these switches that make some of these things happen Are also controlled by the CBN and the banks are stakeholders in those switches But just that the difference is that these guys are actually innovating on top of what the commercial banks are doing Commercial banks are big. They have legacy systems So they will not be able to iterate and innovate fast as fast as fintechs who are soft So who are simple and nimble and able to take quick decisions than the commercial bank I worked in gtb. I worked in some of those banks But can you write a memo and you get a approval down to the Md level you must have taken one week two weeks three weeks But if interest is run by 30 people 20 people with their ceo and their co-founders They can take a decision within 24 hours and it's the dev guys already building it So that ability to be nimble and to be innovative and to iterate and to build faster That's what differentiates the fintech ecosystem from the commercial bank ecosystem How safe is this? Yeah, it's actually safe because it's in the protocols that actually moves this money around It's actually being encrypted. So like I told you, they're also relying on existing infrastructure You cannot build something or nothing And the good thing that we have is apart from the Kenyan market where you have EMPESA Which is mobile money. All right The Nigerian interbanking system has been very very helpful In facilitating fast payments in Nigeria in the past more than 10 years Even our POS terminals and everything before used to have POS terminals We have a chance to get T plus one. That means they get settlement the next day Listening to liquidity crisis But now you can actually get settlements in the same day or even same minute when you use your POS for collections So in so all these innovations are being built on an existing infrastructure, which has also been improved daily Yeah, okay. So Is there a deliberate policy you would want from government to make these things even more in our society? Yeah Like for example, we have a sandbox system from cbn. We have some policies that came out recently All right, but it's all about the matter is that In terms of making it easy for for example, there are so many licenses available And I'll tell you what I have different licenses for different types of fintechs There are about eight categories of 14 categories of fintechs But sometimes it's not usually very clear which license you need to do a business as a fintech Do I need to get good for this license? Why do you get the microfinance bank license and stuff like that? So that level of clarity is why most fintechs are still relying on the license of a partner bank to do transactions I believe some level of clarity will actually help and at the same time too You know, let's let's the elephant in the room is the truth is that is the show of crypto You understand that's well most of the transactions actually moving in that in that space what they call stable coins You know, I hope to know people are not too sure about cbn stand on crypto You know, for example, we heard about last time I want to stop you know, taxing, you know, revenue from crypto So we're not too sure so people That's what Nigeria is among the top three in terms of usage of crypto in the whole world It's among the top three in terms of the number of people that use crypto is over 30 million people use crypto in Nigeria Bigger than any other African country. So it's an elephant in the room So we need to understand what is the regulation clear regulation in terms of stable coins And not because I just can actually make interbank payment and pan-African payment also easier When I can use stable coins to make payments, you know in shopping malls and stuff like that Some of this clarity, you know in terms of regulation is what we're also seeking that space Okay, when you talk about wallet to wallet, we're wrapping up now when we talk about wallet to wallet For instance, Aladdin has an app Of course, does the person I'm transferring to have to have Aladdin? That's what I'm saying So you don't need to have an Aladdin app. Aladdin can do wallet to bank You get my point Everything I can do wallet to bank or wallet to mobile money So I can do wallet to gtb or wallet to sorry for calling any of the banks But is it but but when you have when you're when both of you have the same Aladdin app You don't need to pay that 10 naira or that 20 naira or that 15 naira sending money to your commercial bank account I can send money to your own Aladdin wallet and it's faster. The failure rate is less than 0.01 percent I get my point because you are sending money within the Aladdin ecosystem You're not taking it outside the bank because when you are going outside the bank you need a switch No, no, but if someone has the Aladdin app, I'm using it because you are the same Exactly Exactly You have Aladdin app and someone else that I intend to send money to has another kind of app Exactly I will be charged right? You will be charged if we decide to charge but most of the flintests are offering free transfers You know what I'm saying and that's that's that's that's that marketing gimmick of entering the market So how do you make the money? There are many ways of making the money see that's what I need to talk about what they call free tech economics So for flintests sometimes it's not about making money. They sacrifice making money for valuations See because uber uber was not profitable for a long time, but uber was valued over 50 billion dollars So when you come to the start-up world what they're looking for it's only what your investors are looking for is your level of transaction volume How many users do you have? What's your turn rate? What's the level of engagement? How many active users do you have? What's your gmv? Your gross maths, you know what the volume of transactions you are doing because by the time you can get people hooked up into your ecosystem You can start beginning to introduce charge. I don't want to mention a very popular flintest today in Nigeria That's over 40 million users when they started it was free But gradually they introduced 10 error Partly like every 10 transactions So they have 30 million people by the time you charge 10 error times 30 million people You can see that in a single day the millions they're going to make But they started by sacrificing that initial revenue to gain traction and that's what most flintests play in that direction Exactly How much time do we have? To take these these three days from you No, but I'm sure that that will be is also closing because they are investors are becoming more vociferous about revenue All right, so over 2021 over two billion dollars came into Africa in terms of fintech investment You know billows of dollars are coming into Nigeria Kenya some of the major hops fintech hops in Nigeria So and investors are also becoming wary of just doing free transactions without showing Sense of profit and you know and revenue. So people are rethinking that model into breathing profitable and revenue You know sustainable businesses business models also in fintechs. What's the future of fintech in Nigeria? The future of fintech is actually also But even even the banks realize it. That's why the banks are not doing hackathons They are doing events to incorporate the fintech model into their own model. That's more than my partnering with fintech All right, because if you think the ability to iterate faster You know makes it easier and as we see most of the banks are not going for the group model You know what they call the hotco so that hotco allows them to have a fintech arm I can mention selling bank has one gt bank has a hotco everybody's going to I was the former staff of gt so I was an s gt so I can tell you for free that everybody's going towards that hotco And that gt bank you have scored, you know, which is actually a free tech arm of gt bank Well, that's the future and the reason if you look at the reason why they did that The valuation of a fintech can go as high as 33x But the valuation of the commercial bank cannot exceed more than three or four x in terms of you know the value But the fintech can start today and we look at for example paystack was sold for 200 million dollars within four to five years How many banks can use that for 200 million dollars in four to five years? Now look for a flutter with its value that three billion dollars On the other point so the the valuation level of fintech is usually higher if you get it if you execute well So that's the future and everybody knows that they need to have an arm of fintech in their hotco Because of the level of value you can get from fintech in a short while. Okay. Well He talked to me Like an orator and then sometimes use the jargon that only the fintech people will understand But the beauty of it is that there is a future and we are tapping into it as Nigerians and it is a very good thing I'd like to thank you CEO of Aladdin digital for coming on the show. Thank you very much And we do hope that whatever policy needs to be put in place will be put in place So that people like you and others who are struggling to come up as well will do the needful We've been talking with mr. Darlington and Yagoro CEO of Aladdin digital on the program this morning. We do hope that you had a wonderful time This is where we draw the cotton on the program this morning. It's Going to be another very wonderful day tomorrow. So do join us then. My name is Nyamgol Agadji Thank you on behalf of the entire team. Bye for now