FT AFRICA: Congratulations on the launch of Sparkle. In your press statement, you stated that Sparkle has been granted a banking license by the Central Bank of Nigeria (CBN) to offer comprehensive support for individuals, including flexible payments, savings and analytics to provide greater freedom, flexibility and control over finances and lifestyle. Is it a digital banking license or MFB?
Uzoma Dozie: We hold an MFB license. Currently, there is no license that is specific for digital banking. The most important message a license from the regulator conveys is that we have the people, process, capital and governance to be entrusted with people’s valuables and conduct services on their behalf in the strictest confidentiality.
FT AFRICA: You did announce that you have secured partnerships with Microsoft, VISA and PwC Nigeria. What values are these global brands offering Sparkle and what are the selection criteria?
Uzoma Dozie: We’re extremely excited to be working with some of the world’s leading technology and finance brands. Working with them allows us to strengthen core areas of our platform, as they will provide industry expertise in APIs, cloud computing, data science, machine learning, tax and financial advisory services for the benefit of Sparkle’s customers.
They were selected because we want to build a community of experts in order to bring the best possible service to Sparkle’s customers and in doing so, we will be able to broaden our reach and depth of knowledge by leveraging the infrastructure that these global brands already have.
FT AFRICA: You have promised that Sparkle will redefine Nigerian commerce by merging financial services with a seamless lifestyle solution. How do you hope to achieve this? What are you going to be doing differently from other service providers?
Uzoma Dozie: With Sparkle, we will be opening up financial services to millions of Nigerians who are currently excluded from the financial system. Let us take the case of micro/small business owners for example. We have looked at all the different aspects of what they need to do daily in terms of finances and administration in order to keep their business running.
They need inventory support and assistance with tax. They need to pay bills. They need access to a current account, payment options [send and receive] and access to credit too. These are just the bare essentials to provide support to any business. We have built or we are in the process of building these into the Sparkle app – to simplify life for the users.
FT AFRICA: Most digital-only propositions financial service companies such as Alat by Wema and Carbon have been struggling to win market share for the incumbents. What is responsible for the slow uptake in spite of the huge potentials and how is Sparkle going to change this wave?
Uzoma Dozie: Education is, I believe, one of the issues. Getting people to move their financial lives from an offline to online experience is a question of changing habits but at scale. However, things are changing and what young people know is that financial services infrastructure now exists in the cloud via their mobile phones. They don’t want to queue up in the banking halls any more. They want to do everything on the go.
We want to build a community around digital natives who want and expect digital freedom when it comes to living their lives. So part of that is building a product around young peoples’ expectations. The other is helping to educate those who may not even be starting their digital journey yet, but they are anticipating what their needs will be when they do start.
FT AFRICA: You have promised to start with current and savings accounts. Are there plans for Sparkle to carry out lending in future?
Uzoma Dozie: Yes. We absolutely do want to provide a credit facility for Sparkle’s customers in the near future. By using machine learning and data to inform our decisions, we want to apply the technology we have to remove bias from decision making and open up lines of credit to millions of people who have previously been excluded from the system.
FT AFRICA: Sparkle has joined the Open Banking Nigeria initiative. Is the Nigerian banking system ready for an open banking scheme?
Uzoma Dozie: Yes. Nigeria is ready and needs to keep its focus on ensuring that the entire digital finance space has API standards and reference points that will lead to improved transparency and innovation for our sector. We cannot allow ourselves to be left behind when it comes to building a digital financial infrastructure. Open banking is an essential part of this.
FT AFRICA: FinTech is emerging as a powerful theme in Africa. This is driven by the rapid adoption of cutting edge technologies across the financial services industry such as digital payments and money transfers, financial software and automation and alternative lending as well as funding platforms. What do you expect from the regulators to further deepen the growth of FinTech in Nigeria?
Uzoma Dozie: We cannot build the FinTech space without the collaboration of the requisite regulatory bodies especially the CBN. How can we build trust in the system if there is no regulation or fear of recourse for any finance platform that doesn’t practice robust financial best practice?
If we are serious about pioneering digital finance, then we need regulatory frameworks within which to operate. How these frameworks are drawn up must involve input from FinTech innovators, banks and government bodies. It has to be through collaboration.
FT AFRICA: The era of banks and FinTech companies cosying up to each other is in full bloom. FinTechs have realized that they can better disrupt the industry from within, while the banks seek partners to help them navigate the digital world. The banks worldwide are buying, investing in, and in some cases, lending to FinTech firms. What is pulling the Nigerian banks from doing the same?
Uzoma Dozie: The banks are already investing in FinTech. A number of the banks have their own in-house FinTech-focused hubs and accelerators to help catalyze innovation. At Diamond Bank, for instance, we invested heavily in FinTech and we scaled the numbers of our customers massively with the roll-out of various apps and digital financial products.
However, traditional banks are weighty and more bureaucratic. Due to the nature of their set up, change is slower. The banks can’t move as swiftly as FinTech. This is why we’re seeing the banks and FinTechs working together so that they can leverage off one another.