Financial Technology

How Union Systems is improving financial services with indigenous technology

Banking is one of the pillars of Nigeria’s economy. According to the Nigerian Development Plan (NDP), the financial sector added a total of N44.2 trillion to Nigeria’s GDP from 2017 to 2020. And while technology is quickly taking centre stage, the banking sector is one of its foremost adopters.

However, Nigeria is heavily import-dependent, and this habit spills into its taste for technology solutions. Nigeria spends $2.16 billion annually on foreign tech consulting, and only 23 per cent of the software used in Nigeria is indigenous.

But the problem with foreign software is that they are designed to conform to international best practices and with a global perspective. That means they do not consider distinct features of the different markets they are to serve. Consequently, banks have to spend heavily to customise their software to meet local requirements.

Union Systems, an industry leader in financial software, is dealing with this problem by creating software products tailored to meet the local needs of Nigerian banks. Following the success of several products such as Kachasi Trade Finance Software and Optimus Corporate Portal, it is releasing a new product – Egora Treasury Management Software. Egora is a treasury management solution that allows banks do front-to-back office processing and management of all their financial instruments in one place.

In an interview with Ventures Africa, Seun Adeleye, Head of Professional Services and Delivery at Union Systems, and Ndubuisi Ofoegbu, Product Lead of Egora discuss the problems with international software and how their product is addressing them, plus the future of Nigerian technology.

VA: What inspired the team to build Egora?

USL: Most of the Treasury Management Software in the African market are designed for the international market and do not address the unique requirement of the local market. They are also very expensive and, in most cases, built in silos, causing people to use disparate systems to complete a transaction process. Because of these challenges, we decided to build an integrated front-to-back Treasury Management Application that not only addresses the functional peculiarity of the region, but that is also less expensive to implement.

VA: Impressive. Solving all these problems with one product must mean it has many features. What feature of Egora excites you the most?

USL: In most foreign treasury applications you will normally have the front office, middle office and back office all sitting in silos as different systems. Egora is an integrated front-to-end treasury management application where the front, middle, and back office are in one system, making reporting, reconciliation, and getting timely and accurate  information from the dashboard easy. The ability to configure Egora to meet unique regulatory requirements peculiar to a particular region puts it ahead of others.

VA: How is your clientele receiving the news of this product? Are they as excited about it as you are?

USL: Egora is still in its beta phase, so we haven’t officially launched it. But we have been talking about it with our clients because we understand their pain points. We know what the big players are going through because we have worked with them for a long time. And yes, of course, they’re excited. They are excited to have an indigenous solution to their problems and no longer have to worry about conforming their work to the standards set by foreign solution providers. They are excited to see solutions finally tailored to meet their needs. Their excitement has generated a lot of buzz about Egora, and the market is eagerly waiting for us to launch it. We’ve presented the software to some organisations and gotten a lot of great feedback. But right now, we’re still listening to what our customers want and fine-tuning our product accordingly.

VA: What’s this we heard about Egora being fully compliant with the CBN and IFRS?

USL: In Nigeria, banks have to deliver some reports to regulators at intervals, daily, weekly and monthly. These reports often have tight submission deadlines. But when they have to log in to different applications to get separate bits of data, they’ll likely have time lags. So we’re helping them have one system generate their reports in one click and meet the CBN’s requirements. Aside from getting timely and accurate reports, they can use Egora to monitor their cash reserve requirements. The system also helps them report in compliance with the International Financial Reporting Standards (IFRS). For instance, users can easily separate their financial instruments according to fair value through profit and loss.

VA: Interesting. Let’s talk a little bit about your company. You recently retained the BAFI award as Trade Finance solution provider of the year. What does it mean for you at this point?

USL: We see it as an attestation to the work we have put in over the years. Winning the award was a crowning moment for the entire organisation. It shows that we are on top of our trade and the industry recognises that fact. Even as we now venture into another aspect of transactional banking, we do so with that zeal. It also spurs us to continue being excellent at what we do.

VA: Your company is a vocal supporter of blockchain and big data initiatives. Does Union Systems intend to integrate them anytime soon?

USL: You’re right about us being supporters of blockchain and big data. We have products already toeing the line of big data, which we will release soon. One is a multibank international trade finance platform we have been piloting with a few banks and corporates ahead of an imminent launch. We also have multibank variants for Egora, which will pull players in that space closer to us. We also plan to port some of our major existing solutions to blockchain technology. We’re researching and engaging with organisations outside Nigeria to guide us on how to do that.

VA: Union Systems has been around for quite a while now. What would you say are your most notable discoveries about your industry?

USL: That’s true. We’ve been around for two decades now. Over the years, we have seen a recurrent problem with lack of specialisation, which makes it a challenge for people to patronise locally developed tech solutions. We see too many people not wanting to focus on one area in tech but rather deal with as many products as possible. The goal ought to be deep specialization with time – to continuously hone your skills to deliver for a particular sector – not to cater to all. That’s what we’ve been doing. With time, we’ve learnt everything required to build a successful product in the space we operate. Many organisations want to do everything and end up sacrificing product quality for quantity. The truth is, once the market perceives that they aren’t getting the best from you, they will leave you for another. That’s a problem that has hurt our IT sector in the past. But that narrative is changing today. Companies like Union Systems have been setting the pace for excellence among indigenous tech solution providers.

VA: We’re in the third quarter of the year. What are your most notable accomplishments so far?

USL: We’ve had quite a handful of achievements this year. For instance, we onboarded Wema Bank, Keystone Bank, Signature Bank and Fidelity Bank as new clients and are at different stages of implementing solutions for them. We’ve also helped some of our existing clients in launching their single bank version of Optimus. A lot of work goes into convincing one client, but we’ve already added several big names this year, and that’s a huge win for us. This year, we also helped our clients launch the Optimus solution. Also, the reception for Egora has been great this year, and we consider that a milestone. We expect it to be the achievement that crowns the last quarter of the year.

VA: Are there any projects we should anticipate this year or the next?

USL: Yes, of course. There are other products in our stable. We have a compliance accelerator for the new ISO 20022  financial messaging standards set for global mandatory adoption in November 2022. In fact, the Central Bank of Nigeria has asked banks to move their RGTS (real-time gross settlement) to that format. We have created a product that allows banks to quickly onboard to that standard instead of spending a lot of money upgrading their existing systems. Keystone bank signed up on the Sakobia Software to simplify their ISO 2022 SWIFT migration and other deals in the pipeline. You can expect some big announcements later this year.

VA: What are your thoughts on the current stage of technology in Nigeria, and where do you see it going in the next five years?

USL: There has been an influx of investments into the Nigerian tech space over the past five years. If you watch closely, you’ll see that the chunk of those investments has gone into financial technology. Investors within and outside Nigeria are betting on fintech, and many of these companies have become success stories. On the other side, there are are companies like Union Systems that have grown organically. So regardless of how they scale, there is a lot of awareness about tech in Africa today — that’s the stage we’re in right now. This means we’re entering that stage where we can start exporting our solutions. Africa is already gaining a lot of attention, and in the next 5 to 10 years, this sector would be mature enough to compete globally.

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