About the episode

We catch up with one of our favourite technical, product-centric founders, Rafi Putra Arriyan (or Ari as he called), CEO and co-founder of interbank transfer app Flip. In 2015, Ari and his college friends tackled the long-standing issue of high interbank transfer fees in Indonesia. With Ari’s product-focus and technical expertise, they have since grown the platform to serve 1.7 million Indonesians today. He calls from West Java’s Depok City and we talk about, among other things: 

• the classic story of how he and his college friends built an MVP with a Google Form and found PMF in three weeks;
• Flip’s approach to product development as the company aims to go from interbank transfer app to digital bank for Indonesia;
• his advice for fellow technical founders. 

This episode was recorded on Zoom, 25 June 2020.

Timeline

00:17 Yinglan introduces Ari;

1:20 How Ari met Insignia;

2:15 Why Ari and his college friends started Flip;

4:04 How Ari and his college friends found PMF with a Google Form MVP;

5:32 How Flip has evolved with Indonesia’s financial services sector over the past five years;

6:53 How COVID19 has affected activity and operations on Flip;

9:20 How Flip operates with a digitalising banking sector;

9:56 Flip’s approach to product development;

10:54 Ari’s thoughts on cross-border financial services and transfers;

12:17 One of Flip’s more recent experiments: Flip Instant;

13:38 Ari’s take on upcoming use cases in fintech;

15:06 Ari’s advice for technical founders;

Transcript

Ari: Sure Yinglan, thanks for having me. I really remember the time when Insignia went to Depok. I think Insignia is the first VC to come to Depok in the world I think, because Depok is not really a tech haven in Indonesia and when I met with Insignia team it was very memorable to me because most of the time when I meet with VC, what I [usually] do is introduce myself, introduce the product, how it works, etc. 

But when I met Insignia they went to Depok, they already did so much research about Flip, they already know how the product works, and they already use the product. They were a very memorable team for me and because of that at that time I am very sure that Insignia is a very good partner for the future.

Yinglan: Thank you for the kind words Ari. And Ari, one of the interesting stories about Flip is how it started with an idea and Google Form. Can you share with us what it was like behind-the-scenes when Flip first started and how you found product-market fit? 

Ari: So before building Flip, I’m with my two co-founders, and we’re still in college, and before that we made many failed products together. We built things that at first, many people were excited about but as time went on, they don’t use anymore. The common things that we see in terms of our failed products — the reason why these products fail, is because we were focused on the solution and not the problem. 

So when the idea of Flip arose, the first thing that we do is not build the product itself, but we wanted to validate the problem first. So we wanted to know if interbank transfer fees is something that is a big problem for Indonesians or not. So I started to talk to my friends, but most of them said that they are okay with the fee, because the fee is a common thing. 

As long as I remember, since I am in elementary school, the fee is already there in the market. So most of Indonesian people already see the fee of interbank transfer as a status quo in Indonesia. But because at that time we were college students and we didn’t have that much money and when we did interbank transfer, we saw it as one lost opportunity for a meal, because the fee that we need to pay to the bank was quite equal with the fee we needed to pay for a meal in our canteen in college. So at that time because we really believed that this problem was a big issue in the market, we started to think, “Let’s just try to build a very simple solution and share it to the market and see how the market reacts.” That’s the start of how the Google Form idea came up. 

Yinglan: This is fantastic, the idea to use Google Form is great. I think one of the things we learned a lot is that speed and agility are key attributes that we respect in an entrepreneur. And I’d love to hear the story of how fast you moved the idea from a Google form to actually executing and building a product. 

Ari: So at the time when we got the idea to build a Google Form, we discussed it. The team was very small. I think the advantage of a startup is that we can move very fast because the team is small. And to decide whether or not to execute, we only decided it in ten minutes and since we wanted to do it, we just opened my account immediately. After that we set up the domain and share the Google Form to the users. 

The thing that made us really believe that the solution we proposed will work because after one hour since we shared the Google Form to our friends, there is one user whom we don’t know — none of us know this stranger — who sent IDR 2 million via the Google Form. It became an epiphany for us. Why did this guy risk his money — IDR 2 million — just to save 50 cents (IDR 6.500)?  So there must be something, since then we started focusing on the product.

And because we see that building a proper product takes a long time, but we saw that there’s a very big demand in the market we built the simplest product we could have, but still have reliability on it and we could launch the full proper product in only three weeks since we started the Google Form. 

Yinglan: I wanted to recount your history. When you started Flip almost five years ago, there weren’t that many digitalised banking services. I’d love to hear how you’ve evolved with the evolution of financial services in Indonesia? 

Ari: We were very lucky that we started five years ago, because back then Gopay, Ovo, Dana, are not in the market. Most of the banks did not have API yet. The solution we built was very scrappy. We needed to do a little hack to make the product work.  

But since five years from that time, the digital banking industry is already very different. Gopay, Ovo are already big companies. Banks start to open up their system. But the interesting thing for us is that the interbank transfer fee is still there in the market. I think it is a very good opportunity for us in Flip. We already learned the market for a very long time, we understand how the products work, how the system works. We already understand the needs of the users, and on top of that, in terms of the banking industry there’s much opportunity we can tackle, and because we are a more mature company right we have a bigger presence in the market. This allows us to build bigger things that we hope could give a bigger impact to the Indonesian market in the future. 

Paulo: Thank you Ari for describing to us how you’ve evolved and how you’ve gone through this journey over the past five years, since you started with a Google Form and now it’s really an established service for the Indonesian people. Now let’s take a step back, a few months back, and talk a bit more about COVID19. With all these lockdowns, across different services, you have more people relying on their smartphone apps. So what has activity been like on Flip and how has it affected your platform? 

Ari: So COVID has been affecting our platform in a quite positive way, maybe not as high as the impact that edtech has, but the impact is there, especially because the main use case of people to use Flip is for sending money not payment. We saw a decrease in the usage of the ATM in Indonesia. Before that ATM was one of the biggest channels for people to do transactions,  but because of COVID, people tend to switch their transaction channel to mobile app or internet banking and because of that it allows them to use Flip more easily and it has helped to boost our growth. 

Another thing is the acquisition cost, especially the acquisition via digital channel. I think because most people are staying at home right now, it makes many other companies switch their marketing initiatives to digital channels, because most of the online channels bidding methods make the cost to acquiring users increase a bit but not really significantly. 

Other than that also in the way Flip works right now operationally. So before we are a traditional company, we are working from the office. Since COVID, we see that we need to do business via remote because going to the office is not an option. At that time we are quite worried about the effectiveness of the way we work if we do it remotely. But because we don’t have any other option, we make mitigation, we start to work out how we could do operational via remote, and somehow after an adjustment around one week, we could have quite the same output when we do remote compared to doing work in the office. Because of that we start to build Flip to become a remote team. When we talk with the team, most of them prefer to work remotely rather than at the office because of many factors that happen in Indonesia right now. And on top of that we also see that employee happiness also increasing. They don’t need to spend time on the road. They don’t need to really face traffic. That is another good impact from COVID in terms of the way we work at Flip. 

Paulo: I think it’s interesting that you guys have gone fully remote with your team, and also that you’ve experienced this increasing activity on your platform as more people use mobile applications as you said to do financial transactions. But at the same time you also have banks trying to catch up, trying to enable their transactions online, and introducing new COVID-proof measures. So how does this movement from the traditional banking sector affect Flip’s growth trajectory coming out of the crisis? 

Ari: I believe it will give a very positive impact for Flip, because basically we are not competing with banks, we are complementing them. If the banks do adoption by giving people easier access to do banking activity, we believe it could help the users to use Flip more easily. Other than that we are also building new things in Flip that we hope could give a positive impact for the market especially after COVID.

Paulo: So maybe you could talk to us about those new things you’re building in Flip, without revealing too much. What are you looking into in the market at the moment? What are the new pain points that you have discovered over the course of growing Flip?

Ari: What we see is convenience means higher engagement. If you could build the product more easily to use, more joyful to use it will make the users use the products more. Currently in Flip we have a barrier for the users to use our products, because in Indonesia open banking API is not really there yet. When the users need to use Flip, the process is quite clunky for them. So in Flip if we want to build a product, we always see the quality of the product that we build right now. There are more use cases that we need to add to the products and because frequent activity that users do in Flip is transfer the things we are building right now is to improve the experience of the users when using Flip for sending money via our platform.

Paulo: You talked about exploring new use cases. One new use case could be cross-border transfers. What are your thoughts on cross-border transfers? Is it something on the horizon or will the focus be purely on Indonesia? 

Ari: I don’t know about the future, but currently, yes we are focusing in Indonesia. But as a business we think it is a smart move so currently Yinglan mentioned we started to develop a new use case to help people sending money overseas. Because there is a very big opportunity in it the cost to send money overseas from Indonesia is very high, the experience is not as good, you can’t know when your money will arrive. Other than that if something wrong happens, to solve it, it could take a very long time. 

Currently we are building new products. Actually we are already done with the products. We only need to launch it to all of the users, that gives value for the users first. Compared to the bank the fee is way way cheaper, the SLA is very clear, users could know when the money will arrive, and other than that because we already have experience helping out 1.7M users we have right now, we believe we could give a very good user experience especially if there is a problem in their transaction. 

Paulo: Speaking of new products, I wanted to talk about Flip Instant. You initially started Flip on the premise that people were willing to send money just to reduce the cost of the transfer, send money to your platform. But then the tradeoff was it would take longer because they would have to go through your platform first. But now you’re exploring a product that sort of switches the tradeoff around right — Flip Instant. Could you tell us more about that? 

Ari: Sure we see that to grow the product we need to increase the product quality. One of the biggest pain points that users keep telling us is it takes quite a long time for them to send money through Flip. So we started to look at the opportunity to make the transactions as a real time cash transfer but still keep the cost at a low cost to make the business viable. After we did many experiments, we did some partnership with the banks, we saw that we could give value to the users — free transfer with real time SLA that the users could do every day, and we started to launch it in December last year. 

Since we launched this feature, the usage of this product went crazily high like our month on month growth at that time almost 30% and it has become a thing that we keep focusing on right now. So we see the alignment between the product quality, the service reliability with the user engagement and activity on our platform. So it is the thing that keeps improving in Flip that we hope could enable us to capture more of the market and also give better solutions for users in the future. 

Paulo: Looking at the fintech scene overall, you’ve been in the space for five years already and have seen it evolve with digital banking services coming in for example. So what are the upcoming areas of fintech that are interesting for you these days? 

Ari: I think the most interesting use case right now but most people don’t really see it as a thing is mortgage. It is a very hot topic among Indonesia millennials, especially for people my age, around 25. Everyone wants to have a house, but they’re quite reluctant when talking about mortgage. In my perception, talking about mortgage is like the thing when they talk about joining a rock band when we were still a teenager. Everyone talked about it, everyone wanted to take a mortgage, everyone wanted to do it, to join a rock band, but most of them didn’t take any action, then the chance for us to do it is already gone. 

I think the issue that most of Indonesian millennials are facing today is access. Not everyone understands how mortgages work. On the other hand, I don’t think the banks are not doing a good job to educate the market about it. I guarantee you if you talk to ten Indonesian millennials right now, maybe only one of them understands how the mortgage works. So I think the opportunity to correct the mortgage product is very interesting, and I think the opportunity will be very big if we could crack it, especially for the millennial market in Indonesia.

Yinglan: To close it off I wanted you to share your advice with some of our founders, because you’re one of the few product-centric founders that we are big fans of. What advice do you have for technical founders in Southeast Asia? 

Ari: So Flip is the first job, the first proper job that I did in my life. I learned a lot as a founder when building this company. As a technical founder we have a tendency to really focus on product. It makes us miss other important things. I got lucky that I have a great team that helps me execute things that I missed wonderfully. So my advice for fellow technical founders in SEA, build a team that really believes in the company vision and also complements you, because as a founder we are not Superman, there are many things that we lack, and because of that there’s a team that is together with you in building this company. 

But not only the team that executes on a daily basis, but also the investor and board that join the company especially in early days. From our experience, there are a lot of things that will happen when we build startups, and sometimes one wrong decision could make or break for the company’s future. That’s the advice I would give to other technical founders and to myself right now because I’m still building the company.