In today’s episode we have a chat with the CEO and co-founder of AI-driven data verification platform Verihubs, Rick Firnando, fresh from joining Y Combinator’s 2021 Summer cohort and subsequently announcing Verihubs’ seed round US$2.8 million which we were privileged to lead. We’re excited for Rick to share more about his story building Verihubs, the incredible progress they’ve been making, and what the potential is for AI-driven verification solutions in Indonesia and Southeast Asia.

Highlights and Timestamps

1. 00:27 Paulo introduces Rick Firnando, CEO and co-founder of Verihubs;
2. 01:36 Rick on meeting Insignia through Y Combinator; 
3. 02:07 How an incident with Rick’s family led to the start of Verihubs; 
4. 04:35 Finding the first product-market fit with Payfazz and BCA; “We have this culture of always talking to our customers.”
5. 05:23 The four solutions Verihubs offers currently; “Currently we have various solutions, regardless of verification, because we want to be the infrastructure layer for fintech companies in Indonesia.”
6. 06:40 The biggest challenge partnering with banks and financial institutions; “We really paid attention to our product reliability because [we’re] in B2B market sales; your product has to be reliable.”
7. 07:37 Driving financial inclusion in Indonesia by becoming a fintech enabler in the country; “Despite fintech companies in Indonesia still growing with disruptive technologies and business models, we still have a long way to go. This is because building fintechs in Indonesia requires a very complex and fragmented infrastructure.”
8. 10:49 Learnings from Verihubs’ YC experience; “The most important lesson for us is that it’s not about how advanced [our] AI technology is, but it’s about how your AI technology solves the problem, especially the most painful problem for customers.”
9. 11:41 Hiring AI talent in Indonesia; “Even though AI currently in Asia is rising, the AI talent in Indonesia, I could say, is still insufficient. It is pretty challenging to attract high quality talent. So our approach is to nurture the talent by ourselves.”
10. 12:29 Gaps that need to be filled to drive open banking adoption in Indonesia; “…every single time fintech companies will access their [customers’] financial accounts, we can offer them much more value [through] verification because it’s going to help their users to connect their financial accounts in their fintech apps.”
11. 13:38 How Rick’s diverse industry experience has shaped him as a CEO; “…working [in] various industries obviously gave me more perspective on dealing with different types of people and have a deeper understanding [of] how to manage people.”
12. 14:26 Verihubs’ role in driving the future of fintech in Indonesia; “…unprecedented opportunities also mean there will be unprecedented risk, which is why we started to build our verification solutions…”
13. 15:15 Fintech infrastructure layers beyond verification; “…we are [also] getting a lot of data and building and connecting the data [to] build products that can be beneficial or FinTech is what we’re looking for.”
14. 15:54 The Benefits of Working with Payfazz; “So it’s not all going to be open banking solutions but also about open finance…”
15. 16:34 Applications of Verihubs solutions beyond financial services; “…some unique use cases with our existing clients for rental marketplace, hotel staff, workforce service platform, and digital agent applications.”
16. 17:07 Rapid Fire Round; 

About our guest

Rick Firnando is a serial entrepreneur, having built, run, and grown a variety of businesses from the energy sector to trading to pharmaceuticals to media and coworking, prior to starting Verihubs with his co-founder and CTO Williem Williem, a PhD in computer vision and artificial intelligence expert.

Transcript

Paulo: So welcome to the show, Rick, how are you?

Rick: Hi, I’m good. Thanks Paulo for having me. 

Paulo: I’m just curious how you ended up meeting Yinglan and the rest of the Insignia team and talking to them about Verihubs.

Rick: We met after [Verihubs] got accepted into Y Combinator and we talked a lot about the verification space and then yeah, [Insignia] decided to invest in us surprisingly.

Paulo: So you weren’t expecting it.

Rick: We didn’t expect it at all. We were not in a very, very hot space [with] verifications and joining Y Combinator [was] a life-changing moment as well.

Paulo: Yeah, we’re definitely going to talk more about that Y Combinator experience. but I’d like to dial back a little bit and go back to the origins of Verihubs. Having had this vast experience in different sectors, I’m sure listeners are curious to know how you started Verihubs with your CTO, Williem Williem. What were the pain points that you were seeing in the market and why did you decide to zero in on banking and working with financial institutions as the use case for this AI security as a solution? 

Rick: The first time we started Verihubs I think it was back in 2019 when I was in my very small hometown called Jambi. So basically me and Hendra [from Payfazz] were raised in Jambi. I was in Jambi with my family. To keep it short, at that time we were scanned by a […] financial lender. So my sister’s ID card was misused to lend some money. It almost cost us around US$50K, but luckily we managed to solve this problem with only US$500, which is still quite a lot for us.

At that very specific moment, I realized this is a huge problem because it could happen to anybody. So I went back to Jakarta and I reconnected with Williem, who I met before. He [was] building face recognition and many AI verification [technologies]. So I told him about my family’s [experience] and Williem literally had a very great idea at that time to verify customers using the tech stack he was building that has the ability to tell if a face capture from your camera phone is real or fake. It’s basically [used] to prevent fraud as I experienced before. 

And after we launched our first product, we onboarded our very first customer which was Payfazz and soon after we got deals with banks, such as the Commonwealth Bank and BCA, the largest private bank in Indonesia.

The reason why we decided to put our attention to banks and financial institutions is first, they happen to have the same unsolved pain, which is a lack of onboarding process automation. Typically before using us, the onboarding process would take weeks, but with us, the process only takes five seconds and basically this also enables them to defend their customers from fraud activities. And we believe AI is just a starting point to effectively prevent this from happening.

Paulo: Right, I think once again, we see here another example of how you have a founder who really experienced the pain points firsthand. And I’m glad to know that it worked out okay for you and your family, but because of that story you reconnected with Williem who was at that time also incidentally building the tech stack that would power the solution that you guys are working with at Verihubs. It’s the combination of great timing and the confluence of backgrounds that you guys have. 

So, you said your first customer was Payfazz and then from there on you started onboarding a lot more banks and financial institutions. So at what point did you sense as co-founders that this would really become a big solution and that it would have a lot of various implications in terms of potential use cases?

Rick: We have this belief in our company and we have this culture of always talking to our customers. When we talked to Payfazz at first, the pain point was there: onboarding their customers. They actually have many, many customers and users, but the pain point was to onboard their customers. I mean, they must have hired so many teams just to verify their customers. It was very painful for them. After that, we talked to a BCA as well because we joined their accelerator, and then they happened to have the same problem. After this, we just realized that this is very interesting and this is a huge problem in Indonesia. And with our solution, we believe we’re going to be able to tackle this problem.

“We have this culture of always talking to our customers.”

Paulo: Speaking of solutions, I would love for you to actually share with our listeners, what are the various levels of verification or various features that Verihubs offers on its platform currently? 

Rick: Currently we have various solutions, regardless of verification, because we want to be the infrastructure layer for fintech companies in Indonesia. We have four main solutions. The first one we call Veri-Identity. Basically that comprises many AI verification, such as face recognition, OCR, and liveness detection.

The second one is Veri-Check, to help companies verify their customers using trusted local data sources, such as government ID databases, criminal record databases, bank fraud account checks, and many others. 

We also have this Veri-Authentications, which authenticates phone numbers using omni-channel services, such as SMS, WhatsApp, and voice call. 

The last one we call Veri-Financial. It’s to help companies access their customer’s financial data. We’re in the process of getting integrated with banks and unbanked accounts, and it can be used for many use cases, such as bank account verification, income verification, credit scores, and many others.

“Currently we have various solutions, regardless of verification, because we want to be the infrastructure layer for fintech companies in Indonesia.”

Paulo: [Verihubs’] go-to-market was definitely verification, but there’s a lot of potential. In terms of open banking, becoming like Plaid, with how you guys have already built that network with a lot of different financial institutions and gathered all that data or have access to all this data. Speaking of that, what has been the biggest challenge so far in terms of partnering up with a lot of these financial institutions over the past two years? 

Rick: I think the biggest challenge we’ve faced was during the first time we launched the product, and the biggest challenge was building trust. It’s not only happened to us, but also many other software-as-a-service companies in the B2B landscape. And getting your first customer is really hard.

The way we tackle these challenges was we made sure our product solves our customer’s problems. This is the first one, and we really paid attention to our product reliability because [we’re] in B2B market sales; your product has to be reliable. And the last one was getting their credibility, which is why we dealt with banks and fintechs in the first place. Having big banks as our customers definitely will help us to get more customers because everyone knows earning trust from banks is not that easy.

“We really paid attention to our product reliability because [we’re] in B2B market sales; your product has to be reliable.”

Paulo: It certainly helps that as you onboard more and more backs, like obviously you gain that brand of trust that makes it easier to onboard even more financial institutions down the road. But one thing that interested me in terms of your solution, it’s not just the fact that you help traditional banks and financial institutions in terms of their KYC processes and verification processes, but that you also help in terms of driving financial inclusion, especially with Payfazz. Can you tell us a little bit more about that, how you see Verihubs driving financial inclusion and maybe sharing a customer story or a specific scenario.

Rick: It’s very interesting. If we talk about financial inclusion because, if we compare it to the US and India, I mean the US has more than 10,000 fintechs. India has around 2000 fintechs. And I would say Indonesia is in a very nascent stage in fintech penetration. We only have around 100 or 200 fintech companies and despite fintech companies in Indonesia still growing with disruptive technologies and business models, we still have a long way to go. This is because building fintechs in Indonesia requires a very complex and fragmented infrastructure. 

Let me give you a very simple example. So, before we existed, if fintechs wanted to do verification, then they had to connect with the government and extract the data by themselves. In addition, if they want to access their customers’ financial data, they have to connect with five big banks and they need to do the partnership by themselves, which is quite impossible.

And Verihubs plays an important role here. We are a fintech enabler for Indonesia. So we enable all companies to build fintechs easier using our full stack solutions ranging from accessing financial accounts and many other [services] to support fintechs in Indonesia. We believe with these solutions, this will accelerate the growth of fintechs.

To be specific for the customer story, I think the most memorable story was around eight months ago. We actually had a meeting with one of the potential customers and they told us that they still did manual verification to verify their customers.

I think back then they had 20 verificators and they needed to hire more as their number of users kept growing. And he said hiring more teams actually didn’t solve any [of their] problems because it will just cost them a lot of money and time. In addition, their user experience was really, really bad, [because] typically the user would have to wait weeks to get verified to get into the platform. So when we implemented our solutions to them, I believe they said that they saved their [costs] by around 50% and their user experience was better than before since we helped verify their customers in under five seconds.

Paulo: That’s a really great story. Obviously it saves a lot of time. It saves a lot in terms of manpower. Given that you guys are a fintech enabler, what are some of the biggest learnings that you’ve had in terms of growing a fintech enabler from other markets? 

Rick: The key takeaway for us to be a fintech enabler is to make [it] easy for companies [to] build their fintech solutions. I have a friend who just wanted to start his own startup, a fintech startup. His startup consisted of four to five people. And then he just said to me that “Hey Rick, this is very un-executable and very, very hard to build because you have to integrate with so many solutions.” Let’s say if you want to do the SMS verification, then you have to partner with four to five telcos. 

In addition, fintech is really highly regulated. If you want to do the KYC, then I have to go to the government — there’s so many, I mean, like around four to five vendors, they have to connect [to]. I mean, like that’s highly impossible for a very small player. I think that’s one of the important reasons why we are quite slow in building fintechs [in Indonesia].

“Despite fintech companies in Indonesia still growing with disruptive technologies and business models, we still have a long way to go. This is because building fintechs in Indonesia requires a very complex and fragmented infrastructure.”

Paulo: One thing I wanted to mention is that when it came to Y Combinator, you guys were the first AI company coming out of Indonesia to join the program. What is your experience like in Y Combinator as that kind of company and what advice do you have for founders looking to join the program, especially from Indonesia? 

Rick: Joining Y-Combinator was a life-changing moment, but more importantly, when we joined Y Combinator, we always learned something very important every week. But the most important lesson for us is that it’s not about how advanced [our] AI technology is, but it’s about how your AI technology solves the problem, especially the most painful problem for customers. And it’s okay to not have a perfect solution as long as it solves the problem at the moment. And of course, we believe that we always need to iterate our product from time to time, so we can give better service to our customers.

“The most important lesson for us is that it’s not about how advanced [our] AI technology is, but it’s about how your AI technology solves the problem, especially the most painful problem for customers.”

Paulo: It was also through Y Combinator, as you mentioned earlier, that Insignia was able to meet you guys. So definitely a lot of great stuff came out of it. Continuing on that thread of artificial intelligence, what are your thoughts on AI talent in Asia, since you guys I’m pretty sure are building your technical capabilities as well and your tech team. What are your thoughts on AI in Asia and Southeast Asia and what has been your approach to bring in AI talent in Verihubs?

Rick: When we talk about AI, I always consult with Williem because he took his PhD in computer vision, and he’s an AI guy. And we believe that, even though AI currently in Asia is rising, the AI talent in Indonesia, I could say, is still insufficient. It is pretty challenging to attract high-quality talent. So our approach is to nurture the talent by ourselves. Fortunately Williem is an experienced educator and researcher, so he knows really well how to nurture [talent].

“Even though AI currently in Asia is rising, the AI talent in Indonesia, I could say, is still insufficient. It is pretty challenging to attract high-quality talent. So our approach is to nurture the talent by ourselves.”

Paulo: It’s really great that Williem’s onboard and actually training a new generation of AI talent in Indonesia. And speaking about new generations of talent and new generations of companies, you mentioned earlier that in SaaS and a lot of these fintech enablers, and open banking [are] still pretty early in Indonesia. What do you think are some of the biggest gaps in these spaces that startups like yourself still need to fill in, in Indonesia?

Rick: I believe that open banking is growing obviously, but, I can say that it’s still early, because the banks are not ready yet to open their API. And this is the first one. The second one is, we talk to our customers. So whenever we talk to our users, we ask, “Hey, if a fintech app asks for your user and password for your banking account, would you fill it in?”

I could say that most of them are reluctant to fill in their username and password. And this is why we built our verification [solution] at first. Because every single time they’re going to jump into their bank account, we could verify them and make them feel secure.

So every single time fintech companies will access their financial accounts, we can offer them much more value [through] verification because it’s going to help their users to connect their financial accounts in their fintech apps.

“…every single time fintech companies will access their [customers’] financial accounts, we can offer them much more value [through] verification because it’s going to help their users to connect their financial accounts in their fintech apps.”

Paulo: I think it really goes back to trust, creating that trust with the institutions that you work with. One thing I was also curious about is that having worked in various industries, you’ve told us the origin story of how you started Verihubs, but how has your background in those other industries and building those other businesses influenced the way that you lead Verihubs as CEO?

Rick: Despite [having been in] various industries, I believe my experience is heavily focused on B2B in the past nine to ten years. I believe leaders should be able to develop people and help others to reach their full potential. And the way to do that is to have a deep understanding about their team. And working [in] various industries obviously gave me more perspective on dealing with different types of people and have a deeper understanding [of] how to manage people.

“…working [in] various industries obviously gave me more perspective on dealing with different types of people and have a deeper understanding [of] how to manage people.”

Paulo: It’s really interesting how you’ve come through these different industries, but at the same time, built your acumen in terms of building B2B relationships and partnerships, which, as you’ve mentioned earlier, is really crucial to how Verihubs has grown so far.

I wanted to ask how do you see the future of FinTech in Indonesia, especially with B2B FinTech and open banking and where will Verihubs be in the next five years in that context?

Rick: I would say that FinTech will grow faster in Southeast Asia, because COVID basically is forcing us to go online. There will be a lot of unprecedented opportunities, especially with fintech. So everyone has to be digitalized; payment has to be digitalized, etc. But we realized unprecedented opportunities also mean there will be unprecedented risk, which is why we started to build our verification solutions. Because we believe it is one of the most important infrastructure layers for most companies, especially to prevent risk. Verification is just the tip of the iceberg in our pipeline. In the next five years, obviously we want to be the number one infrastructure layer for fintech companies in Southeast Asia.

“…unprecedented opportunities also mean there will be unprecedented risk, which is why we started to build our verification solutions…”

Paulo: Can you describe to us how that trajectory will look like from verification, moving forward in the next five years. What other layers do you think are important fintechs to have in terms of the infrastructure, as you mentioned? 

Rick: First one would be the verification. The second one would be the open banking solutions. So open banking is quite broad. It can be used for many use cases, like to streamline the loan process and many others, and the third one we believe that it’s [about] connecting the data.

We’re doing verification. We’re doing open banking. Obviously we are [also] getting a lot of data and building and connecting the data [to] build products that can be beneficial or FinTech is what we’re looking for. One of them is basically credit scoring.

“…we are [also] getting a lot of data and building and connecting the data [to] build products that can be beneficial or FinTech is what we’re looking for.”

Paulo: Credit scoring, or anything that, as you said earlier, I think it’s really about risk management. So anything that helps financial institutions or even fintechs manage risk when they release new products or release new solutions to their customer base. 

So I think it’s definitely going to be an exciting next few years, not just for Verihubs, but also for Indonesia. I mean, you guys are already working with Payfazz. How is that going so far? 

Rick: Working with them is very exciting. There’s a lot of use cases; they focus on the unbanked people in Indonesia. So we’ve got a lot of insights from them. And then obviously those insights [enable] us [to] think more about the unbanked people as well. So it’s not all going to be open banking solutions but also about open finance, so the bank with all the unbanked accounts [as well].

“So it’s not all going to be open banking solutions but also about open finance…”

Paulo: And right now the trajectory is definitely going towards finance, but do you see any other applications of the technology that you guys have at Verihubs? 

Rick: Currently we actually have a very high demand from the marketplace. They want to verify the users and merchants. And also some unique use cases with our existing clients for rental marketplace, hotel staff, workforce service platform, and digital agent applications. We believe that our verification solutions are applicable to many use cases because every platform, including mobile apps or websites will need reliable verification [technology]. 

“…some unique use cases with our existing clients for rental marketplace, hotel staff, workforce service platform, and digital agent applications.”

Rapid Fire Round

What are the top 3 skills a CEO should have? 

Rick: 

1. Communication: You have to communicate not only to your team but also to your customers, to investors as well, and many others. And once you open your mouth, actually you tell the world who you are. So we need to practice all the time. 
2. Growth mindset: There obviously will be so many bumpy roads and obstacles. But we need to frame those obstacles not as a problem, but as learning opportunities. 
3. Listening: Obviously the moment you stop listening, basically is the moment you stop learning.

What is the biggest misconception that people have about artificial intelligence?

Rick: This is interesting. I once heard someone saying that AI will take their job. And I know while AI tech is improving, AI will more likely assist you in repetitive tasks that actually a human cannot do these repetitive tasks at the same scale.

What is the biggest misconception that people have about Indonesia, specially the tech space and startups?

Rick: Most people will say in terms of education, [Indonesia] is not as good as studying abroad, But Indonesia education is improving and there are a lot of founders from Indonesian universities, not to mention Hendra and myself. We’re actually improving from the education [standpoint]. 

Any advice for early-stage tech founders raising their first round?

Rick: This is actually one of the mistakes that we made for the first time, and then we learned [from] it. It’s to have a deep understanding of your customers and your market, because we realized in the end, investors just want to get a better and clearer understanding of how your company is going to be big, and why your customer needs your product desperately.

We’ve all been students once (and always are arguably) — most memorable class you’ve been in?

Rick: It was quite a long time ago. The most memorable class is when I was in my high school in Jambi around 2009. I still remember that I had a class where the topic is very boring, something related to biology. I didn’t like the topic but surprisingly, this new teacher explained it in a very interesting way and I just paid full attention in that class. And I was curious [why], right. So I asked, how did you do that? I’m not sure if he took this quote out of nowhere, but this is the first time I heard it. He simply said to me that “great stories happen to those who can tell.” Again, I didn’t know where he got the quote, right? So at that moment, it opened my eyes, that I needed to practice my communication skills. I think it’s the biggest reason why I majored in marketing when I went into a university.

What do you do to de-stress? 

Rick: The quick answer is that I listen to Spotify all the time and I’ve been into painting lately. I don’t know why, but every time I paint, I feel really calm.