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Welcome to the Finhub Canadian Founder Podcast, where host Ibrahim Agiri sits down with VoPay founder and CEO Hamed Arbabi to explore VoPay’s impact across various industries, how they are leveraging AI and machine learning, and his thoughts on trends such as Open Banking, real-time payments, and the rise of Fintech-as-a-Service.
Headquartered in Vancouver, BC, VoPay was established to help businesses navigate the complexity of payments. VoPay operates under the principle that financial services should be easy, affordable, and accessible to all. VoPayy provides a secure data-driven API payment infrastructure and financial solutions to enterprises across North America.Â
At the heart of VoPay’s offering is a multitenancy architecture combined with a comprehensive payment engine, which provides businesses with Fintech-as-a-Service.
Ibrahim: What inspired you to start VoPay? How did your previous experiences shape the company's vision?
Hamed: I come from a telecom background, and I started a couple of other ventures prior to VoPay. My previous venture was focused on voice and IP aggregation on a global scale. We are operating across five continents, and the most challenging aspect of the operation for us was.
The money movement piece relates to how, as a business whose core expertise was offering telecom services, is now dealing with and learning about payment challenges and working out how we can efficiently move money between hundreds of customers and service providers. So, when I exited that venture, I committed to myself that I had to find a solution that could service businesses such as my previous venture and streamline the money movement operation.
Ibrahim: That sounds amazing. Six continents. That's, that's amazing. And can you share some of the biggest challenges you faced while building VoPay and how you overcame them?
Hamed: As you know, financial services are highly regulated, and that's one of the major challenges of understanding and navigating regulation and making sure you have a scalable framework and are complying with all the regulatory frameworks around your business activities.
I think the other challenge is also on the operational side; it comes down to financial risk. We service thousands of customers who manage various aspects of financial services and products that they have built using VoPay technology. It's important for us to implement all the required procedures to protect our customers from financial risk exposures, such as fraud, and other activities, such as money laundering. We have procedures that can help our customers offer services without being concerned about those issues.
Ibrahim: How does VoPay differentiate itself in the crowded FinTech space? Especially with its approach to payment processing and financial services.
Hamed: That is a great question. At VoPay, we don't really categorize ourselves as a payment company. We have elevated in this, in this space where we are more of a Fintech-as-a-Service platform now. So we offer infrastructure to other software applications that want to become a payment company or want to become a Fintech.
They leverage our technology stack by building various products, such as virtual wallets. Accounts-to-account payments are multi-tenancy environments that large organizations can leverage to service their subset of the entire operation. So, we are also trying to help other companies build payment services by leveraging our platform as a service.
Ibrahim: That's amazing. So, Infrastructure-as-a-Service is a good space to be in. Can you share a few impactful customer stories?
Hamed: I don't know if I have any specific brand name in mind that I can share, but maybe I can share about an impact we had across various industries. at VoPay, we have a few core verticals, that we have been expanding, and one of those is, for instance, lending. In the lending space, I think one of the challenges for lenders is how fast they can fund new loans for borrowers And how easily they can reconcile or track those transactions between them and the borrowers so they can extend additional loans as a result of our technology advancement and leveraging, Partnership with organizations that can offer real-time rails. We have managed to help lenders to provide loans in real-time, which has benefited consumers that are in need of immediate funds.
On the operational side, we have made it significantly easier for lenders to track and reconcile these funds, which improves their operation efficiency, as well as capital efficiency. Thank you. And we have done that across various other industries, in the gig working economy, gig workers that want to receive their money immediately after they complete their job, in insurance that is related to claim payments, how we have streamlined claim payments in various ways.
So, there are multiple areas that we have worked on to deliver significant impact.
Ibrahim: Thank you, Hamed. AI is the thing now; everybody's talking about it. And I'm sure you're looking at the trend and seeing where AI can be used in your services. I mean, I've heard of people trying to use it in loan origination, workflow and automation.
How is VoPay trying to leverage AI to improve a value proposition for customers?
Hamed: I think there is definitely a major hype around AI. Everyone is trying to apply some sort of AI to what they do, but the reality is AI is not everybody's kind of thing that they can apply. It's like blockchain in the past and everybody was trying to do blockchain, which was not really a suited solution to certain technologies.
We announced our AI lab about two or three weeks ago that we have unified our efforts toward bringing AI and machine learning to VoPay's core operation. We see that AI and financial services are kind of the best match made in heaven because what AI does is improve predictions and reduce the cost of prediction. So, how fast and how cheap you can make predictions based on the data. And as a financial service provider, that's what we do. We provide payments, transactions, and financial data. And, on the other end, there is compliance and risk.
So, we are applying various solutions to the back office operation and how they can streamline our compliance, underwriting, and transaction monitoring. We can also leverage certain language algorithms to help our customers predict the outcome of certain activities today and better service their customers in the future.
Ibrahim: Thank you, Hamed. Yeah, I read an HBR article recently, and I also believe in the AI trend, particularly the LLM, because, at this stage, it's not applicable across multiple functions. That I agree with very well.
We've also had Open Banking, right? So, looking at these trends combined with Open Banking, what do you see happening in the financial sector within the next five years?
Hamed: I personally think open banking is overstated across the board. We have seen aspects of Open Banking. What Open Banking does is basically streamline the data movement between a bank and a service provider or a consumer. And I mean, we haven't done a good job in Canada, so hopefully, in the near future, things are going to improve.
But when it comes to Open Banking, I think it can increase serviceability and how we can apply various use cases to leverage that information to offer better service to consumers or businesses or even help consumers or businesses understand their finances.
So that's my point of view on benefiting benefits of open banking, but when it comes to trends, there are various things, such as in the fintech space, real-time payments, RTR, and various other sublets of activities.
But what we see as a trend, and that's our core focus at Vopay, is many software applications servicing certain industries that also want to tap into the fintech industry. So, from my point of view, every software company is going to be a fintech company, irrespective of their industry.
We see healthcare management software and insurance management software. Given this trend, we are trying to mobilize our resources and enhance our technology stack so that we make it easy for these organizations to become fintech companies. Basically, we offer a turnkey solution that can help them transact, cover risk, do compliance, bill, and manage data.
There are so many components to being a fintech or financial service provider. It's not just about moving the money. It's about how you secure the data, how you comply with related regulatory frameworks, and so on.
Ibrahim: Thank you, Hamed. Yeah, I agree with that, like, Every company seems to be ending up in a fintech space, like almost every commerce company, one way or the other. I mean, in the past used to provide payment solutions to an e-commerce company, but now they are providing their credit cards, wallets, and so on.
And so now it just keeps expanding. Do you think this is just a phase? We recently heard Apple announce their partnership with Goldman Sachs, right? Personally, I don't know. I think it's a phase like everybody else trying to get into the space.
But in the long run, do you think this is something that we'll keep on seeing within the next, beyond the next five years?
Hamed: I think so and and and again, and you know, but with every new industry trend, there are always mistakes during the adaptation process because there are early adopters that take the risk to implement something new, and it blows up for various reasons or it just doesn't work. The reality is we are moving toward an era where everything needs to be integrated, so you were talking about super apps that will do everything in one application, and I think for many industries that are interacting with consumers is important to adopt more services and solutions to increase customer stickiness, revenue per user or revenue per client.
If there is a money movement or financial services relevance to what they do, it's a must-do thing. We see Starbucks' mobile app. You now see the data that they have. They are one of the largest deposit-taking institutions in the United States.
And now that success story is getting other organizations like Tim Hortons in Canada to adopt a similar strategy. And, we see Rogers of the word now has a Rogers bank, and telcos are doing that. In Africa, we have M PESA or other solutions that were done 10 years ago before anybody else was considering telcos becoming a bank or money movement services.
So, it's not a new trend, but it's a fast-growing trend. Yes.
Ibrahim: Yeah, I mean, I like the example that you, the M Pesa example, like even in Nigeria, MTN went into banking, money management, and it's just, I mean, it's pretty easy directs you don't really need to have an internet phone to use the services and it works. It's amazing.
So, let's take it back a bit. The financial climate isn't the best for raising capital. Can you walk us through how you've been able to raise capital over the years, the process, and all that?
Hamed: VoPay is bootstrapped. We haven't raised any outside capital, but we have seen the challenges. It's not that we didn't try at various stages, we have looked at options that could help us fund the organization through institutional investors such as VCs, et cetera.
But I think raising capital and who you raise from is, is really related to the founders' characters and the company itself and its growth path. There are various types of investors that you can interact from, you know, angel investors or friends and family angel investors, and then you get to institutional from seed round VCs all the way to private equities for growth or IPO, but I think my advice to anyone who wants to raise money, other than just looking at the founder, just look at the partner you are bringing on board.
You want to make sure if you are taking money from a VC, you have a good relationship with that partner that you are working with because they're gonna be with you on a long ride, and you want to make sure you are aligned on your long term goals, on the execution structure so you don't run into issues down the road because you were just were focused on getting the first check into the company without really considering who's gonna be working with you and supporting your company, and that's the reality of it.
As much as you want to be successful, your investors want you to be successful, so there might be times when you disagree because you are making the wrong decision. If that relationship exists between the founder and investor, you can overcome some of those challenges and disagreements during difficult times.
Ibrahim: Thank you. That's amazing. Bootstrapping is like getting funded by your customers, practically getting funded by your customers. So tell me. To you, what have been the pros and cons of bootstrapping?
I'm sure you're able to prioritize things the way you want to prioritize them without having external factors from your VCs and all that. So, what have been the pros and cons of this?
Hamed: I think it's, it really comes down to your beliefs about what you're up to or what you are building in terms of, and it's not about ownership that you want to give away a portion of your company. So it's, it's really about the vision and the mission you are into. For us, it is all about bringing the right partners at the right time.
We could have brain capital in the past, and we still have that option, but we are waiting for the right moment. We have some potential candidates that we are basically interested in partnering with in the near future.
Being a bootstrap company, there is a lot more on the founder's shoulders. It is basically you are on your own, and you have to make those decisions even though you have a supporting team, I have a great team of senior executives who are helping me with the right decisions, and we are charging forward every day and growing the organization but being bootstrap you need to manage the budget, you need to make sure every initiative has a defined ROI return of investments and that, or you have the right customers that can fund your growth.
Some startups bring in a large amount of investment money from their investors, and they try to grow the top line without focusing on the bottom line. There might be challenges that many companies are facing today where no money is coming in, but the expenses are there. It's very hard to sustain that model. For us, the focus was always on the bottom line. What can bring the dollar to the door to help us move to the next steps?
Ibrahim: That's amazing. And I think that's one of the problems a lot of organizations have. So yeah, that's amazing. Looking at your products, what's the process like for developing new features or services for VoPay?
How do you prioritize what to build next?
Hamed: We have, we have few strategies around our, I would say, product development and our R&D team. But I think the most significant aspect of our growth has been has been through listening to our customers. Your customers are your best product advisors and product developers because they are the ones who interact with your platform and can tell you what they do in their industry or across the board that can help them do what they need to do better rather than we predict how things gonna work out and build a hypothetical solution.
We have a customer product committee. We invite a few customers every quarter. We bring them in and listen to their feedback. We learn what they like about our platform, what they do not like about their platform, and what they wish we had. This helps us define what the next thing we need to do is and how that can contribute to our customer experience and our growth.
Ibrahim: Customer-focused, customer-oriented product development is definitely the best. So, what's next for VoPay? Are there any upcoming projects or expansions you are particularly excited about?
Hamed: We have been in the R& D phase for at least three and a half years since we started, and we had the initial pivot in 2018, but, but, but since the platform is stabilized and, we have built on all the components that can support our growth, our, our whole focus is on geographical expansion right now.
So, we officially live in the US and on the American continent. We are now going further down toward Mexico. We are Argentina, Brazil, Chile, and a few other countries in the Latin. And then we are also expanding our operation in Europe and expanding our coverage from a geographical standpoint.
And, and that's our core focus for the next two years.
Ibrahim: That's amazing. It looks like there's a lot of growth coming in. You must be looking forward to this expansion of plans. That's nice. Yeah. So, reflecting on your journey, what critical lessons have you learned about entrepreneurship, especially in the highly competitive fintech industry?
Hamed: Yeah. So, I think it's important that you understand the landscape you're operating. And, and, and, and in terms of differentiation, there is no uniqueness, in the word anymore. You cannot say I, I am, I have a service that nobody else has. But it's about, I think, focus and positioning.
If you have an area that you think your solution can do better than others, that's where your niche focus should be: your niche market. That's where you should penetrate and expand rather than try to do everything at the same time. So the way we see that we have, we have been successful in Certain ways of execution on how we deliver our solution to our target audience.
And we are continuing on, on scaling in that structure. And we are, educating ourselves about the market, but we don't follow competition. We have our own culture. We have our own way of execution. And that's how we're going to continue growing. And for entrepreneurs, my advice is.
Educate yourself, listen to your customers, and make sure you bring value to your target audience. If you do, that will eliminate many objections during the sales process. So focus on the value and hear your customers.\
Ibrahim: Thank you very much for joining us, Hamed. This has been really insightful. I'm sure our listeners will love your insights and all that you have to learn about VoPay.
Looking forward to the expansion plans and continuing to follow VoPay going forward.
Hamed: Of course. Thank you so much for having me. It was a pleasure to be here.
Ibrahim: Thank you for tuning into FinHub Podcast. Follow us on Instagram, Twitter, and LinkedIn for the latest updates and information on our episodes. Don't forget to subscribe to our channel on Spotify and Apple Podcasts. Until next time.
