Category Archives: Financial Technology

August 5, 2016

Owning a home requires Top Ramen and a budget

By ericdunstan

Eric DunstanOver the past few months I’ve been working with a first time homebuyer who is searching for a single-family home in the heart of the Silicon Valley. Yikes, I had to help him overcome the sticker shock of San Francisco Bay Area real estate prices in comparison to prices in his hometown in Alabama! What is most exciting about this buyer is that he clearly sees the value of owning his own home and put a financial plan together to make it happen. He is currently renting an apartment at a rate equal to the monthly mortgage payment he will pay. The big “#winning” for him are the tax benefits of owning a home and the option of controlling his own space. Apparently his next-door apartment neighbor has an affinity for pungent cuisine in the early morning. “There are certain smells that I just can’t deal with in the morning.” I totally get that.

This buyer is the quintessential engineer who thrives on process and data. The search process has been very methodical replete with weighted ranking system across buyer needs. I love it. So cool. I applaud the zeal he brings to the search and the questions he asks. “Can you help me understand the various expenses I should plan for after I buy my home?” Great question.

Getting your financial house in order to buy a home is a first critical step. Understanding the cash flow needed to own and maintain a home is the second. Saving to buy a home shows great financial discipline. Owning a home requires a commitment to maintaining the discipline.

I helped my buyer understand the financial requirements by helping him build a monthly budget that breaks out costs by fixed home ownership costs and variable costs. I am defining fixed costs as expenses that are required to own a home. For example, costs include:

Mortgage Payment: Paid monthly.

Home Owner Association Dues (if applicable): Paid monthly.

Property Tax: Paid 2x a year, but good to budget for each month.

Property tax is an important cost to examine closely for it can be a substantial amount depending on the state you live in. For example, in the San Francisco Bay Area where the average home price is above $1M, the tax rate requires budgeting at least $1K a month to pay the annual amount. I know, YIKES! That’s more than a car payment. A mortgage lender and/or a financial advisor will help you understand the tax implications in your local area and how best to budget for them. For example, tax payments can be included in an impound account to be part of your monthly mortgage payment. Think through how best to budget for tax payments. Trust me, you don’t want to be surprised by the tax bill.

Home Insurance: Various payment schedules are available depending on provider, but good to budget monthly.

Other Fixed Costs: Costs include electricity/gas, water and garbage. Unfortunately there are no work arounds to having these services. Having your own landfill is not a good idea.

Once the fixed costs are defined, an understanding of the money available for the variable costs, or everything else, will become clear. I know…not much is left of your monthly paycheck!!! Now it’s time to prioritize and budget for what variable costs are important and not important including…

Medical/Dental Insurance: What are the best and lowest cost plans available to you? Does your employer provide or do you need to pay for some or all of these policies yourself?

Transportation:  Car payments, car insurance, gas, etc. What’s the cheapest way to get to work? Maybe walk more?

Food: Do you want to eat? If so, do you want to shop at a grocery store or grow your own? J He he. Remember eating Top Ramen in college? Top Ramen is a food staple for homeowners too!

Services: Netflix, cell phone, cable, Internet, dry cleaning, home cleaning, etc. Maybe it’s no longer a “want to come over for a Netflix and chill?” and now a “want to just come over?”

Entertainment: Going out to eat, movies, concerts. I had to cut my Entertainment budget BIG TIME once I bought my first home. Free concerts in the park always work for a date night.

Vacation: Do you take an annual trip home or go on a vacation? Maybe take the train home instead of fly? Maybe it’s Europe in hostels or cashing in the hotel rewards points to save on hotels?

I know, I know. This gets a little overwhelming. However, it’s SUPER IMPORTANT that these costs are identified and a budget is built. Understanding the monthly finances gives you power to control what to spend and not spend on. Knowledge is power. Unfortunately, I know people who own homes who don’t know what their monthly mortgage payment is. They set it up once on automatic bill pay and forget. HOW SCARY IS THAT? The big consumer learning from the mortgage crisis in 2008 is don’t buy a home that you can’t afford…no matter how affordable it seems on paper! If budgeting gets tedious, always keep your mind on why you are being so budget conscious. YOU OWN YOUR OWN HOME. That’s cool.

My goal is to share with others the great opportunities, benefits and risks of home ownership to empower them to make their own decisions for what works best.

Please feel free to Tweet me with questions about this post @ericdunstan .

Leave a comment   |  tags: , , , , , , | posted in Financial Technology, Millennial Talk, Real Estate, Real Estate Technology

June 29, 2016

Owning your own home is totally doable

By ericdunstan

TIMG_5496he thought of owning a home never crossed my mind until my early thirties. I remember a myriad of limiting thoughts crossing my mind including, “there is NO WAY I can afford a home,” or “I don’t have the time or the money to maintain a home” or “owning a home is something you do when you settle down…and renting is still cheaper.” Looking back on those thoughts I can’t help but laugh. Yes, those thoughts are all legit, but SO NOT true.

I was 31 when I seriously considered buying my first home. Up until that time I did what all of my other friends did…rent an apartment with roommates. At that time of my life, I was in my last quarter of my MBA program at Santa Clara University. I was going to school part time and working full time as to not take on giant school debt. “Who has the time or money to own a home? All I do is work and go to school at night,” I remember thinking.

A roommate, Greg, told me one night that he planned to buy a house and asked if I would be open to renting a room from him once he found a home. Hmmm….clever. Seeing him go through the home buying process opened my eyes to how that “trick” is done. Greg found a home after a few months search and I rented a room from him at a price equal to what I was paying for the apartment…and he got all the financial benefits. I quickly realized if Greg could do it, so can I.

The first step in buying a home is to get your financial house in order and determine when you are ready to buy a home. Yes, this can be tough given the lack of financial education people receive these days. Or, if you totally “Kanye” your finances buying too many Yeezy shirts. One of the best things I did was meet with a certified financial planner (CFP). Financial planners will help you obtain a clear snapshot of your current financial health and help you identify short-term and long-term goals…including buying a house. Planners will also provide you the tools to get there.

Ask a trusted friend or parent for a referral or there are options available online. Alexa von Tobel created LearnVest to help people get control of their money. Be financially fearless! The service and tools are all available online and certified financial planners are available to work with people one on one to achieve their dreams. I’ve met Alexa several times during my time with a financial technology startup. She is really great and has a passion to help others. Believe me, once you understand your financial strength, the path to affording a home becomes clear. I think many of you will find the path a lot less difficult than you think. I know I did.

A second step in understanding the affordability of a home is the cost of ownership. This is a BIG factor I find many people don’t quite think through clearly. Getting your financial house in order to buy a home is focused mostly on getting approved for a loan to buy a house. This second step is focused on what’s needed to keep and maintain a home once you buy it. So beyond the monthly mortgage payment, homeowners must consider costs of home insurance, taxes, utilities, homeowners association dues (if applicable) and more. These home ownership costs are in addition to the typical living expenses we all have including cable, phone, Internet site subscriptions, going out, etc.

So how is this done? Build a budget! Building a budget helps identify and prioritize monthly expenses within the context of your financial priority…in this case, home ownership. Yikes, many people quickly realize the need to say “no!” to a Tuesday trivia night at a local bar. I remember making the decision to NOT buy a BMW so I can afford a home. I will be writing more about budgeting in a future post…and will maybe throw in some trivia for those needing a fix.

A third step in understanding home affordability is changing the mindset that it’s what people do who want to settle down. Or that renting is still cheaper. I recently wrote a post for TV and radio talk show host, Chelsea Krost, about the benefits of buying versus renting so check that out as a resource.

The shift in mind-set is up to you and it’s hard to change people’s thinking without a catalyst. What shifted my mind into wanting to own a home was my room mate Greg. He bought a home and I rented a room from him. He used my rent money to pay down HIS mortgage and gave HIM great tax benefits. Greg got to experience the many financial benefits of owning a home…and I paid him to do it. That relationship changed my mindset. “I need to look into this!” I remember thinking.

Yes, home ownership is scary. The more you understand how it’s done and the many benefits received the less scary it is. I argue the more EXCITING it is. Home ownership is one of the many things that make America great. It’s your property. You can do what you want with it…within reason, of course. Do laundry at midnight. Fry fish and stink up the house. Netflix all night with the sound WAY up. If you do it in your own house, no one complains to the landlord. Better yet, NO BODY CARES! To me, that’s the true benefit of home ownership.

My goal is to share with others the great opportunities, benefits and risks of home ownership to empower them to make their own decisions for what works best.

Please feel free to Tweet me with questions about this post @ericdunstan.

Leave a comment   |  tags: , , , , , , , , , | posted in Financial Technology, Millennial, Real Estate

April 2, 2015

Mobile payments leader must provide value to consumers and banks

By ericdunstan

Screen Shot 2015-04-01 at 8.23.55 PMI remember being swept up in the early Foursquare craze. I raced around my little town checking in at my local Starbucks and favorite lunch spots to become The Mayor. I worked hard to keep it by doing drive by check ins as I was stuck at traffic lights. I know, I’m hyper competitive on certain things. Friends and I would compete on who could win the most badges too! I quickly earned the “jet setter” badge with frequent flights from SJC to SNA. Other friends won the “crunked” badge with late night shenanigans. Ahh to be a DINK again. All for what? For pure competition and Facebook feed bragging rights!

At a deeper level, I hoped that eventually I’d receive relevant geographically based alerts and rewards on my phone as I walked by a restaurant or store. Unfortunately, many of these rewards required an AMEX card subscription (creating a HUGE hurdle) or were nothing more than a free drink at check in. Big whoop. Sigh…it was very clear that geo based local marketing had not made the jump from great concepts to effective execution. However, this is all changing quickly with the launch of mobile payment solutions like Apple Pay and well designed retail loyalty mobile apps. Real customer value can be delivered at the right time. Banks can also make HUGE strides in building more meaningful customer relationships beyond checking accounts. FINALLY!!!!!

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My family and I are loyal Safeway customers for the majority of our food. The loyalty was solidified by Safeway launching a program that contained several weekly coupons and special offers based on shopping activity. A key component of the loyalty program is the Safeway mobile app which serves as the main touch point for how offers are communicated to consumers. Just recently, Safeway has pushed daily offers that appear on the front scream of my mobile device. Last week I made a special trip into Safeway’s deli to take advantage of a sandwich offer that was delivered to my phone that morning. Cool. There are several other retail apps, Starbucks for example, that deliver this customer value in a similar way. All of these apps have a way to go on using geo fencing technology to send me offers as I’m nearby or actually in store. Clearly this will be coming!

I mentioned in a previous post that I recently completed my first Apple Pay transaction at Sports Authority. It took me 6 months to actually do this after I loaded all of my cards. Honestly, I forgot to use Apple Pay and struggled with finding locations that use it. I opine in my last post that Apple Pay must do a lot more to remind users that “Apple Pay is Accepted Here” to drive adoption. Steps are being taken to do so for I saw an Apple Pay logo appear on a Walmart payment terminal as I purchased Easter cards.

So where do banks fit in creating greater customer value? Apple Pay requires that customers enter in debit cards and credit cards to make payment. Banks provide these cards. Banks frequently offer rewards programs and provide an incentive to shop a designated retail location. By not actively engaging in this payments ecosystem, banks are LOSING OUT BIG TIME on engaging with customers in a meaningful way with relevant, geo targeted offers.

Screen Shot 2015-03-27 at 3.15.25 PMFor example, let’s say a consumer is using a Wells Fargo bank card for Apple Pay. The consumer pays for items at Walmart that is a member of Well’s Earn More Mall program. The consumer is then informed that they receive double points and are reminded of other Earn More Mall retailers that may be geographically close by. How powerful is that for Wells to influence consumer purchase decision and drive usage of its cards?!

Unfortunately, this type of consumer influence will not be available to banks through Apple Pay. Apple has decided to not share consumer purchase data with card providers/banks. Clearly Apple is looking to own the consumer relationship AND control the valuable behavioral data. However, given the amount of marketing activity driven by banks, especially Wells Fargo, this seems a little one-sided of Apple…giving room for a competitive payment platform that helps consumers AND banks. Banks need to use their power to guide the creation of a payments ecosystem that builds deeper customer relationships.

As we all know, Android OS based Samsung announced the acquisition of LoopPay as their digital payments platform and competitive solution. It would not be surprising if the Android OS based Samsung phones enable banks to access purchasing data to banks and provide the channel to communicate special offers. For a fee, of course. Apple and Samsung need to be reminded of the power banks have in the transaction process. Banks provide the cards! Strangely, BANKS need to be reminded of the power THEY have in influencing the payment ecosystem. The larger banks like Bank of America and Wells Fargo, have enormous power. At the current moment, banks are willing to draft on the success of Apple Pay.  Wells Fargo even promotes their Apple Pay features in TV commercials.  Cleary banks see value in positioning themselves as “cutting edge.”  However, this affiliation is purely brand driven and not consumer value drive.   If a bank can be promised greater access to consumer data AND direct access to consumers through the device, banks will drive great consumer value while promoting new technology.  Because of the consumer value focus, banks will promote one payments solution over another…and mean it.

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March 12, 2015

“Apple Pay Accepted Here” alerts needed to drive adoption

By ericdunstan

Little Screen Shot 2015-03-12 at 11.21.46 AMLeague baseball season recently started which meant a trip to Sports Authority to purchase the relevant equipment. Fortunately, most of the items for t-ball are in the under $20 each category which makes the financial commitment more bearable. Like most dads, the start of Little League season brings back many fond baseball memories including a controversial meeting of a reigning Miss California. When I say “controversial” I mean it raised a few eyebrows as to why she attended, whom she knew on the team and the outfit she was wearing. It turns out she was dating our team’s assistant coach and used her fashion sense to keep his attention off the game played on the field. Dads enjoyed the game that much more. Moms were furious. Funny the things one remembers from more youthful days.

I was excited about the recent trip to Sports Authority for an entirely selfish reason. I was super stoked for a chance to FINALLY use Apple Pay! When I purchased my iPhone 6 Plus, the first thing I did was load on my bank’s ATM and credit cards. Why? Because I’m a FinTech guy…and this sort of thing gets me just as excited as a chance to meet Miss California. However, my Apple Pay excitement quickly slid down into a “now what?” I really struggled to find a place to use Apple Pay within my network of retailers that I frequent. Based on a recent BI Intelligence survey, just 8% of large US retailers currently accept Apple Pay. Keep in mind this stat focuses on LARGE US RETAILERS. I don’t shop a lot at large US retailers. I’m a keep it local type of guy…or at least keep it regional type of guy. When I did visit an Apple Pay enabled business like Toys R Us the opportunity to pay with my phone slipped by for I was not reminded that my chance arrived.

When it came time to bay for the baseball pants, socks and belt I whipped out my iPhone (that scene from “Blazing Saddles” comes to mind)

with great excitement and said, “OK, I want to use Apple Pay. How do I make this work?” My question should raise grave concerns from Apple and the retailer. However, what happened next should FREAK APPLE OUT. “Uhhhh,” began the clerk. “I don’t know…let me talk to my manager.” I stopped the clerk, saving him a trip to find the manager. I scanned my phone over the payment terminal, used my touch ID and the payment was made. “Oh, great…you figured it out,” the clerk said. So wrong.

This frustration is shared with many iPhone loving friends and FinTech colleagues. Clearly Apple Pay merchant adoption needs to increase and consumers need to be reminded to us it. Hopefully this is all changing with greater merchant adoption and the launch (FINALLY!) of the Apple Watch. The same BI Intelligence survey revealed that 56% of retailers say they will accept Apple Pay by 2018. But doing the quick math, this means that 44% still will not…and we all know these merchants will be the locally owned business.

Eric DunstanSo where does Apple Watch fit in driving Apple Pay adoption? Well for starters, the payment process gets much easier for the watch will be tethered to the iPhone loaded with the relevant cards. Users double click a button on the phone, place the watch near the payment terminal and payment is made. Skin sensor technology verifies the watch is on the verified user’s wrist to prevent unauthorized use. The watch really helps make Apply Pay easy to use. Ease of use means greater user adoption.

Informing users that Apple Pay is accepted is the remaining adoption hurdle to be solved. Frankly, I’m a little surprised this hurdle has not been addressed. It seems easy to solve. Functionally needs to be implemented to push alerts to Apple Watch users when they are near a payment terminal that accepts Apple Pay. Given how integrated watches are to routine interaction and reference, these alerts will be easily seen. Better yet, leveraging the iBeacon technology, merchants can send Apple Pay alerts to customers as soon as they walk in the door and before any purchases are made. Ease of payment may be enough of a factor to push the customer to a purchase decision. I am envisioning personal finance expert, Alexa von Tobel at Learn Vest cringing right now!!!

I’m excited that we are moving closer to not having to carry a bulky wallet anymore. The Apple Watch and alerts to use Apple Pay will train and shape the right habit to eventually push me to leave a wallet at home. Now, if I can only get my drivers license, loyalty cards AND annual passes on my phone I will be wallet-less!

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February 9, 2015

Protect company data by securing the personal cloud – a cautionary tale

By ericdunstan

Screen Shot 2015-02-08 at 8.53.17 PMI was part of the leadership team at a small technology company based in Europe and North America. As with many multi-national companies, there was friction around the strategic direction of the company and what verticals provided the greatest revenue opportunities. Unfortunately, the friction was never resolved and festered into a deep level of distrust between the US and European based business units. At times it got down right ugly.

The CEO convinced the Board to focus our technology in the financial services vertical where we had the strongest foothold and generated enough revenue to break even. Other members of the leadership team had very different points of view on where the product should evolve and several stealth projects started popping up. Yes, it is wise to focus on innovation and to make longer-term bets on where and how the market or technology may evolve. However, this can’t happen at the expense of making customers happy.

As a result, several “skunk works” projects were started, engineers ran amok and no one was in control of the code. Our CTO mentioned to me in passing that one project was being coded on a unsecured personal laptop…and the director of the team was not aware of it. When I heard that, I busted out the Rolaids. Oh boy. Clearly these “skunk” projects were stinking up our offices and needed to be reined in for corporate data and proprietary code was at risk.

An eagerly anticipated employee was hired and brought under management by the product organization. This employee was cherry picked from a competitor and had great knowledge of our type of technology and how to apply it to the financial technology vertical. He quickly got started creating innovative products and the team was excited to reap the benefits of a growing revenue side. Sounds great, right?! The company will own innovative products and the code to meet the lucrative financial technology vertical! WRONG!

Screen Shot 2015-02-08 at 8.42.21 PMThe leadership team learned that our innovative product dynamo was developing code on a work laptop, but was backing up to a personal cloud service. Our IT team had no policy in place to prevent or address this. Yikes. The company lost control of a proprietary asset. This employee was quickly reprimanded and asked to back up to a secured back up solution. Unfortunately, the relationship quickly soured and the decision was made to fire the employee. The employee was escorted out of the building, but a copy of the code was backed up to the personal cloud only hours before the termination. Clearly the employee saw this coming. Shit…the code was gone. The investment in the employee’s talents was wasted and company assets were outside of the company’s control.

Obviously once this incident happened, there was A LOT of finger pointing for why the right data policies and technologies were not in place to secure the personal cloud. This unfortunate tale is not uncommon and points to the many challenges company leaders, especially CIOs, face in a fast paced and innovative world. These many challenges are made even more complex with the adoption of cloud solutions and mobile devices in the business environment.

This personal yarn I’ve spun points to the importance of having CIOs and other IT leaders think through how to protect company asset. The first exercise is to implement a mobile enabled network access control (NAC) solution and policy. This technology will enable IT managers to define who and what devices have access to the corporate network. Speaking from my experience, a NAC solution and policy would have prevented employee personal laptops from accessing the secured network. IT would have easily identified the laptop’s posture and directed the employee to access a public Wi-Fi network. Given the wide adoption of mobile devices, it’s important to consider a NAC solution that is also mobile aware. Imagine the competitive implications if our code dynamo was able to access proprietary code through a powerful tablet he brought in the day we terminated his employment? By not controlling this device access, a company is leaving a back door open for data to escape.

A second exercise is to consider implementing a mobile security solution to secure the personal cloud. This is of paramount (I LOVE that word!) importance given how many productivity solutions are moving to the cloud. From my experience working for a multi-national company, cloud technology is very important to enable cross time-zone collaboration. However, it is mission critical that access to this cloud is controlled and managed. Cloud collaboration should only be occurring in secured environments where employees have the approved device posture and access credentials. If the right cloud solution is not in place, the company risks experiencing the code floating out the door accidentally or through deliberate nefarious employee activity.

Heed my words, young IT Jedi, or risk having your “Death Star” plans slip right through your fingers.*

*Star Wars fans, yes, I understand I’m mashing together a lot of Star Wars quotes with this sentence.

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November 17, 2014

EMM solutions required to address consumer demand for BYOD

By ericdunstan

Screen Shot 2014-11-13 at 8.39.41 PMA recent survey by MobileIron found that 80% of respondents are now using personal smartphones or tablets in the work place. Intuitively this makes a lot of sense. I work in the heart of the Silicon Valley and see a ton of badged employees checking their work email on their personal devices as they wait for the salads at Specialties. It’s really easy to tell who works in marketing or BD (iPhone user) and who works in IT or engineering (Android)….or who moved here from the EU (Microsoft) and is still waiting to upgrade their device.

I still marvel at why people want to bring their own device to work…and why companies allow it with very little consideration given to data security and device management. I remember how excited I was in the early 2000s to get my company issued mobile phone. “Wow, I can make business calls AND personal calls…and I don’t need to buy my own phone! Or pay for my plan! Killer.” Now that attitude has evolved to me wanting to access my work email on my own device…and wanting my company to pay for the service plan. After all, I am using my personal service plan to make work calls and check work email. Given this use case, why shouldn’t I want my company to buy the phone as well? Seems logical to me.

We use our laptops for business and personal use and we expect the company to buy those as part of the workplace. It’s RARE that someone wants to use their own laptop at work…and is even greeted with a degree of suspicion for what kind of secrets he or she wants to steal. For example, I had an employee who wanted to write code on his personal laptop. I was adamant that he writes code only on a company laptop out of fear that we’d lose control of the code…let alone having the code physically leave when/if he left the company or lost the laptop. Clearly this was during a time when consumer facing cloud storage solutions were not prevalent.

Screen Shot 2014-11-13 at 8.35.02 PMSo why are there varying employee expectations for mobile devices and laptops? I think the big difference lies within HOW the employee uses the mobile device and what technology is available on the handset. The handset is a camera, online radio, game console, and an access point to social media. All these use cases are driven by personal preference and interest. I can think of only three common use cases on the work front: check work email, make work calls on the road and dial into WebEx meetings while commuting. Conceptually, the mobile device represents an employee’s personal life…and the employee wants to connect their personal life to the company and all it’s proprietary information.

Let’s take a 15 second commercial break and ponder the significance of this and the implications it has for businesses.

OK…we’re back.

Controlling how much access these “personal life” devices have to company data is MISSION CRITICAL for protecting proprietary information and conforming to regulatory environments. Controlling access is also critical to protecting customer data and preventing breaches from unscrupulous employees. Unfortunately, I can speak to several occasions where I’ve witnessed colleagues opening up sensitive data on their phone…to then upload a file to a personal cloud service. Or instructed company visitors to log on to Wi-Fi…to unknowingly providing them access to the same network files that NDA’d employees have access to. Wow, this is scary when you think about it, isn’t it?

So what to do? No matter how small the company, business must embrace the fact that employees want to bring their own device to work…or better put, want to meld their personal life with their professional life. Internet technology managers must also make implementing an enterprise mobility management (EMM) solution a top priority to control who has access to what company data and through which access points.

There are several EMM solutions out there and it’s up to IT leadership to assess their solution needs and approach the right vendor. However, the lagging IT manager will rue the day that he/she pushes off implementing a solution “until next year.” The Internet and cloud connected nature of mobile devices is a ticking time bomb for important data to leave the company. It’s just a matter of time until the data escapes.

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September 22, 2014

Banks think Apple Pay is so money..and Apple totally knows it

By ericdunstan

WellsFargoApplePayI was glued to my computer on September 9th to watch the live stream of Apple’s BIG announcements. As a fin tech guy, I was particularly interested in what Apple would announce around mobile payments and their creation of a true mobile wallet. I had my fingers crossed that the stream would not freeze during that part!  They did not disappoint with the launch of Apple Pay and the announcement of the several major banks and retailers that are participating in the network. Apple did it right…again. These bank and retailer partnerships are key to quickly driving adoption. Consumers do not need to change how they pay for things, download any apps or struggle to find retailers who accept a certain form of payment. The only “hurdle” to participate in this payments network is for consumers to buy the iPhone 6.

The major banks started aggressively promoting their participation with Apple Pay the day after the big announcement. As a matter of fact, I received an email from Wells Fargo the following morning informing me of the many features and benefits of Apple Pay. I also noticed similar messaging on Wells Fargo’s ATMs that day as well. Wow, major banks see Apple Pay as a benefit for the current customer audience. It will be interesting to see if Wells Fargo, and the other major banks, lead with Apple Pay messaging as part of a customer acquisition or switch marketing program.

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The aggressive promotion by banks and retailers also helps Apple too. Keep in mind that while the iPhone 6 was available on Friday, Sept 19 with HUGE lines outside Apple stores, 75% of all handset users worldwide run the Android operating system. Hmmm….will the creation of a secure mobile wallet be enough to cause Android toting bank customers worldwide to switch to an iPhone? Or will Android users be patient to see what payment platform Samsung and Loopts come up with in the months to come? The intensity and reach of the awareness messaging just might cause some Android users to shift…assuming the iPhone 6 and Apple Pay are AMAZING. Time will tell.  The race to create the leading mobile wallet is ON.  It is so on.

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On a side note, it is truly amazing that Apple has such strong brand power that powerful, multi-billion dollar market cap financial institutions have taken notice and forged partnerships. Yes, Apple is THE LEADING worldwide brand.  These partnerships also echo a common theme within the financial technology industry; technology innovation will happen outside the financial institution. So true. Apple, you are so money.*

* I’ve sprinkled many “Easter Eggs” through out my posts to make reading more fun. These eggs include cultural references from the ‘80s, ‘90s and present day. If you get the reference, send me a tweet (@ericdunstan) with the answer.

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September 9, 2014

Apple Pay is great but I will still need to carry my wallet

By ericdunstan

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I have to admit that I was GLUED to my computer screen this morning during the Apple announcement. It still blows my mind that technology and bandwidth can’t deliver a smooth online feed to a live event. What was up with the live translation feeds being clearly audible to online viewers? ANNOYING! Fortunately the live stream technical team saw the multiple tweets and fixed the problem.   Unfortunately my viewing experience was very choppy and I got word of the announcement in real time more from Twitter.

As predicted, Apple entered BIG into payments with Apple Pay and into wearables too with Apple Watch too.  Apple’s recent announcements around partnerships with Visa, Amex, MasterCard etc were clear leading indicators of the entry into payments. I am very excited about Apple’s payment system and how it will help drive mass consumer adoption of a true mobile wallet. Yean! However, we are a ways away from Apple driving mass adoption of their wallet.

Screen Shot 2014-09-09 at 4.14.30 PMApple Pay will be available on the iPhone 6 and Apple Watch devices for it requires technology included only in this hardware. Yes, the iPhone 6 and Apple Watch will set sales records and proliferation will be fast across the globe. However, Apple Pay will not be available on legacy devices that will slow down the adoption rate. Additionally, Apple Pay will be limited to major retailers including Whole Foods, Macy’s and Toys R Us. Yes, over 200,000 stores will be accepting contactless payments through Apple Pay. I’m sure Apple is busy negotiating partnerships with several other major retailers as well and the footprint will grow even more.

Apple Pay will not be available to stores outside of this Apple negotiated big box retailer network. Consumers will not be able to truly leave their wallet at home. Apple’s partnership with IBM, though, will help Apple Pay expand its footprint to more business….but it will take time. As I mentioned in a previous post, the IBM partnership provides Apple access to many banks and financial institutions. These FIs have business banking customers and frequently provide merchants with POS payment systems. Now that the iPhone 6 includes the NFC chip, Apple will be hot to engage IBM on pushing the distribution of NFC enabled payment terminals to their banking customers. Only until NFC enabled payment terminals are more widely distributed will Apple gain ownership of the mobile wallet.

Clearly Apple has the hardware, technology and strategic partnerships to create the closed loop necessary to build a ubiquitous payment system. It’s a matter of time before this happens. However, NFC technology and devices are not Apple technology and can be easily licensed by competitors. Yes, Apple has leap fogged into the lead on building a mobile wallet, but the competition did see this coming. Apple must continue adding nationwide retailers to their network to enable consumers to use Apple Pay. The first mover advantage will be key and the network affects will take hold. If a competitor is to provide another offering for consumers and merchants, they better act FAST. Samsung and Loopt I’m sure are having lunch right now.

On a side note, I am amazed by the level of talent Apple employs for their advertising and marketing efforts; JT, Jimmie Fallon and U2. A list talent meets A + list company. I’m sure Apple pays a large portion of the marketing budget for these names. Or maybe it’s vice versa! Let this be a reminder of the high margins Apple receives on every product they sell. Impressive.

 

 

 

 

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September 8, 2014

Apple poised to deliver mobile payment system that just works

By ericdunstan

Screen Shot 2014-09-04 at 9.06.31 PMI started off my week with a trail run and then a quick stop off at a downtown locally owned coffee joint. The coffee shop is filled with laptop toting Silicon Valley types, local Lululemon wearing trail bunnies and a myriad of salon and spa employees on their way to bill $150 for a 1-hour deep tissue massage. I stood in line and waited to pay for my overpriced cup of coffee. I’m an old school guy and paid in cash while most people paid using their debit/credit card. It seems strange to me to pay for something so cheap with plastic…but, hey, I AM old school right? However, of the 10+ payment transactions I saw, no one paid with his or her phone using the NFC feature of the payment reader. Now don’t panic…you are not the only one who has not seen the NFC technology in action. Very few merchants even have a card reader that includes NFC technology. Forbes magazine ran a piece in mid 2013 that asked the question if NFC payments were dead. After all, the only major retailer to include NFC technology at checkout is Walmart…and adoption is LOW. However, this will most likely all begin to change on September 9.Screen Shot 2014-09-04 at 9.01.31 PM

Apple yet again has the media and its loyal customer base all in a flutter with what will be announced at their big event on September 9. Of course everyone is super excited about what’s happening with the iPhone 6 and the expected announcement of their first wearable device. There is also buzz around a key feature of the iPhone and wearable – will these devices enable customers to make payments for goods and services at retail? Will Apple finally break into the payments space and push mobile payments into the mainstream? This buzz, of course, is mostly coming from technology people, but will have massive implications for consumers and merchants now and in the future. A big shift is coming.

Reports from the Financial Times and tech bloggers indicate that the iPhone 6 will include a near field communication (NFC) chip to enable mobile payments. Adding fuel to the mobile payments speculation, CNET recently reported that Apple has forged partnerships with all the major credit card providers and payments networks including American Express, Visa and MasterCard. Wow, these relationships are great leading indicators that Apple is poised to bring a true mobile payments tool, or wallet, to the mainstream audience. Color me stoked.*

Looking at this a little more closely, however, the media focus is on the consumer side of Apple’s payments technology.   But wait…I thought NFC payments was dead with very few retail shops and big box stores offering this form of payment? Is Apple setting itself up for a black eye if their payments tool is not accepted at most locations? Did Apple only think of the consumer side of this equation and totally miss the merchant? Not at all. Apple thought through this quite nicely and I’m surprised there is not more technology media focus on this strategic partnership that ties it all together. Once again, Apple has proven the importance of controlling the complete ecosystem to create products that revolutionize consumer behavior. Here’s how.

Screen Shot 2014-09-04 at 8.55.09 PMApple announced a few months back a strategic alliance with Big Blue. I provided my point of view in an earlier post on how the Apple/IBM partnership will affect the banking industry. This partnership will also affect the technology these banks provide their business banking clients (merchants) at point of sale. For example, the infusing of Apple technology into the bank provided payment terminals will enable merchants to collect payments using NFC in addition to accepting card swipes. Apple strategically addressed the biggest roadblock in enabling adoption of mobile payments – how can merchants accept payment from a mobile device without undoing the POS payment system that is already in place.

The Apple/IBM relationship enables Apple to create the complete system required to connect consumers with merchants through a single payments technology. No other technology provider can do this. However, Samsung sees this happening and is quickly putting together their “me too” plan for the Android market. There are rumors flying around that Samsung is partnering with Loopt to connect consumers to merchants through one payments system as well.

There will be a lag between what Apple announces around payments and the launch of the complete ecosystem.   However, given the amount of iPhone users who already have their credit card on file in iTunes, the major credit card providers will be HOT to get the NFC card readers in place to enable card use in the online and offline world. We can expect a lot of pressure on the banks to get the NFC enabled payment terminals out to market quickly.

How we pay for things will be very different a year from now. Now if Apple can solve how to securely store my driver license, loyalty cards and annual memberships cards as well, I can finally stop carrying around my wallet!

* I’ve sprinkled many “Easter Eggs” through out my posts to make reading more fun. These eggs include cultural references from the ‘80s, ‘90s and present day. If you get the reference, send me a tweet (@ericdunstan) with the answer.

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August 19, 2014

Marketing Advice for Start-ups: Know your customer first

By ericdunstan

An e-commerce start-up asked for my thoughts on how the company should be thinking about marketing and what could be done with almost no marketing budget to drive acquisition and purchasing activity. I had to chuckle when I was asked for this input for yet again it demonstrates where in the priority list most business people perceive marketing to be….at the bottom. Most start-ups build a product, get it up and running and have a rough idea of how it will generate money. Unfortunately, most business leaders look to marketing as the tool to help grow the business…after the product is launched.

4PsGraphicI am using the term “marketing” very loosely here. Marketing is mostly understood as all the tangibles – online, website SEO, paid search, social media, etc. Little regard is given to the core marketing principals of the 4 Ps, for example. When most people hear the words “the 4Ps” they think about the OPP song from the mid 80s and NOT the critical marketing concepts of Product, Price, Place, Promotion. Clearly most people get stuck on the Promotion part….which is putting the cart before the horse.

I encourage all start-ups who approach me for marketing help to stop, take a deep breath and evaluate their business and product through the lens of the 4 Ps within the context of a few additional guiding principals; defining the target customer segment (s), understanding why the customer segment wants to buy the product and defining how the customer evaluates/buys the product.   Now to the start up leadership who feels time pressed, this sounds like a lot of work to do for marketing.

Working through this process and understanding the customer is CRITICAL to the success of the business. Leaders may find their product does not meet the right customer need or that a different customer segment should be targeted. This can be a tough nut to swallow for it means reworking the product that was just launched. Start up leadership must get these marketing concepts right before any marketing plans or programs can be developed and launched with a successful outcome.

One of my mentors and managers at eBay developed a structured document called a Unified Marketing Brief that helps guide business units and companies through this form of critical thinking. The document requires debate and thinkin around target audience (segmentation), marketing objectives, key success metrics, competitive industry analysis and market research. Once these elements are addressed, discussion is encouraged around brand and how to position and message the product and key benefits. I’ve guided business units in the e-commerce, identity protection and financial technology verticals through this process with very successful outcomes. Yes, it’s a lot of work and it takes time. However, once completed, business leaders now have a road map to guide marketing planning and tactical program development.

Buying Cycle GraphicI found another great example of a structured approach to startup marketing by April Dunford on Rocket Watcher . She provides a great approach to mapping marketing tactics to the buying process of each target segment.

April also takes the concept one step further by discussing the importance of testing, improving and understanding the root cause of the tactical failure. Too often companies don’t get the immediate tactical response rates desired and make the wrong assumptions as to why it happened. Unfortunately these wrong assumptions follow to the next tactical program…that has the same poor results. April makes a great point in encouraging marketers to understand the WHY to improve tactics. Check out April’s recent presentation to learn more at:

Now let’s assume that most of this strategic marketing work is in process and marketing tactics are launched. Is the marketer’s job done? Obviously no. The work has moved into a different phase of continuous improvement based on customer feedback. Start-ups must have a mechanism in place to capture and listen carefully to customer feedback. The mechanisms can be customer support teams accessible by email or online chat, twitter feeds or by call centers.

Listening to customer feedback is critical…but converting the feedback into actionable product improvements is another. This is a topic for another post! Does your start up have these mechanisms in place? I bet your competition does.

 

 

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