Whether you realize it or not, you’re participating in the sharing economy. Whether you're lending money to your friend, using P2P lenders for a business loan, renting an apartment on AirBnB, requesting a ride through Uber, or finding a dress on Rent The Runway, the sharing economy is in full-force. And, it’s going to continue to grow rapidly.
As someone deeply involved in the sharing economy, I’ve realized that ID verification is an important component in determining the success of businesses participating in the sharing economy.
The importance of ID verification
“Sharing saves people time, money and aggravation. But what really greases the wheels of this fast-growing economy is trust; it’s what allows someone to take a ride from a stranger or rent a room in a house from someone they’ve never met,” Trulioo founder and CEO Stephen Ufford wrote in Forbes.
That’s why back in April 2013, AirBnb “added identity verification to its platform, adding more transparency and reducing the fear and friction that can occur when strangers do business.” Ufford adds, “In a peer-to-peer marketplace, verifying user identity increases trust, and from there users begins to build their online reputations.”
In a world where 75% of purchasing decisions are influenced by peers, it’s easy to understand why building trust is so important. We trust the reviews left on AirBnb and Uber. We refer our friends and family to companies that we enjoy. The only way this type of economy will work is by building trust. We need real reviews and transparency from actual people and companies. And, it now works both ways as businesses can leave reviews for customers.
Ultimately, this transparency helps both businesses and customers decide who they want to conduct transactions with.
Companies that offer frictionless onboarding will succeed
Like banks, companies involved in the sharing economy can verify an ID with personally identifiable information that can be validated from reliable data sources, such as driver’s license, passport, utility bill, telecommunication, or credit bureau.
One of the important things I’ve learned while running my payments startup is that customers don’t want to jump through hoops or remember a ton of information to create a new account.
That’s why Venmo made its on-boarding process easier for it’s users. As noted in Fast Company, “iOS and Android users who download Venmo will be able to link it directly with their bank accounts, using the same username and password they use for online banking.” Venmo also will allow Apple users to sign in using Touch ID, Apple's iPhone fingerprint sensor. As the article states, “The result is a more seamless on-boarding process that offers a glimpse of what app sign-ups will hopefully be more like in the future.” This is something that we're trying to do with our digital wallet as well.
Solutions like Trulioo’s GlobalGateway is currently providing real-time identity verification for over 4 billion people in more than 60 countries electronically to make onboarding less painlful. This platform can also mitigate risks by detecting fraud, while complying with regional Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations across borders.
Another option is using behavior characteristics like the way you hold your mobile device while you conduct business, whether you use your thumb or forefinger, or how lightly you touch the phone. These characteristics are unique, extremely difficult to duplicate, and is completely frictionless.
If you want to compete in the ever-growing sharing economy, you need to be able to authenticate the identity of your users as easily-as-possible.
Striking the right balance between risk mitigation and providing an improved user experience
Making sure that my customer’s personal and financial information is secure is a top priority at Due. However, so is making the user experience exceptional. At times, these two components conflict with each other. But, it is possible to accomplish without hampering the user experience?
Not at all.
Businesses that move money online can reduce fraudulent activity by tracking all transactions from the moment they are made until the money reaches the respective bank accounts by implementing a robust fraud monitoring and detection program. Adhering to PCI compliance and leveraging machine-learning technologies provide more effective security over time.
But, is it enough for a finance company to be just compliant and monitoring fraud? The answer is no.
If you’re still stuck on how to find the right balance between risk mitigation and user experience, here are a couple of pointers to keep in mind;
- Be transparent. Share reviews, and if there is a security breach, be upfront about it, quickly.
- Provide outstanding customer service.
- Start working with a RegTech firm (like Trulioo) so that you can become aware of new regulations and understand risks.
- Be optimized for mobile users. You can start by having a responsive site.
- Make on-boarding as quick and painless as possible, while also verifying the identity of your users. Biometrics and behavior characteristics can assist with this task.
Here's to taking our ID verification to the next level.