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Trust and Verify:
Identity Verification in the On-Demand Service Economy

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We are a country full of busy people on the move. We’re migrating in greater numbers to urban areas, and we also travel more for work and pleasure. For the most part, we plan our own travel and are always on the look out for ways to soften our landing in a new place or streamline our daily routine. Our smartphones are the new travel agent and concierge, helping us find the best sushi, the cheapest place to stay, and the easiest way to get around. And as they say, “there’s an app for that.” An exciting array of mobile app-based personal services has sprung up in urban centers. This trend is so new, we don’t even know what we want to call it yet. The Uber economy, the sharing economy, the on-demand economy—whatever we call it, it’s here and it’s disrupting business models all over the place. Everything from babysitters to doctor house calls to valet parking can be sourced online, with your smartphone and an app taking the place of all the “middlemen”—cashier, receptionist, service desk, broker, agent, concierge, etc.

These business models take advantage of underused resources like empty parking lots, passenger seats, vacation homes, extra bedrooms, and underemployed service workers. They enable individual entrepreneurship and return schedule control to part-time service workers, providing advertising, administration, and buying power efficiencies by aggregating those workers under one digital umbrella.

As with any emerging business model or technology that upends traditional structures, there are a lot of kinks to be worked out. Uber, the multi-billion dollar namesake of the trend, has come under fire for myriad offenses, including insufficient background checks that allowed felons to be accepted as drivers. Such serious concerns highlight the fact that much of the app-driven, on-demand, self-service economy runs on trust. When the middle layer of in-person customer service representatives, storefronts, offices, and other traditional infrastructure are removed, so are many of the built-in checks and balances around safety and accountability. Considering the sensitive and personal nature of many of these services—child and pet sitting, home and ride sharing, food preparation, and home healthcare, for example—identity verification becomes a key method for sustaining brand reputation and customer loyalty. Moreover, services that remove the “middlemen” from high dollar purchases like cars and real estate (e.g., Carvana, ListingDoor) will certainly require careful authentication and verification mechanisms. And because this new economy runs at the speed of swipe, verification has to be mobile and real-time. After all, you’re not going to fingerprint every driver, cook, and masseuse you hire in a one-time arrangement.

The convenience and creativity of these service delivery models is appealing in and of itself, but their popularity also reflects a growing preference for self-service options. According to Allied Market Research, the global self-service technology market will exceed $31 billion by 2020, representing an annual growth rate of almost 14 percent. North America has the highest adoption rate, accounting for 44 percent of global revenue from self-service technologies.

Self-service appeases consumer preferences for ease-of-use, flexibility, and running our lives through our smartphones. It’s good for business, too. Self-service kiosks and mobile apps expand service range, save staffing and training costs, increase customer throughput, and efficiently capture valuable data. Hotels and rental car agencies use kiosks to create better customer experience by streamlining check-in, eliminating lines of tired guests and freeing desk agents to focus on people instead of screens and keyboards. In a recent Software Advice study, 60% of respondents said they are more likely to choose a hotel that allows check-in and door access via smartphone.

Scanning and verifying identity cards (e.g., drivers’ licenses) can be done instantaneously at kiosks and via mobile devices. Recording and verifying a customer’s identity is not only required for billing and for fraud prevention, but also for compliance with ‘Know Your Customer’ (KYC), Red Flag, and Patriot Act regulations that apply to a growing cross-section of industries.

As the on-demand economy develops, mobile ID scanning and verification will without a doubt play a huge role in solving new problems related to financing, licensing, insurance, compliance, and the personal safety of both service worker and customer. Verification technologies will have to be mobile, fast, and easy to use. They also have to be smart and deeply connected, able to instantaneously populate back end data processes and connect seamlessly to third-party databases (DMV, credit bureaus, FBI, etc).

These intelligent technologies will enhance on-demand service relationships from start to finish. Registering for mobile service apps can still be a bit cumbersome, requiring the user to tap and type their way through sign-up and payment screens. Multiply this process by 20 or more separate apps, or imagine doing it in a rush with kids and luggage in tow, and it becomes a barrier to adoption. In the future, customer and service worker trust issues should be satisfied in similar fashion, with the customer able to scan and verify a service worker’s ID at the point of transaction. After all, an on-demand valet parking service is “magical” only if you get your car back at the end of the night.

It will be fascinating to see where these disruptive new business models take us, and we’re likely to witness many cautionary tales along the way. In a deeply connected, self-service economy full of astonishingly convenient options, reputation is a bottom line concern. Customers are increasingly security-minded, and especially in digital and urban environments, trust without verification is risky. For busy travelers and the urban digerati—and the businesses catering to their every need—verification-on-the-go offers vital protection and peace of mind.

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