“Collaborative Consumption”, “The Sharing Economy” and “Peer-to-Peer” are relatively new terms; the premise in which their function lies is not. Since trade began, we have always tried to cut out the middleman.
The internet as an enabler
The internet has been the “collaborative consumption” enabler, allowing peers to reach each other faster and on a larger scale. As a result, this has disrupted traditional trade models. We now have the peer-to-peer model for almost everything; from those better-known brands such as AirbNb, Zipcar and Taskrabbit through to new entrants like Lending Works.
The earliest “collaborative” model we can probably all think of is eBay. Founded back in 1995, eBay changed the way that people bought and sold second hand goods both on and offline.
Fast forward almost 20 years to the present day and we can now cut out the middleman in hotel stays, transport, financial services, odd jobs, as well as being able to rent pretty much anything you want, directly from the owner.
Let’s not forget that perhaps the newest (and most controversial) collaborative or peer-to-peer models are emerging from the payments and banking industry where we are seeing disruption through crypto-currencies like Bitcoin.
Collaborative consumption valued at USD 3.5 billion
But with Forbes’ valuation of the market in 2013 at USD 3.5 billion, most people are trying to understand the enormous social, economic and environmental potential of collaborative consumption, on a global scale.
It’s certainly a concern for the traditional models. It was only last week that we saw taxi drivers in the UK take to the streets of London in protest of the launch of Uber in the UK. To be honest, I don’t think the person organising the protests had heard the phrase “no PR is bad PR” with Uber claiming (and enjoying) an 850% rise in the download of apps from the previous Wednesday.
Being a Londoner myself and having taken too many expensive taxi rides, I think the Uber app is a welcome addition. Whether certain sectors like it or not collaborative consumption is transforming business and consumerism.
These newer models can leave a void
However, there is one very valid point that the taxi drivers did make last week. Where there are essentially very few standards by which the market operates, how do the peers in the market trust each other? Market disruption happens more often than not before standards or regulation come into place. As we have seen with Bitcoin, this often leaves a void with people trying to work out how they can gain comfort and confidence in this new way of doing things.
In the example of a taxi ride app, how do I know the person picking me up is ok? How does he/she know I’m ok too? A traditional model would enforce the taxi driver to have a CRB (Criminal Records Bureau Check), which is both an identity and criminal history check.
For those companies already entering a regulated space, such as peer-to-peer lending within the financial services industry, the answer is a little easier because they can fall back on existing frameworks such as Know-Your-Customer checks and anti-money laundering.
Does this newly formed industry simply seek to take our insurance when the horse has bolted, after the event that something bad has happened? Every business is built on its reputation and the challenge for this sharing economy will be how they can manage this.
Disruptive methods of trust creation
I believe the key to unlocking this industry lies in trust creation. Traditional ways of creating trust have often been to complete some level of identity verification. The challenge is in the fact that these traditional methods are often not contextual to the transaction and therefore impair the user experience.
For example, how would you feel if when going to use a taxi ride app, you were required to type in your passport or ID card information before you could take a ride anywhere? This way of identity verification is usually expensive from a merchant perspective and intrusive from a consumer perspective. It tends to leave both sides exposed as the consumer’s personal data is left everywhere they transact.
So for a disruptive economy we need disruptive methods of trust creation. New models of creating online trust are emerging such as reputation-based personal clouds, personal data stores and user-centric identity.
User uptake will benefit everyone, worldwide
The good news is that through global industry collaboration many of these new models of identity already have trust frameworks with standards, scheme rules and governance in which they operate and interoperate.
In the long run these standards and frameworks should bring down the cost of creating an online identity, enabling digital identity to become ubiquitous across the internet whilst simultaneously creating and elevating trust.
The user uptake of these new identity models will enable these collaborative businesses to protect their reputations and allow their commercial model to fly.
About Emma Lindley
Emma Lindley has over 14 years’ experience working with technology led identity, compliance and fraud systems. She works with merchants, regulators and governments globally helping them build best practice for identity and risk.
Emma has an MBA from Manchester Business School.
COMPANY PROFILE
Innovate Identity is an independent consultancy providing advisory services focused on digital trust, data and technology innovation within the global online community. Our areas of expertise include Global Identity Proofing, “Midata”, Identity Verification, Age Verification, Know Your Customer, Anti Money Laundering, Data Privacy and Anti Fraud technologies. We improve our client’s global reach, competitive advantage, return on investment and enable sustainable business transformation through identity innovation.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now