Last month, I contributed an article to The Paypers’ Voice of the Industry social data for identity in the digital marketplace.
The point that I really wanted to emphasise is that the only way to enable digital market opportunities is to create trust. This changing online market moves with innovation, speed and the ability to reach across borders – all at a level we have not seen before. As a result, there has been an increasingly common use of social data to provide trust.
2.7 Billion People Are Online
That’s a lot of people, almost unfathomable. Many are coming from emerging economies like the BRICs and the newly coined MINT countries (Mexico, Indonesia, Nigeria and Turkey). With experts having touted them to be the next economic giants, the question is how can we embrace these new markets whilst also managing the risks?
The most dependable solution is to create trust. But here is where it gets tricky. How do companies create such trust? The major culprit preventing growth in the digital market is fraud. Here is why social data comes in. So how can social data legitimately answer this problem and consequently create trust?
Traditional Identity Footprints are Limited
Currently, numerous companies use credit data to verify identity or identity documents. Whilst extremely valuable for identity, credit data is also limited to geographical regions and personal characteristics. So this kind of makes trust difficult too.
It also leaves organisations with gaps in their ability to manage risk and on-board new customers. To combat this problem, we have seen organisations move towards new sources of “big data” such as social data to validate identity attributes.
Particularly for those companies and organisations operating internationally, many use social data as an alternative to the traditional forms of identity footprint. Using social data has also helped such companies achieve liquidity. Early adopters of these new methods include Airbnb, eBay and Paypal.
The New World of Big Data
Social data statistics from across the globe certainly kickstarts some interesting conversations about this new big data (and its use). Did you know social networks in China account for 1/6 of their total online population? Similarly in Russia, the main social network covers over 100 million of the 118 million strong population. In the UK, social media accounts are owned by 90% of the 16 – 24 year old age bracket. The opportunity certainly awaits for those who take it.
Russia’s internet consumers. Image from digitaleastfactor.com
We have no time to lose
Companies like Trulioo, Trustev and Veridu are already taking advantage of the trust offered by social data. These companies are enabling accounts to be verified from real or fake, use visual knowledge-based authentication, and verification of other identity attributes contained within the social profile.
Looking to higher influencers, even the European Commission urge us to embrace the wave of globalisation in order to exploit the opportunities offered by the digital market. This is something they believe is yet to occur. Or at least not to its full potential.
What can merchants do?
As merchants, our goal is to facilitate the increase of cross border eCommerce, increasing GDP by creating greater digital access for all.
According to the Single Market Act II (2012), the internet economy already accounted for 21% of GDP growth in some key economies. In the same year, there was a gradual increase (24 % rising 5% from 2008) in the number of EU residents who made purchases over the internet from another Member State.
Forty percent of shoppers in the European Union now use the internet to buy goods and services. However, 35% of internet users are not buying online because they have concerns about payment and delivery. Using the new big data and social data can help to close this gap.
As consumer confidence grows in online shopping and regulation changes to enable trade, European cross-border transactions could account for at least 20% of all eCommerce within the next five years. If European cross-border commerce could increase to 20%, it is estimated it would contribute a 4% growth in GDP across the whole of Europe.
With regulators and researchers like Open Identity Exchange mulling over how these new methods fit with more traditional methods, I believe that whilst still in its infancy social data, other “big data” like it, and future innovations in this area, have the potential to take us into a new world of identity services and trusted transactions in the future.