Business

Why the Sharing Economy Needs Trust On Demand

This column is authored by Ajay Trehan, Founder, Authbridge

sharing economyUber and Airbnb, two companies that didn’t even exist ten years ago, have revolutionized the way we travel these days. They are also the leading lights of the sharing or ‘on-demand’ economy, one that counts millions of consumers around the world today. More than 4.8 billion dollars1 have been invested in the on-demand industry and well, experts say that this is not a fizz or trend anymore. According to Investopedia2, the Bank of America Merrill Lynch expects the sharing economy to reach between $250 billion to $2 trillion value. People now, more than ever, have started believing in the idea of collaborative consumption. Whether it is on-demand food or furniture, the world has started to revolve around the sharing economy.

However, of late, sharing economy startups have found themselves afflicted by a regular stream of horror stories.3 Instances of rape cases or the curious case of squatter in 2015 have made many a customers question trust in the services offered by these companies. These incidents also reveal the true nature of trust-deficit in the business model, where these companies cannot exercise full and direct control over a customer’s experience – cab aggregators do not employ any of their drivers and Airbnb does not own any of the accommodation it offers. The checks and safeguards designed to circumvent these important constraints can easily fail – the Airbnb squatter who had turned out to be a professional scam artist was one of the site’s verified users, and was in all probability subjected to the company’s thorough security checks.

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Cutting-edge branding and advertising, favorable news stories and customer-friendly nature of their services cannot hide the growing trust deficit that today plagues the sharing economy’s startups. Moreover, the on-demand industry is endowed with new challenges. According to a UN report4, two-thirds of the world population will be urbanized by 2050, which would further increase the pressure on the sharing economy. Conventional trust building methods are not capable of working in the fast-paced, on-demand industry anymore. They are not only protracted and demand a lot of time, but also the costs involved are often way too high in relation to the expected efficiency and accuracy.

The traditional methods of background verification process are not only quite cumbersome but they also fail to establish trust in real-time. Last decade has witnessed a significant number of incidents in which many a startups failed to keep their promises of meticulous and authentic identity verification of drivers, delivery boys or hosts. Most of the notorious incidents that have happened in the sharing economy startups bring us closer to the fact that one of the elements, inevitable for building trust was ignored in the process of background checks. For any business to survive, building trust in its services is critical. From a business’ perspective, identity, profile and reputation are the three most important elements of trust. Identity involves validating who a person claims to be; profile involves the validation of the credentials of an individual and reputation involves character-verification of a person. The existing loopholes in the sharing economy can be plugged through a clear and authentic check of identity, profile and reputation i.e., through a provision of ‘Trust-On-Demand’.

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India has a huge addressable market for ‘Trust-On-Demand’ infrastructure.  Over the last couple of years, as the sharing economy has found its foothold in India, there has been a lot of scope to create the ‘Trust-On-Demand’ groundwork from scratch, which is capable of employing verification process of not only individuals but large eco-systems instantaneously.

Companies have started to maintain several online data repositories that are capable of validating the identities instantaneously through their tech-enabled system. These web-based repositories accumulate the data of employee from employers across industries, thereby saving a lot of time; to build an effective and accessible trust infrastructure in India.

Lately, the industry has also started to validate ‘Identity’ instantly with an in-house proprietary platform that has access to authentic data repositories from UIDAI, NSDL and the likes. This platform is connected to all levels of courts from across the country and can quickly throw up any instances of criminal incidents or negative records related to an individual, with an aim to build an effective and accessible trust infrastructure in the country.

Citations

http://kernelmag.dailydot.com/issue-sections/features-issue-sections/10958/the-hidden-cost-of-the-on-demand-economy/

http://www.investopedia.com/investing/what-are-biggest-stocks-sharing-economy/

https://www.theguardian.com/business/grogonomics/2016/apr/18/uber-airbnb-sharing-economy-tougher-rules-australia

http://www.un.org/en/development/desa/news/population/world-urbanization-prospects-2014.html


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