Market failure
By Dave Birch posted Sep 13 2010 at 11:25 PM[Dave Birch] I was in a meeting today discussing some ideas for introducing a sort of trust service, that could fit in a framework along the lines of NSTIC but as a commercial proposition. You know the general idea: a private-sector, for-profit issuer of trust identities. The customer and the segment aren't relevant (and I wouldn't tell anyway), but I wanted to reflect back something I was thinking about the market. The idea that I was involved in exploring assumes, as do many similar ideas, a "two-sided market".
In this market paradigm users and relying parties both interact with each other with the help of a platform. The platform (e.g. single players like Facebook/Google/ Paypal/etc or a network of cooperating parties) optimizes both the proposition towards users and the relying parties. The relying parties are business (including banks) and governments, all with clear business needs: relying parties achieve better e-services for their customers and lower cost of operation... If there is value, a market can come and the growth will come by itself when the trust is organized properly. It’s just a matter of getting the industry act together.
[From Innopay - Payment Consultants - home]
The problems that "e-identity" businesses might try and solve fall into the this two-sided (aka "chicken and egg") structure, and this has so far proved a barrier. This isn't because there aren't problems to solve: here's some examples of how straightforward the business problems are.
- I wanted a new credit card from a UK card issuer and I couldn't use my Barclays Bank "identity" to get it. Surely this should be one of the simplest problems to solve? I just called John Lewis to find out why a chip and PIN transaction in Waitrose had been declined (a problem with the network apparently) and it took me longer to "log in" than to deal with the issue: I had to punch in my card number, date of birth, last 4 digits of phone number and then when I got through to person I had to give my name and the first two letters of my secret word. Surely card number followed by CAP/DPA OTP is all that is required?
- I can't use my Barclays identity to log in to Barclaycard.
- The British government presumably trust Barclays, since they regulate them, but when I log on to sort out taxes or get my car tax I have to use completely different username/password combinations (ie, no security) instead of just linking my government "identities" to my Barclays identity for authentication purposes.
So despite having all of the technology already in place and deployed, there is no functioning two-sided market. I wonder if it's because it's just too complicated to either explain to senior management or make it accessible to the general public?