User identity and what it means for businesses has dramatically changed over the last two decades of the Internet economy.
Web 1.0, or the Internet as it was in the mid 90s, had no concept of identity. Businesses only cared about visits to websites and often put a number of visits counter on them. The Internet in those nascent days was a repository of information that people could access digitally, and the web was monetised around access. In this era, purchases through platforms were negligible and marketplaces non-existent. The identity of any business’ customer was generic – most didn’t care who was visiting their website, as long as there were visits. The event itself was the identity – where are your visits coming from, and what are visitors doing?
Then came Web 2.0 and communication between people emerged over IP. It was in this period that marketplaces and platforms emerged – the concept of events or activity gave way to transactions. The moment transactions of user activity came into play, the need for an identity, as well as managing that identity (i.e., user bases) became critical. The direct result of this need was a proliferation of the kinds of digital identities that existed. Each user would have several identities that were transactional in nature – an identity for electronic correspondence, an identity for blogging, an identity for social networking, and so on. Many of these identity management systems are still in place. Verifying these identities was still not important since the monetization was around the transaction – a click-through or a purchase.
Over the past few years, Web 2.0 has given way to the Cloud economy, which I really see as Web 3.0. The enablement brought on by cloud-based infrastructure and service proliferation is the ubiquity of access. This access implies that there are no barriers to transaction, and managing users with access is business-critical. The challenge of managing users’ access is further complicated by the fact that many users now have multiple devices, fragmenting their access points. Also, as Web 3.0 becomes the norm at workplaces alongside personal devices and uses, identity itself has fragmented into multiple personas.
There are two challenges that become evident. First, users are tired of doing identity management themselves and most users are actually bad at it. There has been a consolidation therefore in forms of identity that are more easily manageable, such as Facebook, LinkedIn and Google profile-based authentications. The second, perhaps more important one, is that given that each user has several identities, what each user means to a business is now relational in nature.
Identity management based around emails or social profiles is great for convenience of consolidation, but it poses a direct challenge to businesses since the relational nature of their relationship with their customers is compromised by them not having control over their user base. Even customers who are okay with sharing their social profiles for the purpose of identification are often unhappy to share more information with businesses. This, for many businesses, limits their relationship with a user.
Maintaining a relationship with their customers in Web 3.0 puts businesses in a position to understand their customers better, and improves the value the customers derive through the business. However, each business needs to be careful about the relationships it creates with its users to both protect its own business, as well as protect their other customers. It is therefore very important for any business to have a set of users with which it can be comfortable with trusting. Having a verified user base is business-critical.
It is here that social profiles are particularly weaker since there is no barrier to entry, just as with email. Phone numbers however, don’t only form a very integral part of a user’s identity; they are also near ubiquitous, hard to fake, pre-verified to a certain extent and very hard to fake ownership of. This makes them an excellent means of establishing a reliable identity that a business can then create a relationship with.
Businesses are starting to have a sense of how important it is to adopt phone numbers as a measure of identity. However, their large scale adoption was limited until now, because ensuring a smooth flow of user phone number verification is not only hard to implement on a global basis, but done incorrectly it can lead to a loss in customer acquisition. It is towards solving this problem that Nexmo has developed a new API – Verify, which enables businesses of all scale from all sectors to move into the relational customer management era. Learn more about the solution here.
This post was written by Parth Awasthi