Are You Ready for the Identity Economy?

With Facebook’s value being pegged around 100 billion dollars; it is easy to see why many are calling identity the new oil of the internet. And one company, UnboundID is looking to become the leader in this bold new frontier which they call the identity economy. By allowing companies to buy, sell, trade and leverage customer information the company allows their customers to combine this information with others in order to add value to themselves as well as end users.

An example of this concept in action is logging into a site using Twitter or Facebook – end-users hate to answer questions online and indeed many will abandon a site which makes queries which take their time. That’s why a site like Pinterest relies on Facebook to be an identity provider. Of course there are applications where Facebook’s login may not be secure enough such as let’s say banking. But still, a bank could let users check their balances via Facebook or even a Facebook login but require more rigorous authentication in order to make a transfer.

Telecom carriers are logical providers of identity and in fact BT has rolled out authentication as a service. The concept here is that a carrier knows who you are and also has your credit card on file or at least a billing arrangement. Moreover, consumers trust their carriers to be middlemen in transactions such as purchases (think ring tones, etc.) – so it makes sense to piggyback on such an ecosystem like app developers leverage their app store of choice.

And there could be even greater incentives for consumers to share their identity information beyond simplifying logins. For example, credit card fraud is a huge problem – ranging between $37B-$70B per year in the US alone. What if credit card companies gave consumers a better interest rate or other incentives to share their information and as a result were able to work with your telephone operator to ensure your cell phone was near your credit card when you were making a transaction? The savings would be massive and when you realize what a big deal this would be you understand that whole “new oil” reference above.

In a recent conversation with Steve Shoaff, CEO and Andy Land VP of Marketing of UnboundID I was told the company helps its customers acquire new users while also helping the users turn into dollars via monetization directly or through targeted ads and intelligence. Finally they help with customer retention and satisfaction.
Andy Land speaks with me at Cloud Expo 2011 New York – as you can see the business has evolved a great deal from last year

They advise a user-centric approach to managing your business. In other words whereas many companies have product silos of customers where information is isolated, you need to align your data and organization around the customer. I like to think of it as a normalized database where information is not duplicated – a customer number is constant and is used across your company’s various products and services.

The obvious question to me has to do with security – how do you ensure this information which is pay dirt for hackers around the world is guarded as well as the secret service guards the president – well at least in the US. I got the answer I was expecting – UnboundID data is encrypted end-to-end and unless a foreign government gets into it and can apply a supercomputer to break the encryption, the information is of little value if intercepted.

Moreover, the company says – and I agree, it is better to have identity information in the hands of a few highly secure companies than spreading it around to numerous vendors you do business with. Of course no system is infallible but many of us would feel safer buying from an established e-commerce vendor with a reputation to protect than a smaller company which may not have the resources to fend off attacks.

The company also restricts the rights of users – making sure the admins aren’t too powerful, allowing them to easily tap into the data themselves. Moreover, UnboundID helps its customers with the ever-changing patchwork of global privacy regulations.

They are looking to become the center of this identity brokering space and have been growing by leaps and bounds while also receiving recent funding. They have established a foothold in the carrier space and are evolving their product to serve the needs of tech and financial companies as well.

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