How Income Verification has evolved in the Gig Era
The global verification market, currently valued at $100 billion, is growing rapidly; mainly, the employment verification market for freelance and gig-market is growing around 12 percent annually, but it’s been slow to adapt to evolving market needs.
The income and employment verification market are due for disruption. Giving candidates ownership of their income and work verifications would make hiring and selling financial products more straightforward, faster, fairer, and more secure.
Verification of Income and Employment is everywhere, from hiring to banking to apartment rental applications. According to a leading job portal, 72% of companies background-check everyone they hire. A 2018 RBI report said that reporting of incorrect income impacts nearly four in ten loans that financial service providers disburse. There is no statistic for the number of people whose employment or income verification led to unfavorable results. Still, with occupational fraud cases causing a total loss of more than $6.3 billion in 2018 and identity theft reaching a record high of 15.4 million victims in 2019, it is safe to say that income and employment checks aren’t exactly going anywhere.
Current Status of Income and Employment Verification
Any HR, staffing, or bank underwriter can tell you that the current income verification process is complicated and cumbersome. The backend involves manual research and data mining of an assortment of institutions and organizations — from government agencies to private employment records, to professional associations, and so on. It is a process that invites human error and delayed results, often costing companies productivity and future employees income. New companies in this space are working to streamline this process through digital tools and interfaces. Still, they have yet to simplify the result, especially to meet the needs of a millennial workforce.
The Millennial Mindset
The millennial workforce and the gig economy go hand in hand across industries. Today, according to Forbes, millennials prefer freelance jobs because of flexibility and freedom of work. According to a report by ASSOCHAM, India will likely have 350 million gig jobs by 2025, presenting a huge opportunity for job seekers to capitalize and adapt to the changing work dynamics.
Freelancers/gig workers will need to complete an employment check for each of the various jobs they’re working or provide proof of income if they are looking to get any loan or a credit card. The redundancy of doing them all separately will be overwhelming.
Additionally, the repeated cost is unnecessary. The waste of time and resources for both verifier and employee will be tangible. Repeated checks within the current system also incur a heightened risk to the gig-worker giving out Personal Identifiable Information (PII) like Adhaar or PAN.
All of this: concerns around data privacy, personal security, the need for efficiency and speed, and maximization of productivity are leading us toward candidate-owned verification models. We believe that the next phase of the verification market will allow the employee package to include a verified identification record as a substitute for the traditional background check. It could exist alongside (or in place of) the candidate’s resume and references and allow them to control the level of information available to prospective employers or the financial institute.
This type of employee or worker-centric model can be used repeatedly at a much lower cost to everyone. This method is also more reliable because users will be incentivized to ensure they are aware that their data is correct and is easily shareable in a single click, the same way they are interested in keeping their resume up to date or sharing paper payslips. Taking the ownership of income and employment verifications out of the hands of HR teams or expensive vendors, and putting them into the hands of workers, speeds up the hiring and loan decision process, saves your team time, and benefits the bottom line. It also invites younger talent sensitive to data privacy concerns, skeptical of background checks, and likely multitasking on different projects.
User-owned verified profiles offer a 21st-century approach to an outdated and burdensome process. It provides a win-win for employees, employers, and any other businesses who can use income and employment verification by expediting the process, enabling productivity, and delivering accurate data faster and more securely.
At Tartan, we are synthesizing all the disparate data from millions of independent and contingent workers into a usable and logical format that can empower employers and provide new ways to serve and support this growing population. If you are interested in trying our platform, contact us here.