Government of the segments by the segments for the segments

 

by David Moss

November 2008

 

Last week, a new business opportunity was revealed to UK retailers – they could become the front office for the government:

ID cards are on time, and on budget
6 November 2008

The Home Secretary today announced significant progress in the national identity scheme [NIS], which will protect your identity in the most secure and convenient way.

...

Talks begin with businesses
The Home Secretary also revealed that the Identity and Passport Service (IPS) is to begin talking with businesses and other public organisations about how customers can join the scheme and give their biometrics using locations that are convenient to customers, like the high street.

As part of this work IPS is publishing a prospectus outlining its vision for the creation of this biometric enrolment market - estimated to be worth approximately £200m a year.

What are UK retailers to make of this offer?

Italy (population 58 million) has a national network of about 8,000 ID card registration centres. The Netherlands (17m) has or plans about 4,000 centres. The UK (61m) was recommended in one study to set up a network of about 2,000 centres, a curiously low number, but not as low as the number IPS came up with, 69.

If IPS aren’t going to set up a sensible channel for their product – ID cards – then they have to use someone else’s. Thus the Front Office Services Prospectus, “an opportunity to partner with one of the UK’s most trusted brands – The British Passport”:

The most likely way services will be provided, we believe, is via fixed facilities in retail outlets that meet all relevant standards ... Fixed facilities will ideally be located in areas with good transport links and existing customer footfall, such as high streets or large shopping centres providing easy and convenient access for customers.

Biometric equipment costs money to acquire and to maintain. It takes up space, people queuing to use it take up space, and space costs money. Staff have to be trained how to use the equipment, and staff cost money.

All that space and all those staff could be used to sell high margin goods. Why should retailers consider this IPS opportunity? They’re not in the biometrics registration business. They’re in the groceries business or the holidays business or whatever. What will biometrics registration do for their gross profit per square foot? IPS’s answer:

The organisations that we work with will be able to benefit from:
• a new revenue stream
• increased footfall
• access to new customer segments
• association with a respected and trusted brand
• goodwill generated by providing a valuable public service

Time to be sceptical. 28 risks for prospective suppliers to the NIS are well known. Here are some additional matters for Chief Executives to consider:

Brand
Mothercare, for example, have spent decades and a lot of money associating their name with healthy babies and happy young mothers. What would happen to their brand if they started recording people’s biometrics? People might associate Mothercare with the British passport. Or they might associate them with the government that lost the personal details of 25 million child benefit claimants.

Footfall and customer segments
• 3 government surveys* reveal a consistent message. When people are asked where they think is the right place to go to register their biometrics, if they have to, the majority identify government/official/institutional venues like police stations. Not retail outlets.

• Increased footfall could mean a lot of people with no natural interest in a retailer’s products walking into the shop because they have to, not because they want to.

After a while the retailer, too, may wish they were somewhere else.

Goodwill
IPS want biometrics to be used to determine whether people have the right to work in the UK. And whether they have the right to non-emergency state healthcare and to state education for their children. But the biometrics they are proposing to use are not up to the job. If someone registers for the NIS at, say, Travelex and then finds that as a result he can’t work or get medical treatment, and his children can’t be educated, “good will” will not be the name for their attitude to Travelex.

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There are a lot of people out there. 61 million of them. That could be a lot of revenue. But there are risks. If Labour lose power, the NIS will be cancelled. Why have BT withdrawn their name from the candidate list of suppliers to the NIS? And BAe Systems? And Accenture? If the government can’t set up its own front office, why should retailers be able to? Remember, the banks have already refused.

Which Chief Executive will take on these risks?

Maybe some will. But more likely, IPS will have to be serious and build its own distribution network. Like the Italians. And the Dutch.

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* UK Passport Service Biometrics Enrolment Trial, May 2005, p.120 onwards

COI/Identity & Passport Service, National Identity Scheme Tracking Research, January - February 2008 and May 2008


David Moss has spent six years campaigning against the Home Office's ID card scheme.

2008 Business Consultancy Services Ltd
on behalf of Dematerialised ID Ltd