I have a lot of thoughts on this industry-changing acquisition, and I imagine some of them will be the source of many debates in the months to come. In a nutshell Tim O’Reilly, the oracle of Silicon Valley, once said “The guy with the most data wins!” Equifax now has, by a huge margin, the most data. Their ability to directly compete is undeniable. It’s a matter of how and when they execute it. I think they will soon.
The concept of a background check has evolved over the past 20-25 years, no question. What was once a very manual, labor-intensive operation is now very much automated utilizing products and services we only dreamed of even 10 years ago…, While the industry has been commoditized, so have the individual services across the board. There is very little differentiation between screening companies other than customer service and some unique technology offerings. We can debate this all day long, but from the customers standpoint, it’s these things and price that drive decisions.
Now many of you have heard me say this in the past, Kevin Bachman (The CRA Doctor) and I even debated it on a recent webinar; most end users do not care about accuracy. I guesstimate that between 80-90% of end user volume wants to do a background check, and protect themselves from negligent hiring lawsuits simply by doing a good-enough background check. Equifax is now in an incredible position to deliver that fast and cheap. 1-3 years from now Equifax can deliver what looks like a credit report, but it’s an employment background check. The background check could become just another data point in the hiring process. Thinking about the accuracy of a credit report, I would argue that most things you see on one are outdated, inaccurate and filled with a myriad of different data points. Yet as inaccurate as it is, you won’t find a major lender in the world that doesn’t rely on that as a benchmark for extending credit to an individual. I think employers will have a much higher tolerance for missing records that were not found in exchange for clearing a large workforce quickly and cheaply. “Get me 30 new staff members that seem to have clear backgrounds, are eligible to work, pass our aptitude tests, and can hit the KPI’s laid out in the job description.” Says Future Employer.
Background screeners, you must find a way to compete with this: 170 Million criminal records, 220 Million credit files, 100% access to all sex offender data, employment records on more than 119 Million Americans, education records on 109 Million people and much more.
Equifax can now offer this all INSTANTLY: historical county criminal data, access to current county criminal data, national criminal files, arrest and conviction monitoring, medical exclusion searches, credit data, civil data, more than HALF of all the historical employment information, and now education data via a new partnership. I see them buying a MVR provider like SAMBA Safety or creating a partnership with another. All the other gaps in data can be fulfilled via API’s or other acquisitions. The only question after this is do they buy market share by acquiring First Advantage, HireRight, Sterling or Accurate OR do they go at it by themselves. This I don’t have the answer to, but knowing that these 4 firms account for more than 60% of all the volume in the industry it may be a no brainer for them. Oh yeah, they also have the money to do it.
Does this scare you? Honestly I think it should inspire you. This should inspire you to think differently, sell differently, compete differently and innovate differently. I may be wrong, but regardless of that, don’t bury your head in the sand. Perhaps the future of the industry looks like this [YOUR CRA Powered by Equifax. ]
Call, email, pull me aside at PBSA or message me if you want help creating a critical path for the future of your business.
I’d love to hear your thoughts!!
Best,
Jason
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