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The #1 Growth Opportunity for Background Screening Firms

number-one-growth-opportunity

You would be hard-pressed these days to find an employer that doesn’t conduct a criminal background check on new hires. Criminal background screening has become a rite of passage for most job applicants, as common and accepted as reference checks.

For consumer reporting agencies (CRAs) that provide background screening services, the ubiquity of pre-employment criminal background checks is both a blessing and a curse. On the one hand, as long as companies keep hiring, there will always be a demand for background screening.

On the other hand, while the demand for criminal background screening is high, so is the number of firms offering to provide background screening reports.

As courts and law enforcement agencies move toward fully digital and accessible records, barriers to entry in this industry are crumbling. According to a report from 2019, there were nearly 2,000 background screening firms in the U.S. market — a phenomenal rate of growth for an industry that barely existed 30 years ago.

What this means is commoditization. From an employer’s perspective, one criminal background report is as good as another; the only significant differentiator is price. To remain competitive, CRAs are forced to slice their margins thinner and thinner. Customer churn is commonplace.

Is there a path forward for CRAs looking to grow? In a recent article, we identified four potential new revenue streams for CRAs. The number-one opportunity: Continuous Criminal Monitoring.

What Is Continuous Criminal Monitoring?

Imagine you were in charge of hiring for a healthcare organization. Naturally, you would be very interested in the criminal backgrounds of the people you planned to hire. In industries such as healthcare, the penalty for employing someone with certain criminal convictions can be as much as $10,000 per person per day.

(Similarly, FDIC financial institutions face fines of up to $1 million per day for employing people with certain criminal records.)

But even if someone has a spotless criminal record at the time of their hiring, there’s no guarantee their record will remain spotless forever. Appriss Insights found in a massive 2015 study that 12% of the workforce is likely to be arrested over the next five years. A full 20% is likely to be arrested over the next seven years.

As a hiring manager in healthcare, this leaves you with two not-very-good options:

  1. Hope for the best and order a criminal background check only during the hiring process or just before a new hire starts work. This is the option 89% of employers choose, according to the Society for Human Resource Management (SHRM).
  2. Rescreen your employees intermittently. Typically, rescreening is triggered by a promotion or addition of new responsibilities. Months and years may pass between screenings, during which time, employees may be arrested, convicted, and even incarcerated without their employers’ knowledge.

Continuous Criminal Monitoring offers a third — and much less risky option — to employers. 

Continuous Criminal Monitoring is a post-hire technology for employers and CRAs that provides real-time alerts on criminal activity in a workforce population. Continuous Criminal Monitoring alerts employers to potential criminal activity in real-time, throughout the duration of employment, and without the need to filter out noise and constantly monitor reports.

How Continuous Criminal Monitoring Will Help Your Background Screening Firm Grow

Background screening has become a commodity with intense competition and minuscule margins. Continuous Criminal Monitoring, in contrast, is a relatively recent development. Only a handful of CRAs have access to the kind of real-time data needed to monitor employees throughout the employment cycle.

(Our Continuous Criminal Monitoring solution, for example, draws from a proprietary data feed covering 45 states and more than 2,800 incarceration facilities. Our feed never goes more than 15 minutes between data refreshes.)

The first CRAs to offer Continuous Criminal Monitoring will be able to do so at a premium. Continuous Criminal Monitoring will help your background screening firm:

  • Be a leader in a market segment that is expected to generate over $1 billion per year for the background screening industry. With the growth of the gig economy and the popularity of job-hopping among younger employees, companies are more vigilant than ever about protecting their worksites and their customers.
  • Expand your customer relationships by providing a valuable service that goes beyond HR to departments such as compliance, legal, and risk management. Continuous Criminal Monitoring positions your company as a critical partner throughout the entire employment cycle.
  • Create reliable subscription revenue while your competitors squabble for a shrinking share of one-time-only fees.

The future is promising for background screening firms willing to seize cutting-edge opportunities like Continuous Criminal Monitoring. Learn more about how Continuous Criminal Monitoring can help take your CRA to the next level in our free ebook, “Close More, Churn Less, and Create Subscription Revenue Through Continuous Criminal Monitoring.”

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