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Banking on SMS to drive customer engagement

August 1, 2016

Jeff Bak   

Vice President of Mobility Product Management for Tata Communications.

Mobile technologies are transforming how businesses across multiple industries communicate and interact with consumers. As around half of the world’s population has a mobile subscription — an increase from just one in five 10 years ago – the opportunities for businesses are immense. Today’s mobile consumers use smartphones to shop for virtually every kind of product and service comparing prices and reviews, checking product information and placing orders.

One industry in which mobile technology has sparked major change is retail banking. Mobile banking applications have changed the way people manage their accounts, check their balance and pay for goods. But, perhaps surprisingly, despite many banks investing heavily in the development of innovative, feature-rich mobile apps – the most effective way to engage with retail bankers is SMS banking –  application-to-person (A2P) SMS. Or in plain English: text messages.

Upd8s str8 2 ur phone

SMS banking is a value-add service for mobile banking customers. Banks can send push and pull messages to their customers: push messages advertising new savings opportunities and balance alerts, and pull messages that respond to requests for information or to perform a transaction.

While traditional media — TV, radio and print — broadcasts the same message to a mass audience, A2P messaging gives businesses the power to precisely target messages. Additionally, the open rate of SMS is 98% compared with 22% for emails, and nearly 66% of consumers subscribed to mobile marketing say they’ve made a purchase as a result of receiving a highly relevant mobile message. The difference is not in the content, but in the medium itself.

Its proven effectiveness is why the use of messaging is increasing rapidly. The volume of messages is projected to reach 28.2 trillion worldwide by the end of 2017 — nearly double from 14.7 trillion in 2012 – and a recent study by Juniper Research forecasts that A2P messaging will surpass P2P (Person-to-Person) messaging by 2016.

“Just send me a text”

Understandably, scepticism exists around the security of SMS banking. SMS encryption is often easy to replicate, meaning consumers may receive text messages that claim to be from their bank requesting sensitive information. Most banks make a point of assuring customers that they will not request high-risk information or encourage high-value transactions via SMS. Furthermore, SMS gateway providers must ensure that they provide a high quality of service and security when it comes to SMS banking services.

Tata Communications, with the help of strategic partnerships, is working to ensure that this much-needed security and reliability is iron-clad. With A2P messaging firm Anam, we are building an end-to-end solution that helps mobile network operators globally to tackle A2P SMS spam, fraud and ‘grey route’ messaging traffic – where message aggregators take advantage of non-contracted routes to send large volumes of A2P SMS messages. A2P SMS presents an opportunity for mobile network operators to tap into a market that is estimated to reach almost $60 billion by 2018, but only if consumers can trust the mobile messages they receive.

While the humble SMS seems like yesterday’s news with technological advancement now enabling mobile contactless payments using smartphones and smartwatches, its success as a direct engagement medium means it remains a key part of any bank’s mobile strategy.

How do you see A2P messaging transforming how customers connect? Let us know in the comments below.