In July this year, the Financial Conduct Authority (FCA) announced it was exploring SMS as a way of alerting consumers to better interest rates for their savings accounts.
It is easy to see the logic behind this. When it comes to savings and interest rates, consumers can often feel bamboozled by the sheer number of different providers and offers. The result is that many savers in the UK aren’t getting the best deal.
The key to addressing a widespread problem like this is simplicity, and therefore SMS offers an ideal way to achieve it. In the UK, mobile phones are virtually ubiquitous and give the FCA a straightforward and universal platform to communicate with any consumer, whether they own a basic handset or the latest smartphone. A reliable and consistent channel is vital to tackle the lack of education around interest rates, and this is exactly what SMS can provide.
Although it’s a relatively recent move by the FCA, professional SMS systems already exist as an established communications channel in the financial services industry. Banks were among the pioneers of using SMS as a notification and engagement channel, having realised its potential early on for direct enterprise communications. SMS does not rely on data-driven access networks such as LTE or 3G, which helps to ensure the ubiquitous reach that text messaging can offer, and when it comes to bottom-line delivery success SMS has no equal.
Keeping customers happy
Initially, banks used SMS as a way of sending customers basic notifications. These simple alerts led to a better relationship between the customer and the bank, and meant that consumers felt far more in control of their own finances. This, in turn, led to greater customer satisfaction, as consumers felt more in touch with their bank of choice.
However, these large institutions are no longer untouchable goliaths and are instead facing increased competition from disruptive mobile money companies. With a proven track record of improving customer engagement, it makes sense that banks are making the most of SMS as a channel to increase brand loyalty.
Improving customer confidence
Alongside engaging with consumers, SMS is also being used increasingly by banks to bolster security and give their customers further peace of mind. For example, by sending SMS alerts when suspicious transactions take place on their accounts, consumers can instantly flag fraudulent activity before any damage is done.
Due to the sensitive nature of communication from financial institutions, it is vital that any SMS-based banking correspondence conforms to a number of stringent security standards. Over the years, dedicated mobile messaging providers have garnered the know-how to build messaging platforms specifically tailored to the market regulations and security needs of financial services providers. By using these industry specific solutions, banks can integrate an SMS system as a trusted way of reaching their customers.
Security provisions such as VPN tunneling, IPsec protocol, and data encryption are all essential components of a good solution. Furthermore, new messaging flows have been developed and successfully tested against standards such as PCI DSS, which offers a reliable indication of a system’s capacity to handle even the most sensitive financial information including credit card PINs and numbers. These developments have occurred in recent years as a result of investment and innovation in professional SMS platforms.
Where next for SMS?
With an ever increasing focus towards mobile and digital transformation on the one hand, and consumer protection and associated rights on the other, it’s easy to see why mobile messaging will become one of the priorities for banks and financial services providers in the next few years. With banks and other financial institutions all looking to better engage with their customers, they are exploring various communications channels and how to combine them in order to cater to consumer habits and preferences. However, there are strong reasons to believe that professional messaging systems will remain at the epicenter of this communications revolution, acting as the central and secure hub for growth.
With the mobile apps revolution in full swing, and SMS unrivalled in its ability to reach every consumer, it’s easy to see why multi-channel messaging and communications technologies are emerging as the next big loyalty-building opportunity for financial institutions.
The ability to send notifications and open conversations with consumers over mobile channels and devices they prefer, and at the time they choose, remains one of the key concerns to address, together with the associated issues of automation, triggers, and failover scenarios.
Silvio Kutic, founder and CEO, Infobip
Image Credit: Melina Sampaio Manfrinatti / Flickr