Personal finances: it's one aspect of life we all want to know about and keep updated on, from understanding our bank balance to checking transactions and managing loan repayments. And when we need this crucial information, we need it pronto – there can't be any delays. Financial services, therefore, must place speedy customer communication as a top priority.
SMS is one of the fastest and most reliable channels for delivering critical information to customers. In this article, learn about the benefits and use cases for mobile SMS banking and whether it's secure enough for exchanging financial information.
What is SMS banking?
SMS is a form of mobile banking where customers can receive banking-related alerts instantly by text message. It's offered by almost all big banks worldwide today.
How does SMS banking work?
Customers first need to opt-in and give permission for financial notifications to be sent by text. Following that, they can receive banking-related information directly to their SMS inbox. The information is relayed over a cellular network via traditional SMS messaging. Text messages can be set up as either one-way or two-way, depending on whether you want customers to be able to respond (e.g. you'd need two-way messages for back-and-forth queries).
How financial institutions use SMS banking
SMS is frequently used as a means of communication in the financial sector. Here are some of the primary use cases for SMS banking:
Sending one-time passwords (OTPs) for secure login – the customer begins to log into their bank account online with their username and password but must also enter a unique code sent by text for two-factor authentication.
Account balance updates – customers can request alerts when their account balance reaches a specified minimum. Some banks set up short code numbers and keywords that customers can use to text a request, e.g. they might text the word 'BAL' to the number 12345 to get a quick balance enquiry.
Real-time transaction alerts – for cash withdrawals, large financial transactions, online funds transfers, bill payments, cheque clearances, etc.
Recent account activity – where customers want to check their last few transactions.
Failed transaction alerts – to notify customers when they don't have enough money in their account to fund a payment and to make them aware of any suspicious or fraudulent activities.
Conversations – as part of a customer service solution to help resolve enquiries and problems quickly. Conversational messaging can also be automated to answer common questions, such as where the customer's nearest ATM is located.
Financial statements – some banks provide this option through RCS (rich communication services) messaging.
Bank card cancellation – for customers wanting to immediately block their debit card if it's lost or stolen.
Payment due alerts – text message reminders to help customers keep on top of credit card or utility bill payments.
General banking notifications – like changes to bank charges, branch openings, closures or relocations, investment news and other announcements.
Benefits of mobile SMS banking
Using SMS to deliver banking-related messages can massively enhance the customer experience and streamline your communications strategy. Benefits include:
1. Speed
SMS is a super fast communication channel. Messages are instantly delivered to customers as long as they have a mobile phone signal. There are no unnecessary delays to transmission, like having to wait for a WiFi connection.
Texts are ideal for time-sensitive information which requires instant feedback or action from the customer. An example is where customers need to enter an OTP to verify a payment instruction. OTPs are often valid for only a short period, usually 10 minutes after being sent. If the customer can't enter their OTP within this short timeframe, their online payment session will expire – so it's essential they receive their code instantly.
OTPs are one type of text message that can be automated, saving much time for your financial organisation, with unique codes triggered to be sent immediately after customers request them.
2. High deliverability
Texts are unlikely to be marked as spam or get lost unless the customer's mobile phone has been switched off or is unreachable after several attempts. That said, specific deliverability rates depend on which provider you choose. Here at Messente, for instance, we've recorded a near-perfect 98% deliverability rate for text messages sent via our SMS API.
3. High open rates
Gartner is just one source that's reported high open rates for SMS (a whopping 98%). That's the percentage of recipients who click open an SMS message after it's received. The response rate – where recipients reply to a text – is also reported to be high at 45%. These figures are significantly higher than comparative stats for many other channels.
Since financial information often needs to be urgently communicated, SMS gives you a high chance of customers actually reading the messages you send them. They're not likely to be accidentally missed or deliberately left unread.
4. Cost-effectiveness
It's relatively cheap for banks and other financial institutions to send SMS messages instead of making phone calls, and with the right SMS provider, it can be even cheaper than email.
It's also cost-effective for customers to reply to text messages from their bank. Texts are often included in mobile pricing plans, whereas calling a bank's helpline will cost money if it's a premium number. Texting is also hugely convenient for customers as they can avoid long wait times in phone call queues.
Is SMS secure enough as a banking communication channel?
Over the years, questions have been raised about whether SMS is secure enough to transmit private or sensitive information. Many people ask, in particular, whether SMS banking solutions are safe to use.
It's true that SMS faces certain security threats, such as SIM hijacking and SIM swap scams, where hackers persuade phone providers to move your phone number to their devices to gain access to your data. These are valid concerns, but it's important to know that all online and offline channels face security risks – there's no communication option that's 100% secure.
For example, banking documents sent in the post can easily get intercepted or lost, while internet banking apps could get hacked. Another common threat is the stealing of email login credentials which can enable fraudsters to hack into bank accounts. And, of course, banks and financial institutions are also susceptible to data breaches.
Getting started with SMS banking services
If you decide mobile banking messages are something you want to look into for your financial institution, you can get started quickly with Messente. We already work with several financial services clients, such as Bigbank, Collect Net and Monese, to deliver business-critical messages to their customers.
With Messente, you can send scheduled or automated text messages at pocket-friendly rates! Take the first step by signing up for a free account to see how our platform works.
Enhance customer communications with SMS
SMS can be used for sending account login OTPs, bank balance alerts, transfer funds requests, payment reminders, transaction notifications and more. It’s also a great option for marketing, to promote your latest financial products to customers.
Texts are fast, reliable and cost-effective – and best of all, they're highly visible. Most mobile phone users will open and read them, so they're perfect for communicating urgent information you don't want customers to miss.
