Businesses in the financial sector require constant and consistent communication with their customers, be it for transactional, marketing, or debt collection purposes. Timeliness and reach are key. So utilizing a channel like SMS (sent through an SMS API) makes sense since it has a tremendous reach and a super high open rate.
Note: Wish to know more about messaging through APIs? Read our ultimate guide to SMS APIs!
Here are some of the most frequent use-cases for SMS in the financial sector.
Fraud prevention and 2-factor authentication
Two-factor authentication as a best practice means protecting against fraud, hacking, and data loss. Delivery of quickly expiring, one-time PIN codes confirms that the person having the passcode is the one attempting to access your service. This also enables the service provider to verify the person’s contact information for future communication such as marketing, debt collection or notifications.
2FA enables a second layer of security by ensuring that only the person with the right codes gets access to the account from another device, helping against account hijacking.
Here’s an example of typical messages of that type:
“Hello! Your security code is: XXXXX”
Transaction confirmations with PIN codes
When service users attempt to finish higher risk transaction (i.e. approving loan applications, transferring large sums of money or signing contracts) the system will send a one-time PIN code for confirmation. As this PIN code has a short expiry date, the transaction needs to be completed on time as well as only by the person having access to the phone used for message delivery.
Here’s how that would look like:
“Hello! Your verification code is: XXXXX”
Onboarding new users
When new users sign up for your service, the system can send a welcoming SMS message with the most relevant service information and contact details. This enables the user to have an immediate chance to communicate with the service provider, iron out any issues or answer the first questions that might come up, strengthening the relationship.
Here’s an example:
“Hi, Kevin! Nice to have you with us. If you need help or have any additional questions feel free to get in touch with our customer service via XXX-XXX-XXX”
Nurturing inactive users
When registered users are inactive for some time, a quick reminder message is a good way to go. This way the user can be brought back to use the service, sign up for additional features or kept in touch with the advancements of the service.
“Hi, Kevin! We haven't seen you for a while. We’ve just launched a new account balance feature, come check it out. If you need help getting started or have any additional questions, feel free to get in touch with our customer service via XXX-XXX-XXX”
Loan applications acceptance or denial notifications
Consumer lending is a big industry and they are a heavy user of SMS. When user-requested loan applications get approved or declined, a notification message is sent with a call for action to move forward with the loan or an alternative offer. It’s a quick way to let the customer know if the money is on its way or if additional steps are needed.
Here’s one of those:
“Hi, Kevin! Your loan application is accepted! Please log in to your account to confirm it. If you need help or have any additional questions feel free to get in touch with our customer service via XXX-XXX-XXX”
We, humans, are forgetful people and from time to time paying our bills just slips the mind. Reminders for users who have forgotten to pay monthly payments is a quick way to nudge them in the right direction. Also sending pre-reminders messages with upcoming payment dates is an even better way to go as latency fees don’t pile up and the timely payment practice is kept up.
Here’s how that looks like:
“Hi, Kevin! Your current overdue payment is 71,24€. Please repay the debt as soon as possible. If you need help or have any additional questions, feel free to get in touch with our customer service via XXX-XXX-XXX”
With a 98% open rate and 90% of that coming within the first 3 minutes, SMS is still one of the best ways to send offers and information to users to sign up for more of your business. New customer acquisition or campaign-based marketing messages are used in both lending, e-wallets, banking, money transfers, etc. to a great extent and it does not seem to slow down in the slightest. In an information-saturated world, having a message viewed 98% of the time is outstanding. Just make sure that you comply with GDPR.
Here’s one we’ve seen:
“Hi! Loans from 1K to 10K. Check if you qualify on your mobile in 30 secs: (shorten URL) address. Rates from 5%. opt-out: (shorten URL address). If you have any additional questions feel free to get in touch with our customer service via XXX-XXX-XXX”
There you go, a whole host of ways financial service providers use SMS as a key communication channel aimed at both selling to, verifying, assisting and reminding the customer quickly and reliably.