News
06/01/2020

In SMS veritas

SMS gives financial services companies countless opportunities to surprise, impress and help customers in precise moments by giving them information, alerts, experiences and engagements that they will be thankful for. Even though it is a very “old school” tool, the rise of popular messaging apps did not affect negatively on its worldwide presence. Currently, more than 4.8 billion people use SMS, which is significantly more than the number of people on social media (around 2.2 billion) and people with email addresses (2.6 billion) combined. The use of SMS is even surpassing the number of people with access to a TV – 4.4 billion. Having this in mind, it is obvious why the leading companies from each industry have implemented SMS in their core communication procedures.

  • SMS fights against the crime with Two-Factor Authentication

Cyber-crimes have become everyday news and those who are impacted the most are fin-tech companies with highly valuable private information. Financial firms cannot afford to have their customers’ data compromised in any way, which is why they rely on various methods of SMS account security.

Two Factor Authentication has proven to be the most popular one, as it is showing the best results so far. It is simple and efficient. It adds a second level of authentication to an account whilst logging in.

When it’s required to enter only your username and a password to create an account or log in, that’s considered a single-factor authentication. 2FA requires the user to have two out of three types of credentials before being able to access an account. The other type of credential could be anything from a biometric input (such as a fingerprint) to an ID card with a barcode. When it comes to account logins for financial firms, many find that requiring a second pin code is ideal. Here’s how it works:

A user inputs his username and password from a new device.

The financial institution recognizes that this is a device that’s never been used before and notifies the user that he will have to enter a second pin code that will be texted to the phone number on his account.

The account owner then receives an SMS with a unique pin code which should be entered into the appropriate field on his device.

This additional layer of security prevents someone unauthorized from accessing an account, even if they somehow get to the username and password. The same process can be followed for transactional confirmations (such as pulling out a large sum of money, transferring funds, or closing an account).

  • Payment Reminders

Young generations are mostly worried about financial missteps but aren’t always proactive enough to handle all their responsibilities. One of the ways financial firms are addressing this pain point is by sending out payment reminders to customers via SMS. These reminders may look like this:

“Hello, Lucy. Your mortgage payment of $783 is due tomorrow. Please log in to your account to confirm the payment or contact us at XXX-XXX-XXXX if you need any assistance.”

Giving customers the opportunity to opt-in to reminders like these can provide some added value to a financial firm’s product offering.

  • Real-Time Communication

SMS is as close to real-time communication as any company could ever hope to achieve with any customer communication channel. The reason for this is not only that has the highest open-rate, but also that 90% of messages are being read within 2 minutes. SMS still has its way to get through the users, which is why it is a common practice nowadays for financial companies to cherish the customer and employee relations. They can send an SMS which contains an URL in it, advising about further actions on their websites. Imagine the possibilities!

  • Marketing

Finally, many financial firms are using SMS to increase their ROI. Once customers have opted-in to a messaging list, companies can send new offers and updates. An example can look like this:

“Hi, Ben. We thought you might like to know that you currently qualify for a home equity line of credit up to $25,000. Contact us at XXX-XXX-XXXX if you’re interested in learning more about this opportunity.”

Occasional messages like this can lead to higher sales and more customer engagement.

Finally, all these factors lead to increased loyalty between clients and their banks. By offering convenient service and security, banks find it easier to facilitate relationships and build long-term client loyalty. This loyalty enhances customer lifetime value and enhances the institution’s chances of selling more products and services to clients over time. It’s a win-win situation for everyone involved.

Author: Jelena Kolundzic