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Despite the emergence of other communication channels, SMS continues to be one of the most preferred channels. More than 90% of people read a text message within three minutes of receiving it. So when it comes to timeliness of delivery, SMS maintains the highest engagement rate compared to emails or instant messaging apps. 

In effect, you can own any mobile phone, and you will still be able to send and receive SMS, and this makes its global reach soar as there are no pre-existing connections required, such as requiring two parties to download the same app. The lower barriers to communication allow users to receive messages quickly, making it ideal for sending short, time-sensitive content. 

Importance Of SMS Communication in Banking

With more than 4.7 billion people using cell phones globally, the banking sector has realized the need to streamline communication via SMS messaging. At present, most of the big banks have already implemented mobile banking for financial services, and many others are catching up.

As a personalized end-user communication tool, cell phones are possibly the most accessible channel on which banks can reach consumers instantly, as people carry their mobile phones all the time irrespective of where they are. Besides, the operation of SMS banking functionality via phone makes its use very simple. 

SMS banking is quite different when compared to internet banking. The latter can offer broader functionalities, but it is limited to users with the internet and computer access. However, SMS banking will allow banks to send critical text alerts to their customers instantly, unlike other channels such as email or telephone banking, on which a bank’s notifications to their customers involve the risk of delayed delivery and response.

Benefits of SMS Communication in Banking

SMS communication has several benefits in the banking sector, including the following:

1. Convenience: It’s effortless for businesses to keep customers stay top of their banking transactions with SMS messages. Since customers can send and receive SMS quickly, it simplifies banking operations, making it easier to interact with banks
2. Security: You can add another layer of security to SMS messages through encryption and requiring a password or PIN for accessing essential account-related information
3. Real-time Communication: Banks can configure SMS messages to send alerts in real time for banking transactions, such as fund transfers, cash withdrawals, deposits, or purchases. SMS helps customers easily manage their bank accounts and protect themselves from fraud.
4. Cost-effective: Text messages are a more cost-effective communication solution when compared to traditional channels such as phone calls to reach banking customers.
5. Reach: The easy availability of SMS results in wider audience reach – especially connecting with customers who do not want to use banking apps.
6. Instant Delivery: Although SMS is not technically an instant messaging platform, SMS messages are usually delivered within seconds. This ensures that customers receive time-sensitive account updates on time.

SMS Banking Usecases

Below mentioned are some ways banks can use SMS services to improve their customer communications. 

Payment reminders

Research indicates that SMS has an open rate of 98%, making it an effective means for communicating with customers. Banks can capitalize on the power of SMS to reach out to their customers instantly. SMS reminders are an effective way to let account holders know when their bill payment is due, or when they have unpaid transactions. 

Sending out regular transactional SMS updates works great for both banks and customers. Banks are more likely to receive their payments on time, and the customers are less likely to have additional fees piling up for being late. 

Real-time notifications 

SMS is the best communication channel to send out time-sensitive information. Banks can use SMS to minimize fraudulent activities by keeping their customers informed of any suspicious activity on their accounts. Real-time notifications ensure that the customers are aware of all the activities carried out on their bank accounts and can quickly take action if something doesn’t seem right. These notifications usually include automated alerts about cash withdrawals from ATMs, account login from an unknown device, or online payments made to third-party accounts. 

Two-factor Authentication

Data protection has become extremely important in the current digital age. OTPs are no longer a safe option when it comes to safeguarding a customer. Many big banks are now using two-factor and multi-factor authentication techniques to safeguard their users from cyber attacks. 

With 2FA, banks can request users to sign in with their login credentials, and then enter a code that is sent to them via SMS, thereby providing a layer of protection for users when they access the banking platform. 

Through SMS APIs, banks can generate and manage one-time passwords for their 2FA login process. As a safety measure, the unique passwords generated for the 2FA process are valid only for 30 seconds or less; therefore, the chances of a security breach is minimal. 

Enhance customer service with interactive messaging

Banks can consider incorporating a conversation-based engagement strategy by deploying chatbots along with two-way SMS to address immediate customer issues like loan refinancing and applications or warnings about incoming fees and low bank balances. These are all issues that anyone with a bank account runs into at some point. 

Interactive messaging, if done correctly, can improve the customer experience. It can provide unique data insights to the bank about the customer as the conversation helps capture nuanced customer data, like their needs and preferences, and can also help in improving the operational efficiency by handling more number of user interactions without needing human intervention.

How Banking Sector Can Improve Customer Engagement and Experience With SMS Communication

With SMS, banks can send personalized messages to engage their customers. For example, banks can send personalized offers, product recommendations, and alerts based on customer data including their behavior and preferences.

Since SMS services enables two-way communication and allows customers to reply to messages, it increases engagement. This comes in handy for banks to collect feedback, answer queries, and provide prompt support.

Banks that offer dynamic messaging, beyond simple alerts, will have an opportunity to engage with customers seamlessly. With digital engagement, each additional touchpoint is another opportunity to build trust. Kaleyra’s SMS platform provides numerous opportunities for banks to enhance the customer experience, including preventing fraud and providing speedy account authentication. By putting together these strategies into action, banks can offer cutting-edge services to their customers.