By Heather McLean
Karol Nita, product marketer at MACH, discusses the ongoing importance of SMS in mobile banking.
With research from Berg Insight forecasting that the number of mobile banking users worldwide will grow from 55 million in 2009 to 894 million in 2015, it seems that we are about to see a golden age of mobile banking. So what role will traditional SMS services have to play in this new banking landscape?
Traditionally SMS-based services have been the mainstay of mobile banking, but this is beginning to change in developed markets with the advent of smartphones and the growth of apps stores.
More sophisticated
As mobile apps become more sophisticated, mobile banking is being touted as a more convenient alternative to online banking, however, SMS will remain a key part of the mobile banking ecosystem.
The major benefit SMS offers over apps is that it is virtually as ubiquitous as mobile phones themselves, whereas apps can only be accessed by the relatively small proportion of users with smartphones. Unlike its smartphone cousin, SMS is available to all levels of mobile subscribers and has a wider appeal to more segments of society than apps.
A further limiting factor of apps-based mobile banking services is the lack of standardisation across mobile platforms, necessitating banks to tailor their offerings for the iPhone, Android or BlackBerry platform to maximise the potential reach of the services. SMS is compatible with even the most basic of phone platforms, meaning banks can engineer one solution to cover the entirety of their mobile phone owning customer base.
Most mobile banking applications require a high level of proactivity from the user. In general, users have to log-on to the app in order to access the mobile services.
Get mobilised
While this is suitable for services such as balance checks and money transfers, it does mean that some of the more useful services cannot be mobilised. For example, with SMS, a bank can send its customers alerts when they are approaching their overdraft limits, thereby helping them avoid charges for exceeding this limit.
It is clear that for the mobile channel to be used to its full potential, even an apps-based system needs to have an SMS platform integrated into it, to ensure that banks can proactively contact their customers, as well as allowing customers to access their account services while on the move.
While apps may be a convenient and feature rich way of interacting with your bank account, the levels of security are only equal to that of online banking. SMS technology ensures that a banking service is secure, both in terms of mobile banking and regular online banking.
SMS alerts can be employed as a type of early warning system to alert account holders to potentially fraudulent activity on their accounts, drastically reducing the high annual cost of fraud. SMS can also turn the mobile into a second factor for authenticating account holders. SMS, therefore, has the power to make the mobile a truly secure channel for mobile and online banking, a claim that cannot yet be made by apps-based services.
Effectively outsource
By working with a global messaging specialist, banks can effectively outsource the complexity encountered when setting up an SMS mobile banking service. Instead of having multiple relationships with multiple operators, they have just one relationship to manage with a partner that can immediately provide connections to all of their customers in one go. As well as reducing costs, this frees banks up to concentrate on their core business without having to worry about the management of operator relationships.
The rise of apps-based approaches to mobile banking is to be welcomed if it can stimulate the use of this highly beneficial channel. However, SMS will continue to play a very important part in the structure of mobile banking services. Indeed, when twinned with mobile apps, SMS makes for a much more useful and secure solution.