Millennials, Security Concerns Drive Financial Firms to Text Communications
By Renee Caruthers, FierceFinanceIT
Millennials have sometimes been called the texting generation, and a new study indicates their habits may be having a growing effect on how financial firms communicate. Driven by competitive pressure to reach the younger consumers as well as security trends, such as two-factor authentication, financial firms are increasingly adding enterprise-level texting programs as part of their communications platforms.
Eighty percent of financial services companies are currently using or planning to use global SMS texting with their customers or employees, according to a study released Wednesday by research firm IDC. In addition, 88 percent of financial services organizations believe that mobile messaging has a considerable or major impact on customer experience.
“There is lot of interest from financial services firms in attracting and retaining millennials and millennials tend to not want their notifications as voice calls or messages. They tend to not respond on that channel as well,” said Tim Fujita-Yuhas, director of product management at OpenMarket, which commissioned the IDC study. OpenMarket is a division of Amdocs focused on enterprise mobile solutions.
While reaching millennials has been one driver for text communication programs, a security-related trend that has also seen strong growth is demand for two-factor authentication. When customers log into a secure website or access personal account information, firms are increasingly texting them a one-time code to use as a second factor in addition to their user name and password.
“Financial firms, as part of the increased security awareness around all the breaches and cyberattacks that have been happening, have picked up their game in terms of rolling out two-factor authentication using mobile messaging,” Fujita-Yuhas said.
The IDC study found a range of enterprise-level use cases for texting, with IT alerts about system status or network outages as the most popular; followed by emergency alerts to employees; customer surveys; and customer alerts, updates and notifications. Two factor authentication falls into the fourth category, Fujita-Yuhas said.
Meanwhile, a separate study, released in May, showed that customers who receive texts increasingly expect them to be interactive. Financial firms led other industries in attempted texts to toll-free numbers, with 231,805 attempted message inquiries sent to the largest North American financial services organizations, according to the May study by OpenMarket and Zipwhip. This consumer behavior has prompted some financial services firms to begin to inquire about text-enabling their toll free numbers, their land lines or even their interactive voice response systems (IVRs).
The use cases vary, but at this point financial firms inquiring about enterprise text messaging tend to be looking to solve individual pain points, Fujita-Yuhas says, rather than trying to achieve a wide-scale communications transformation.
“Most clients aren’t looking to buy the entire platform from day one. It’s more individual use cases, but quickly they begin to think to themselves I could use this for two or three other related areas,” he said.