Today's consumers are tech-savvy. Thus, it's important for the banking sector to modernize its processes. Banks can leverage technology and strategies, such as SMS, to achieve this and make banking easier for consumers. Here are five effective ways banks can leverage SMS:
When a bank sends information via text to its customers so they can use their services and products, they are using transactional SMS or A2P SMS (Application-to-Peer SMS). Transactional SMS offers an efficient, cost-effective and non-intrusive way for banks to enhance communication.
Transactional SMS is also a convenient method for reaching customers worldwide so they can check their account balances and make deposits. Transactional SMS is able to provide this convenience due to its ability to access any network in the world.
Banks can use SMS to strengthen its security measures and authenticate users for account logins and transactions by using two-factor authentication or 2FA. Two-factor authentication (2FA) is a security measure that adds an extra layer of protection for users who want to log into their accounts, transfer money or make various transactions.
Two-factor authentication requires users to have at least two out of three credentials to gain access to their accounts. These credentials can include a unique personal identification number (PIN), a device, including a customer's mobile phone, or a biometric, such as the customer's fingerprint.
For example, the bank can use SMS to send a unique PIN code to the account holder's mobile phone number before authorizing a money transfer after an account login from an unknown computer. The account holder may make the transaction once they provide the special PIN code. By using the PIN code, the account holder may also reduce incidents of unauthorized transactions.
One-time passwords (OTP) are automatically generated temporary passwords that bank customers can use as an added layer of security for online transactions. OTPs are typically more secure than user-created passwords. The reason for OTPs enhanced security is because banks can transmit OTPs to authorized devices and keep the OTPs valid for a set timeframe, such as 30 seconds. For example, banks can generate an OTP via SMS that the bank customer must use at the end of his own password to log into his account.
OTPs are also useful for helping customers reset their passwords. Banks can easily use SMS to send these temporary passwords to its customers who forget or need to change their passwords.
Research from the Pew Research Center indicates that most people now have access to some type of mobile phone. Thus, SMS is a viable option for facilitating one-time passwords. By using SMS, banks streamline various processes for its customers, including password updates, account logins and the ability to conduct a variety of online transactions.
Fraud prevention is a security strategy banks can implement across its operations to help safeguard its customers' accounts against fraud, data loss and security breaches. SMS can facilitate two-step verification for fraud prevention.
Banks can leverage SMS text messaging to verify user information and transactions by sending a PIN code that expires in a short time to ensure the user making the transaction is the account holder or to authorize a transaction. For example, banks can send a text message alert to the account owner to verify that the customer authorized a debit card payment at an out-of-state gas station.
Research indicates SMS boasts a 98-percent open rate, which makes it an effective means for communicating with consumers. Banks can take advantage of SMS to send payment reminders to its customers, such as notifications for paying a past-due bill. Using SMS for payment reminders helps increase the opportunity for consumers to make on-time payments and for banks to collect and reduce their accounts receivables.
SMS provides a variety of opportunities the banking sector can use to enhance the customer experience, including counteracting fraud and providing speedy account authentication. By putting these strategies into action, banks can provide the cutting-edge services their customers need.
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