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SMS Banking: The First Step in a Successful Mobile Banking Strategy EXECUTIVE SUMMARY As mobile devices become an increasingly indispensable tool of 21st century communication, consumers will expect their financial institutions to provide mobile banking as part of any standard services package. Some financial institutions are already adopting business models and technologies to serve the growing demand for mobile services, positioning their institutions for competitive advantage. Industry analyst forecasts that eight of the top ten banks in the United States will soon offer mobile banking and mobile bill payment and that within five years, a quarter 1of today's online banking customers will bank by mobile phone. A key capability of mobile banking is SMS (text) messaging. SMS messaging addresses the majority of mobile banking needs today. Balance inquiries, fraud and transaction alerts, fund transfers, and bill payment are already proven examples of SMS messaging services. However, implementing a mobile messaging architecture that addresses today's SMS banking needs, while accommodating future growth and innovation, can be a complex, costly task. A comprehensive mobile messaging solution must be able to abstract, send, and receive messages from multiple channels, including mobile devices, land lines, and interactive voice response (IVR) systems. This capability implies the need for a multimodal messaging architecture. Multimodal messaging architectures help financial institutions cost-effectively deploy SMS messaging services without upgrading their existing information infrastructures or adding support personnel. They enable customers to perform simple messaging tasks (e.g., receive alerts, retrieve account information, and conduct transactions), while allowing banks to add more sophisticated offerings as needed. Using multimodal messaging, financial institutions can establish themselves as leaders, attract and retain customers, and prepare for long-term success in the mobile banking market. This white paper addresses the application of SMS messaging to the banking industry, and suggests how financial institutions can leverage multimodal messaging architecture to gain a competitive advantage.
Best Practices for a Successful Mobile Banking Strategy 1. Implement SMS-based mobile banking capabilities that focus on the most relevant and actionable alerts for consumers today: account balances, recent transaction history, bill payment and reminders, and intra-bank funds transfer. 2. Anticipate the increased need to intelligently reach out to customers across multiple communication channels (SMS, email, voice, and instant messaging). 3. Select a solution provider that enables cost-effective delivery of SMS capabilities today while capable of seamless addition of new channels over time.
1 Karen Epper Hoffman, "Mobile Banking: Where's the Business Case", October 2007
Copyright © 2007 Clickatell 2 SMS Banking: The First Step in a Successful Mobile Banking Strategy THE RISE OF MOBILE BANKING Nearly 80 million U.S. adults will conduct some type of banking activity online this year, an increase of almost 10% over 2006. By 2011, approximately 101 million adults will be banking 2online. Recent technology advances, pervasive adoption of mobile devices, and consumers' increasing appetite for anytime, anywhere service are sparking a similar trend in mobile banking. According to industry analyst Celent, approximately 35% of all online banking households will use 3some form of mobile banking by 2010. Short message service (SMS) text messaging plays a prominent role in this evolution, enabling customers to obtain account-related information, control their finances, and conduct transactions 4via mobile phone. In a recent Javelin survey, mobile banking customers preferred simple mobile messaging functionality such as the capability to check account balances, monitor recent transactions, and pay bills (see figure 1). Preferences for more advanced mobile banking scenarios requiring Wireless Access Protocol (WAP)-based screens and mobile client applications vary considerably among consumer segments and are unlikely to become mainstream mobile banking services in the near future. Clearly, consumer interest, for now, focuses on SMS-based banking services. Consumer Preferences for Mobile Banking
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