How SMS and voice services are boosting African banks

Since the turn of the millennium, mobile penetration in Africa has exploded. Outside developed hubs on the continent, huge expanses have not been covered with traditional fixed line telecoms. This has resulted in mobile services offering a practical alternative to what would otherwise be a major connectivity challenge. Mobile penetration is expected to reach 79 percent in Africa by 2020 (according to Frost and Sullivan) and as a result rapid growth in this region has turned Africa into a world leader for mobile service innovation.

Africa has become an ideal environment for the creation of mobile technology use cases, transforming multiple industries from health care and utilities to payments and banking. Banks are constantly on the lookout for communications solutions that enable them to communicate with mobile-centric consumers. Yet as LTE and 3G are still inaccessible for many in the region, data-led engagement is still not as efficient as banks would want it to be. SMS and voice messaging are reinventing themselves as powerful tools for reaching users instead. It’s no surprise that banks have adopted this technology en masse to cater for their mobile-oriented user base as a way of improving customer service and ensuring loyalty.

From early rollouts to professional platforms

Initially, banks used enterprise SMS technologies to send customers basic notifications. Research at the time reported a range of benefits, from reductions in overdraft charges to improved customer satisfaction. Even the simplest alerts led to a better relationship between bank and customer; increased interaction helped consumers to feel more in control of their finances simply by being able to access relevant account information when on the go. SMS notifications quickly became pervasive for consumer banking in Africa.

But early rollouts required a huge amount of technical infrastructure behind the scenes, making these initial deployments complex to deliver and difficult to sustain. Banks required multiple agreements with mobile network operators, which in turn meant connection maintenance and commercial relationships had to be handled separately for each operator. This was far from ideal, and overcoming the technical diversity of mobile network systems and connections led to additional challenges.

Later on, professional SMS systems became unified and integrated into banking IT systems. But even this approach was not without its flaws. Performance was still affected, with bank employees spending their time monitoring the text notifications service with minimal technical support available if something went wrong. Without a simple to use interface for management and reporting, incomplete service was commonplace. Banks had limited insight into delivery rates and speed, and without real-time SMS reporting it was impossible to understand the success rate of delivery to customers’ phones, as well as the impact the messages were having on the user.

Reducing technical complexity

Fortunately, the past decade has seen an emergence of professional SMS platforms and specialists that are able to develop robust and sophisticated solutions to solve many bank-specific requirements. This has included enhancing security, incorporating advanced database integration, and ensuring quality connections, delivery, and transparency.  The rise of professional SMS solutions has not only addressed the various issues holding this technology back, but has also made it possible for banks to start offering consumers more innovative services via SMS. Integrating notifications with banks’ IT systems has become much faster and easier, requiring little effort on the part of bank employees.

Reaching several networks, even across multiple countries or regions, has also become a matter of connecting to a single SMS provider. By integrating their database with a messaging gateway, banks can send reactive SMS messages and meaning alerts. Also, notifications now give real-time updates on activity relating to a customer’s account. Systems have been improved and processing power enhanced, allowing them to deal with peaks in notification volumes. For a large majority of banks, a messaging technology specialist is a valuable partner when it comes to handling the underlying technical and commercial complexity. A once challenging process has been transformed into a simple one, with the added benefit of much greater connectivity, coverage, and service reporting.

Security aspects making a huge difference

It is true of any market: banking security is a top priority for customers. One of the advantages of SMS-based communication for financial services is its reputation as a secure and reliable channel. This is essential, as any message sent from the bank to one of its customers can potentially contains sensitive, private information about the person and their finances. Security provisions such as VPN tunnelling, IPsec protocol, data encryption or proprietary infrastructure are crucial elements in enterprise messaging flow. It’s hardly surprising that advancement in the enterprise SMS space has also resulted in SMS-specific security solutions. International certificates such as ISO 27001 are increasingly becoming the norm allowing SMS to function as a communication channel that marries security with convenience for the consumer.

Silvio Kutic is CEO and founder of mobile messaging specialist Infobip. Earlier this year, Infobip held events in Africa, focusing on SMS and how the technology can integrate with banking.
 

African Business Review’s September issue is now live.

Stay connected: follow @AfricaBizReview and @WedaeliABR on Twitter.

African Business Review is also on Facebook.