Text messaging is no longer something people just use to communicate personally and privately. More and more businesses are using it to reach their customers, including fintech companies. If you’re in the financial technology industry and you haven’t paused to consider the role SMS plays in marketing and communication, now’s your chance.
Emphasizing Generation Y
When you look at the financial services industry, it’s pretty apparent which segment of the population companies are focusing on. While older generations, such as Baby Boomers, are still important, they realize that the future is found in Generation Y.
But fintech firms aren’t just lumping all of Generation Y into one basket and trying to reach them all at once. There’s clearly a difference between young Gen Y’s and older Gen Y’s. At OpenMarket, we’ve dedicated considerable time and resources to studying the differences between these two distinct groups and how they deal with financial matters. Here’s what we discovered:
- Young Gen Y. These individuals are 18-24 years old, have low assets, are mostly students, and possess a mobile-first mindset. They’re also less likely to monitor or manage personal finances. The group’s size is an estimated 30.6 million people.
- Older Gen Y. These individuals are 25-34 years old, fully-employed, have growing assets, are investing, and are more likely to monitor and manage their personal finances. The group’s size is an estimated 44.6 million people.
Young Gen Y’s prioritize avoiding financial missteps and are interested in receiving alerts about upcoming bills, overdraft warnings, and credit limit warnings. Older Gen Y’s prioritize control and want to receive alerts about unusual transactions, progress towards budget goals, and transaction thresholds.
While these two segments of Generation Y have different goals and needs, fintech companies are coming to the realization that reaching both sets of customers via their mobile devices is supremely important. That’s why many firms are turning to SMS.
4 Ways Fintech Companies are Using SMS to Reach Gen Y
Email, mobile apps, and push notifications are out. Fintech companies are instead turning their focus towards SMS, which is cost-effective, ubiquitous, and versatile. Specifically, here are some ways they’re using it for strong results:
- Two-Factor Authentication
With cyber crimes occurring at record levels, financial firms can’t afford to have their customers’ data compromised in any form or fashion. That’s why many are using SMS to strengthen account security. One of the first ways they do this is through two-factor authentication.
“Two-factor authentication adds a second level of authentication to an account log-in,” security expert Seth Rosenblatt explains. “When you have to enter only your username and one password, that’s considered a single-factor authentication. 2FA requires the user to have two out of three types of credentials before being able to access an account.”
A second type of credential could be anything from a biometric input (such as a fingerprint) to an ID card with a barcode. When it comes to account logins for financial firms, many find that requiring a second pin code is ideal. Here’s how it works:
- A user inputs his username and password from a new device.
- The financial institution recognizes that this is a device that’s never been used before and notifies the user that he will have to enter a second pin code that will be texted to the phone number on his account.
- The user receives a text with a unique pin code and then enters that code into the appropriate box on his device.
This added layer of security can prevent someone from unlawfully accessing an account, even if they steal a username and password. The same process can be followed for transactional confirmations (such as pulling out a large sum of money, transferring funds, or closing an account).
- Payment Reminders
As mentioned, younger Gen Y’s are worried about financial missteps but aren’t always proactive enough to handle all of their responsibilities. One way financial firms are addressing this pain point is by sending out payment reminders to customers via SMS. These reminders may look like this:
“Hello Courtney. Your mortgage payment of $987 is due tomorrow. Please log in to your account to confirm the payment or contact us at XXX-XXX-XXXX if you have any issues.”
Giving customers the opportunity to opt-in to reminders like these can provide some added value to a financial firm’s product offering.
- Real-Time Communication
SMS is as close to real-time communication as any company could ever hope to achieve with any customer channel.
“83% of text messages are opened within 90 seconds. 90% of text messages are read within 3 minutes, and 98% are read within 10 minutes,” Tim Fujita-Yuhas, Director of Product Management at OpenMarket, is quick to point out. “Clearly SMS messages are getting through to these users.”
“We also know that when a SMS message contains a URL in it, that users are clicking those links at higher rates (36%) than they are for e-mails with links (3%) from businesses,” he continues. “So it is no wonder that 80% of financial service companies are currently using or planning on using SMS to communicate with their customers or employees.”
- Marketing
Finally, many financial firms are using SMS to enhance their marketing efforts. Once customers have opted-in to a list, companies can send new offers and updates. An example would look like this:
“Hi Alex. We thought you might like to know that you currently qualify for a home equity line of credit up to $25,000. Contact us at XXX-XXX-XXXX if you’re interested in learning more about this opportunity.”
Occasional messages like this can lead to higher sales and more customer engagement.
Contact OpenMarket Today
For fintech companies, few things are more important than connecting with Generation Y. As a whole, this generation makes up roughly 30 percent of the adult population and is clearly the most receptive to mobile banking and financial technology.
If you’re interested in making SMS a part of your company’s customer engagement strategy, then you’ve come to the right place. At OpenMarket, we’re proud to provide some of the world’s largest enterprises with one-way and two-way messaging that allow for better connectivity, security, and brand building. For more information regarding our industry leading SMS messaging platform, please don’t hesitate to contact us today!