By Joseph Salesky, ClairMail Inc.
In theory, alerts can be an effective customer service tool for fraud prevention, account management, bill payment and other banking functions. When executed correctly, not only can alerts increase customer service and satisfaction, they can also significantly cut costs for banks, introduce new revenue opportunities and accelerate adoption of the mobile banking channel.In practice, however, most alerts offered by banks today - phone calls, email and 1-way alerts - fall short of making these benefits a reality. Phone calls are only effective if the customer answers live; more often than not, a voicemail message is placed, requiring the customer to remember and dial back a phone number in order to remedy the situation. Emails also oblige the customer to reply, and can go many hours or days without being checked. 1-way alerts provide timely notification but lack a convenient response mechanism, thereby still placing the onus on customers to contact the bank. Like a phone that is only able to receive calls but unable to send them, these alert types are only half-effective.
The key to truly effective alerts is ensuring that they are both timely (sent and received instantly) and actionable (provide a convenient way for customers to immediately resolve issues). How best to reach customers in real-time and empower them to immediately respond to alerts and resolve account issues? The answer is 2-way alerts.
With over 254 million mobile U.S. subscribers - an astounding 84% penetration rate - mobile phones are more pervasive than the Internet and readily available at any time. Whether at home, work or on vacation, customers are very likely to have their cell phone with them. Moreover, according to Aberdeen Group, over 1 billion SMS messages are exchanged every month, making SMS alerts a timely (and ubiquitous) communication medium.
Taking advantage of the dynamic, real-time, 2-way nature of SMS alerts adds the critical "actionable" component. In a recent report, Javelin asserts that 2-way is the key driver for providing value to bank customers and accelerating adoption. Javelin argues that banks "able to provide time-sensitive informational 2-way alerts that affect account status will experience higher adoption of the mobile channel and give customers the control they desire."
2-way alerts are the perfect combination of timely and actionable, making them valuable to both customers and banks.
For customers, 2-way alerts provide the obvious comfort of being informed in real-time when issues arise with their financial accounts, and the convenience of being able to immediately resolve the problem via their mobile phone.
Consider the example of a questionable account activity. A 2-way alert is immediately sent to the customer, asking him to verify the transaction by simply replying with a "Y" (for "yes") or "N" (for "no"). Unlike existing alerts, this alert type is timely and actionable. The alternatives would be a phone call, email or 1-way alert, all of which require the customer to make an effort to call or visit the bank, with the possibility of the customer's account being frozen until the transaction is verified.
2-way alerts are non-intrusive yet deliver valuable information in real-time, and empower customers with simple control of their account. Without the timely delivery and ability to take action, this type of information can be virtually useless.
For financial institutions, 2-way alerts can significantly cut costs and generate new revenue. Banks can avoid huge losses from fraud and identity theft by utilizing 2-way alerts as a fraud prevention tool. These alerts divert traffic away from more expensive customer interaction channels, such as call centers and IVR systems. Mobile alerts are estimated to cost pennies, compared to $14 for each call center call or $3 for each call to the IVR system.
Two-way alerts also give banks the ability to generate revenue. With functionality such as mobile bill pay, in which a customer receives an actionable alert when a bill payment is due and can pay via text reply, banks stand to gain significant revenue. Banks can take advantage of "the float," improve payment predictability, eliminate check processing fees, charge for expedited payments, and bring on new billers (e.g. utility or cable companies) willing to pay the banks for these services. Finally, 2-way alerts can serve as a direct marketing medium by enabling banks to accompany alerts with actionable, targeted and contextual offers.
Alerts are not just a value-add for customers, but for banks as well. Something as simple as a 2-way text message, when executed correctly, can generate significant revenue and savings for banks, and can deliver a less intrusive and far more effective communication channel for customers. The two key elements for a successful alerting strategy is to ensure alerts reach customers in real-time and empower them with a quick and easy way to take action. Done properly, 2-way alerts can do wonders for a bank's bottom line.
Joseph Salesky is CEO of ClairMail Inc., a Novato, Calif.-based provider of mobile banking and payments solutions.