The Right Way for Banks to Use Texting

By Tom Sheahan

Text messaging may seem like merely a way to communicate with friends and families, but since the beginning of short message service texting decades ago, its usage has evolved. Texting offers a fast, effective way for businesses to reach customers. And it’s working. According to research from OpenMarket, 83 percent of millennials open SMS messages within 90 seconds of receiving them.

Research from Gartner indicates 90 percent of all people read texts within three minutes of receiving them, and that SMS boasts a 98 percent open rate, much higher than email.

While not every industry has jumped on board, many banks are now wading into the texting pool. The private nature of SMS allows banks to send messages to customers that are both discrete and convenient. Calls from a bank during work hours can be uncomfortable; SMS allows customers to talk to their financial institution without saying a word.

Of course, there are regulations that must be followed when deploying an SMS campaign, and appropriate systems must be in place to keep all texting and other communication recorded. From marketing services and offers to account notifications and alerts, bank marketers should keep in mind the following tactics in order to offer convenience and information to customers with business SMS while also building affinity for the bank without becoming a nuisance.

Inform customers what you will and will not send via text. To avoid scammers and spammers, make sure to spell out what your communications will and will not include or request. Add this information to your opt-in process as well as posting it on your website. Security of your customers’ information is top priority, so let them know you will not send out personal identification information or request social security numbers, account numbers, passwords, etc. via SMS. Remind customers that if they receive any texts of this nature to not respond and then report it to the bank.

Send to expecting customers only. Texting is perceived as a more personal form of communication. For that reason, it can result in higher response rates, but only if those receiving the messages are expecting and interested in the message. That’s why the recipient should be an existing customer who can benefit from the SMS, or someone who has opted in to receiving messages. Sending spam messages, perceived spam, or even just unwanted messages is the biggest texting mistake banks can make.

Texting non-customers who have not opted in may violate the Federal Communications Commission’s rules implementing the Telephone Consumer Protection Act. A Supreme Court ruling earlier this year narrowed the scope of devices that qualify as an autodialer, which opens the door to greater use of automated or interactive text messaging. But the opinion did not affect existing restrictions on artificial or prerecorded voice calls and “do not call” list requirements for telemarketing calls. Moreover, lower courts have only begun to implement the Supreme Court’s ruling. An ABA members-only staff analysis advises that it “continues to be prudent for banks to obtain a customer’s consent to be called [or texted]where possible, particularly as we wait to see how lower courts apply the opinion.” And that banks should be aware of and follow both federal and state Telephone Consumer Protection Act laws.

Make opt-in and opt-out easy. Just like some people prefer calls over emails, some people prefer texts while others do not. Text opt-out is essential. Make texting opt out easy by including, “Text STOP to opt out” at the end of each text. Again, banks must receive consent first for all text messages sent by an organization using an autodialer.

Send texts purposefully: There is a delicate balance in finding the right number of texts for customers. Most people do not need to hear from their bank on a regular basis, so keep a close eye on which customers are getting sent what. When sending marketing messages, limit them to bimonthly or monthly. If messages are sent too often, your customers may start to ignore them or worse, opt out altogether.

SMS text messaging can offer an effective, quick way to strengthen a relationship with existing customers. When a texting campaign is deployed responsibly—respecting federal mandated rules—customers will feel well-informed and cared for, and perhaps less likely to look elsewhere for their banking needs.

Tom Sheahan is the CEO of Red Oxygen, a business SMS solutions provider.