Demand for ‘traditional’ SMS enterprise messaging will keep the A2P market growing until 2025, says Tata Communication‘s Anurag Aggarwal. In an exclusive interview with MEFTV, he explains why…
At one time, the mainstream view of OTT messaging apps was that they represented competition to the traditional telco industry. No longer. Today, many insiders know that the picture is much more nuanced. Yes, the major OTT players do have ambitions in the enterprise messaging space. And yet, they are also among the operators’ best customers.
Anurag Aggarwal, Associate Director Messaging Services at Tata Communications, certainly holds this view. He observes that companies such as WhatsApp and Viber, which use SMS to on-board and authenticate new users, are currently giving a welcome boost to the oldest enterprise messaging channel of them all.
“Via OTTs, the end user is getting a rich format to communicate with the brand, while the brand is getting to maintain a two way secure channel of information,” he says. “But what rides along with this is A2P SMS. When installing an OTT app or looking for a one-time password, most of these brands fall back to SMS as a method for reaching out to the consumer.”
All of this makes Aggarwal extremely bullish about the medium term future of the enterprise messaging space. “I see SMS becoming one part of a bigger omnichannel picture,” he says. “And because of this, I expect the traditional A2P market to keep growing for at least the next five years.”
The other reason for his optimism is the surging demand coming from financial services. All over the world, banks and fintechs are looking for a secure and universal medium through which to connect with increasingly digital customers. They are finding this in SMS.
This is especially the case in mobile-first regions. India is an outstanding example. Aggarwal notes that, in India, the state itself has helped to fuel the rise of new digital financial companies.
On November 8 2016, the Indian government banned the use of 500 and 1,000 rupee banknotes. This became known as ‘demonetisation’. The authorities took the action to attack the black economy and improve tax revenues. After demonetisation, people would have no choice but to make high value transactions digitally – and therefore transparently. “The Reserve Bank of India now mandates sending out SMSs after any transaction or any banking action,” says Aggarwal.
The move provided a giant nudge to the Indian population to start using digital wallets. These app-based products – Paytm, MobiKwik, Freecharge and others – were already popular. In 2017, they exploded – as did their demand for SMS-based authentication and alerts. This was great news for the country’s messaging providers.
“There is an emergence of a whole new set of mobile wallets and they are consuming A2P SMS volumes crazily,” says Aggarwal.
In fact, taken together the OTT and financial services sectors now contribute over 50 per cent of Tata Communications’ global messaging traffic. And there is plenty of reason to believe that the two markets are set to grow much more.
For example, there are persistent reports that Facebook wants to bring payments to WhatsApp‘s 250 million Indian users. If true, this will represent another significant opportunity for Tata and the A2P messaging space in general.
To hear more about these topics, watch this video of Anurag Aggarwal talking to MEF TV.
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I entirely agree that A2P messaging will continue in some form or other. Even if the technology might shift from an SMS base to an IM communications base, the general principle of mobile customer engagement through short, easy to use messaging will continue. There is still also significant installed base of feature pohone users, so RCS and related technologies must find a way to reach those customers as well.