SMS is among the most ubiquitous communication tools on the planet-three billion users worldwide according to Portio Research-but banks are struggling with how to fold it into their operations. Today, many banks offer text-based alerts around account balances, but two-way interactions are generally limited to transactional information; and capabilities have not progressed much in the past year.

Now there are signs that consumers are growing disenchanted. A recent Javelin study forecasts a big slowdown in the number of new households receiving SMS alerts as they conclude that alerts fail to deliver timely information, are too generic and are too difficult to tailor. "Consumers are trying it and not finding it as helpful as they'd hoped. Customers want SMS, but they want it better," says Mark Schwanhausser, a research analyst at Javelin. For the institution to entice customers and make the most effective use of SMS, Schwanhausser and other analysts say banks need to transform texting into a two-way engagement.

Stepping into the SMS fray last month was SoundBite Communications, which unveiled a novel SMS platform that offers improved customer service by tying SMS to the call center. Rather than calling a customer support center, with SoundBite's Contact Center Text Messaging Solution a consumer can send a text message using a keyword and five digit telephone number, known as a short code. When the consumer sends a text message, the SoundBite Dialog Engine reviews the message using a set of predefined business rules. Based on the results, the solution automatically responds with a personalized text message. If the consumer's text message warrants special attention, the message can be routed to a customer support agent who can access the entire message history and respond using the SoundBite Agent Text Portal. The entire text message conversation can transition from agent to automation and vice-versa, depending on the consumer's most recent response.

Executives at SoundBite say that consumers may be frustrated with banks' current SMS capabilities, but texting remains their preferred means of communication. According to a survey commissioned by SoundBite through, 52 percent of respondents prefer customer support via texting, while 35 percent preferred voice. One big reason is that texting doesn't require a customer to wait on hold, says Alan Berrey, vp of market development at SoundBite.

George Peabody, director of Mercator Advisory Group's emerging technologies advisory service, agrees that SoundBite's offering is a potent new tool for organizations that want to leverage consumers' communications preferences and the ubiquity of the mobile phone. "They're taking the experience with Web chat and opening it up to a broader audience because of SMS's huge user base." Meanwhile, George Tubin, a senior research director at TowerGroup, says two-way SMS make enormous sense. "Alerts now are static but useful. But to take action I've got to go to the bank branch or make a call."

That said, SoundBite could have a tough go of it on two fronts. First, there are IT budget concerns. Second, SoundBite must muscle into a competitive field. ClairMail, Sybase, and M-Com are just some of the big players in the space. All three offer a mobile baking solution that integrates Web browser, applications and text messaging, and some analysts wonder if SoundBite's text-only approach is viable even if its customer service focus is unique. Schwanhausser says it's critical that banks integrate all three modalities into their mobile offering "because that's what customers demand." And Red Gillen, a senior analyst at Celent, adds that "the market is pretty saturated. If [SoundBite] is serious they need all three." However, Peabody is not so certain. While banks will need to offer all three modalities, he says it's not clear that they must get all three from the same vendor.

Some analysts also question the wisdom of linking SMS to the call center at all, arguing that text messaging will increase the costs of the call centers and reduce mobile banking's ROI. The purpose of mobile banking is to avoid the call center, says Nick Holland, a senior analyst at Aite Group. "The beauty of mobile banking is it disintermediates people. If anything call center text messaging is a step backward." Peabody again counters that banks should not think of communication channels in either/or terms. The goal is to communicate with the customer as effectively as possible.

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