Navigating Chaos: Ensuring Trust in Digital Communication

Amid Escalating Fraud Risks, CPaaS Tools Emerge as Crucial Allies. SMS, Despite Vulnerabilities, Retains Vital Role in Real-Time Alerts within a Turbulent Digital Landscape.

The perception of risk in the conventional enterprise-customer paradigm has reached unprecedented levels. Previously, banks, telecom operators, and retailers viewed communication platforms as avenues for enhancing cross- and up-selling prospects. However, today, the role of these platforms has evolved significantly.

A digitally savvy populace is increasingly vulnerable to fraudsters armed with sophisticated technologies like Artificial Intelligence and machine learning. In this scenario, Communication Platform as a Service (CPaaS) tools emerge as indispensable assets, bolstering security and trust. While the widespread adoption of mobile banking has fostered financial inclusion, it has also exposed users to a surge in online scams. The lure could be as innocuous as a restaurant discount, a job offer, or a second-hand iPad advertised on an online classifieds portal. For brands, maintaining a comprehensive understanding of their customer journeys is imperative.

Communication platforms like SMS have become deeply ingrained in India, to the extent that even an Aadhar card is authenticated through this channel.

Yet, deciphering customer behavior poses a formidable challenge for enterprises. WhatsApp, a coveted platform for customer engagement, witnesses the exchange of 140 billion messages daily. On Twitter, approximately 500 million tweets are posted daily, while Snapchat logs 4 billion. Many brands also rely on SMS, with a staggering trillion messages transmitted worldwide annually, and India stands as the second-largest market, accounting for 120 billion messages.

Regulatory Oversight

The proliferation of communication platforms has raised concerns among banks, insurers, retailers, e-commerce entities, and regulators alike. The escalating internet penetration has heightened risks for online consumers. The Reserve Bank of India (RBI) reported 7,382 fraudulent card and internet-based transactions within just six months of FY24. The surge in losses attributed to ‘card and internet-based’ frauds, from 1% in FY21 to 76% in the first half of FY24, alarms banking authorities.

A decade ago, banks levied monthly fees for SMS alerts and updates. However, contemporary industry trends incline towards revising pricing structures or offering these services free of charge as a security measure. Furnishing customers with transaction details via SMS alerts signifies proactive fraud detection, fostering transparency, reliability, and enhanced customer service. Besides banks, numerous retailers and financial institutions are embracing communication platforms through channels like WhatsApp.

Regulators such as the RBI, TRAI, SEBI, and the Finance Ministry are actively addressing concerns regarding communication chaos. While emphasizing user vigilance and awareness, brands are rightfully apprehensive about the repercussions of any mishap. SMS has entrenched itself in India’s digital framework to the extent that even Aadhar card authentication relies on this channel. To mitigate misuse, telecom regulators mandate the deployment of AI/ML-based technologies by telcos to counter fraud and unsolicited messages. Service providers are also obligated to adhere to prescribed SMS templates, with non-compliance risking suspension and potential SIM blocking for sending unsolicited messages.

SMS: Pros and Cons

SMS remains a deceptively simple yet potent tool in the arsenal against banking fraud and enterprise communication needs. Enjoying universal reach, SMS facilitates communication even in areas with limited network access. Enterprises leverage SMS to dispatch real-time transaction alerts, empowering customers to promptly identify and report unauthorized activities. By verifying user locations during login attempts, SMS aids in pinpointing potential breaches across disparate geographic regions. This capability enables banks to scrutinize transaction patterns and trigger SMS alerts for suspicious activities, such as high-value purchases from unfamiliar locations.

However, SMS’s efficacy hinges on its correct utilization. Vulnerable to interception and spoofing, SMS is susceptible to phishing attacks and scams. Moreover, SMS delivery reliability is as dependable as the weather, contingent upon network availability. Network congestion or technical glitches may impede message dissemination, leading to failed deliveries. Although SMS benefits from direct delivery by telecommunication companies to mobile SIM cards, inadequate security practices by CPaaS providers pose security risks. Furthermore, the proliferation of over-the-top (OTT) messaging apps offering end-to-end encryption, such as WhatsApp and Signal, has diminished SMS’s relevance for secure communication.

Optimizing SMS Delivery

Despite its vulnerabilities, SMS remains a preferred choice for enterprises, albeit with evolving considerations regarding simplicity and deliverability. The proliferation of service providers and the advent of new AI tools have introduced complexities, challenging operational efficiency for financial institutions. Nevertheless, SMS continues to serve as a vital communication platform, facilitating the cultivation of trust amidst chaos.

With 800 million smartphone users, India boasts the second-largest mobile subscriber base in the APAC region. However, this vast user base also exacerbates delivery challenges, contributing to chaos. Although CPaaS solutions empower businesses and aggregators, a Sinch study reveals that 48% of enterprises lack comprehensive insights into SMS delivery processes and potential impediments.

The enactment of the Digital Personal Data Protection Act in India has prompted marketers to seek solutions offering transparency and reliability. Implementing opt-in verification, prioritizing responsible data practices, and obtaining detailed delivery reports empower businesses. However, effecting such measures in a chaotic internet environment necessitates a transformative shift. 

By Nitin Singhal

Nitin Singhal is the Managing Director of Sinch India.

maildqindia@cybermedia.co.in