Navigating chaos: Securing trust in digital communication

The risk perception in the traditional enterprise-customer model has increased to unimaginable levels. Until years ago, banks, telecom operators, and retailers preferred an enterprise communication platform for better cross- and up-selling opportunities. Today, however, the purpose of a communication platform is far different.

A highly Internet-savvy user is at a higher risk from fraudsters armed with artificial Intelligence and machine-learning tools. In this case, a Communication Platform as a Service (CPaaS) tool helps enable security and better trust. High adoption rates of mobile banking have enabled financial inclusion but have also led to an increase in victims falling prey to Internet scams. The trap could be as simple as a discount on a restaurant, a job offer, or a second-hand iPad on a classified portal. It is crucial for brands, therefore, to keep a stock of their customer journeys.

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

However, knowing the customer is where it gets chaotic and flummoxing for enterprises. WhatsApp, a platform where every marketeer wishes to interact with a would-be customer, observes the transmission of 140 billion messages daily. On X (Twitter), approximately 500 million tweets are made daily, and 4 billion are made on Snapchat. Many brands also rely on SMS, a communication platform with a trillion messages sent annually worldwide. India remains the world’s second-biggest market, with 120 billion messages.

The Role of Regulators

The chaos with communication platforms has worried banks, insurers, retailers, e-commerce players, and even regulators. The rising adoption of the Internet has increased the risk for customers in the online space. The Reserve Bank of India (RBI) reported 7,382 fraudulent card and Internet-based transactions in just six months of FY24. RBI data worries bankers because total loss attributed to the channel of ‘card and Internet-based’ frauds surged from 1% in FY21 to 76% in the half year of FY24.

Until a decade ago, banks charged a monthly fee for SMS alerts and updates. However, recent industry trends have shifted towards revising the existing rates or offering these services for free as a security measure. Providing customers with information about their transaction details is crucial in improving trust scores. Sending an SMS alert about a fraudulent transaction demonstrates proactive fraud detection and enhances transparency, reliability, and overall customer care. In addition to banks, many retailers and financial institutions are now establishing communication platforms using newer channels such as WhatsApp.

On the regulation front, regulators such as the RBI, TRAI, SEBI, and the Finance Ministry are deeply concerned about the chaos in communication. While the ecosystem has been reminding users to stay vigilant and informed, brands are rightfully worried about the potential loss of trust in case of a mishap. Communication platforms like SMS have become deeply ingrained in India, to the extent that even an Aadhar card is authenticated through this channel. To prevent misuse, telecom regulators have implemented stringent policies, directing all telcos to deploy technology based on AI/ML to avoid fraud and unsolicited messages. Furthermore, service providers have been instructed to adhere to the correct SMS templates. Failure to utilise these templates may result in their suspension and the risk of SIMs being blocked for sending unsolicited messages.

SMS: Why and Why Not?

SMS remains a seemingly simple yet powerful solution for the banking system’s anti-fraud arsenal and the communication needs of enterprises. As a primary tool, SMS enjoys universal reach as a communication platform. It enables communication even in zones with limited access to the network. Enterprises can leverage SMS to send real-time transaction alerts, empowering customers to immediately identify and report unauthorised activity. Since SMS helps confirm a user’s location during login attempts, back-end teams can identify potential breaches from geographically distant areas. This also enables banks to analyse transaction patterns and trigger SMS alerts for suspicious activity, such as high-value purchases from unfamiliar locations.

Although SMS is vital, using it correctly is equally important. SMS is vulnerable to interception and spoofing, making it susceptible to phishing attacks and scams. Secondly, SMS delivery is as guaranteed as the weather. Since SMS relies on network availability, network congestion or technical issues may prevent dissemination, resulting in failed message deliveries. SMS benefits from direct delivery by telecommunication companies to mobile SIM cards. However, security vulnerabilities can arise if enterprises use CPaaS providers with inadequate security practices. Moreover, the rise of over-the-top (OTT) messaging apps offering end-to-end encryption, such as WhatsApp and Signal, has resulted in a decline in the relevance of SMS for secure communication.

Deliver SMS the Right Way

While SMS remains an industry-preferred choice, enterprises have constantly evaluated simplicity and the ability to detect deliverability. The diversity in service providers and the arrival of new AI tools have thrown enterprises into a frenzy. Newer advancements may have complicated operational efficiency at financial institutions. However, SMS can still be leveraged as a crucial communication platform to build what matters most - trust.

With 800 million smartphone users, India leads the second-largest mobile subscriber base in APAC markets. The sheer volume adds to the potential for delivery issues, creating chaos. Although CPaaS solutions enable businesses and aggregators, a study by Sinch found that 48% of these enterprises lack clear insights into SMS delivery journeys or potential issues.

The arrival of the Digital Personal Data Protection Act in India has also resulted in marketers scouting for solutions that offer transparency and reliability. Ensuring the platform’s opt-in verification, focusing on responsible data practices, and obtaining detailed delivery reports certainly empower businesses. However, enabling that in such a chaotic Internet environment requires a paradigm yet transformational shift.

By Nitin Singhal

The author is the Managing Director of Sinch India.

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