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Decline in trust with SMS platforms predicted by new XConnect study
Thu, 8th Feb 2024

New research from XConnect, the provider of numbering intelligence solutions, and Mobilesquared, a provider of mobile intelligence, indicates a notable shift in trust among Communications Platform as a Service (CPaaS) providers. According to the study, these messaging providers are projected to lose trust in SMS platforms by nearly a quarter between 2023 and 2025.

The research entitled 'Do We Still Have Trust in Communications?' demonstrates a diminishing trust in conventional communication channels like SMS, email, and voice channels. These channels accounted for 70% of trust in 2023, but will drop to around 50% by 2025. In contrast, the trust for platforms like RCS and WhatsApp is expected to grow, accounting for a combined 50% of trust within the same period. This suggests a transformation within the mobile ecosystem that providers, brands and enterprises should be aware of.

The report also revealed an anticipated rise in trust for Rich Communication Services (RCS), predicted to be 75.1% and 41.7% for WhatsApp respectively. While SMS did not have an immediate dent due to increased fraud levels in 2023, the report indicates that it may significantly impact these channels long-term unless preventative measures are implemented by the messaging ecosystem.

XConnect's Chief Strategy Officer, Tim Ward, commented on this shift, saying, "SMS remains the most engaging and effective messaging channel and the market should consider the value and potential risk of the alternatives." He acknowledged the challenges facing the SMS ecosystem, including increased impersonation risks and costs, and hinted at XConnect's role in the evolving landscape: "Enabling these providers to manage termination rates, manage traffic delivery accurately and handle fraud is critical to maximising revenues and profits."

Despite the concerns, the Mobilesquared survey found that most brands and enterprises still use SMS for virtually every use case, including alerts, promotions, and security, among others. Efficacy remains the key factor influencing channel selection, trumping potential threats from fraud. Still, concerns stemming from fraud, particularly smishing/phishing, are prevalent and expected to rise in the coming years. CPaaS providers anticipate 8.1% of their customers' CPaaS spend to be lost to fraud, a concerning increase from the previous forecast of 4.75%.

Nick Lane, Chief Messaging Officer at Mobilesquared, explained, "This is by no means the end of A2P SMS, but to delay its regression, it will need to urgently tackle fraud in the short-term. CPaaS providers must take proactive measures to mitigate fraud within the channel to move the industry forward."

This research provides important insight for the mobile and communications sectors, indicating the need for proactive fraud monitoring in SMS communications, and an expected shift in trust towards platforms such as RCS and WhatsApp. As the industry evolves, these trends and predictions remain critical for CPaaS providers, brands, and enterprises alike.