2020 was uncertain for many sectors of the communications market but A2P messaging continues to show resilience and growth. Its role in online transactions, identification, verification, brand engagement and customer service mean that A2P was even more important to businesses in 2020, and the total number of A2P messages sent grew around the world.
Banking, financial services and insurance (BFSI) remain a large portion of the market, but we’re seeing A2P messaging diversify as use cases increase. Healthcare, governments and non-profits increased their usage of A2P messaging as quarantines and lockdowns associated with COVID-19 caused new demand. For example, Communications Platform as Service (CPaaS) provider Twilio reported 90% growth in the use of its platform by healthcare customers.
While hospitality, transport and airline industries generated very little traffic in 2020, these losses were replaced with increasing online activities, and identify verification using A2P grew, as online commerce activities flourished.
Overall, A2P messaging is being embedded in a growing number of services and becoming essential for how brands and organisations communicate and engage with users. 2020 was an uptick in the business messaging market that will only continue in 2021.
Here’s a look at what we think will happen in the market in 2021 and what will be creating new opportunities:
- Differentiation with Optimisation and Experience
A study by Juniper Research estimates that 3.5 trillion A2P messages will be sent in 2023, up from an estimated 2.5 trillion in 2019. That is a 40% increase. For A2P aggregators, that is a tremendous opportunity to capture new and sustained growth. The key will be to differentiate their services and offer an optimised user experience. The successful companies will be those that explore ways to increase the speed and precision of their message delivery to increase customer satisfaction and loyalty.
The best way to do that is by ensuring that every message is rapidly delivered to users with the lowest possible cost base. Offering delivery assurance immediately separates their offering from others and positions them to capture a larger share of this multi-billion-dollar opportunity.
- Rapid Two-Factor Authentication (2FA) Adoption
2FA growth is accelerating and demand will continue to grow in 2021. 2FA is becoming standard for applications and services, especially as flexible working means that ICT environments become more difficult to control.
According to Verified Market Research, 2FA for web platforms and services is anticipated to propel the growth of the global A2P SMS market. This is due to more and more organisations intensifying their security protocols as serious threats like phishing and spoofing affect their revenue, reputation and trust. The challenge for aggregators will be to serve this demand and ensure that they deliver A2P messages at speed. Failure to deliver messages quickly can mean that users can’t access their applications or they turn off 2FA. They have to deliver optimised performance to capture the opportunity in 2FA.
- It’s Finally the Year of Rich Communications Services (RCS)
Branded and interactive mobile experiences delivered via SMS are finally taking off. According to the GSMA, monthly active RCS users surpassed 300 million in 2019. It expects the total market value of RCS services to reach $74 billion in 2021
Brands that have been struggling to engage customers in the physical world have the opportunity to offer new and dynamic experiences via mobile devices. In 2021, we will see a growing number of Mobile Network Operators (MNOs) offering brands RCS services, and brands investing in new customer journeys that include rich A2P messaging experiences.
For the MNO, it is again crucial to not just offer RCS, but optimise it. They have to be able to deliver these messages with a user-centric experience that goes beyond best effort.
- M&A and Growing CPaaS Offerings
Growth in the A2P market means that more voice business will be entering the market via acquisitions. In 2021, we expect to see A2P aggregators acquired by voice-centric businesses to add new revenue and margin to their bottom line. Voice players want to get into the A2P space as price erosion hits margins.
At the same time, A2P players have seen an opportunity to deliver CPaaS through adding voice capabilities and offering a comprehensive set of services. It is going to be interesting to see which side moves most aggressively to build their service offerings. It is likely that voice players need the revenue and margin more and would benefit from the operational and commercial synergies.
- Data Drives Profitability
As mobile number portability grows globally and an estimated 40% of numbers have been ported, any player in the A2P space has to have high-quality number intelligence. They have to deliver messages to the right users every time. As more numbers are ported, that becomes increasingly difficult and can lead to delays, undelivered messages and high routing costs.
In 2021, A2P aggregators need to invest in enhancing their mobile number portability data to ensure that they are delivering optimised experiences. The better the data they have, the greater the precision, performance and speed that they can deliver.
2020 demonstrated how fast user behaviour and demands can change. In 2021, we will not see A2P messaging return to pre-COVID usage patterns. If anything, we will see growth further accelerate as users accept a new normal where most transactions take place online and applications and services are accessed from anywhere. SMS has proved itself to be a bit of a stalwart over the past year – it is still the only ubiquitous service and everyone with a phone knows how to use it. In a market plagued by walled gardens and tech giants who people find hard to trust – it is easy to see SMS continuing for quite some time. This will support growth for A2P aggregators who can deliver the user experience that customers demand, and that requires rich data sets.
In 2021, we’ll see a growing recognition of the power of global number intelligence in the A2P market, and in turn will see higher quality experiences delivered to users.