Monday, April 15, 2024

    FCA to make banks use SMS to tip consumers off about better interest rates

    The UK’s Financial Conduct Authority (FCA) is looking to use SMS to let consumers know that they can get better interest rates on financial products, Telemedia News has discovered.

    Many ordinary people are getting really poor interest rates currently, with some on terms as low as 0.01% – or 10p interest per year on a saving of £1000. From December this year, banks and building societies will have to produce a ‘summary box’ on statements giving basic information about savings rates that will make it easier to compare accounts.

    But the FCA wants to put pressure on the banks who give such poor rates and text is the natural choice: it is simple, widely understood and used by pretty much everyone.

    Out of a number of trials of different methods of engaging with consumers about interest rates, SMS alerts and email reminders were found to have a positive effect on persuading people to switch accounts.

    It will therefore consider the idea in more detail in the months ahead.

    “When it comes to savings and interest rates, consumers often feel bamboozled by the number of different providers offering various deals, and the result is that many UK savers just aren’t getting the best deal,” comments Ivan Maksic, Regional Manager Western Europe, Infobip. “To address this, the FCA needs to do one thing – keep it simple and SMS offers the ideal way to do this.”

    Maksic continues: “Limited to only 160 characters, SMS is a straight forward way of getting the message of a better deal across. Text messages, by their very nature, offer a clear, concise and familiar way to speak to consumers about a subject where lack of information is a significant issue. With some savers earning just 10p a year on a £1,000 investment, the way banking customers are kept up to date needs to change and SMS will play a big part in the solution.”

    One of the major advantages of SMS over many other channels is that it just works. On any type of phone, from basic handsets to the latest smart devices, SMS is the consistent and reliable channel that the FCA needs. Beyond this and most importantly, SMS has come a long way since its inception and messaging providers are able to deliver SMS alerts in a completely protected way. The combination of security and clarity will not only allow peace of mind for consumers but allow them to make the most of their savings at a time when many are feeling the pinch, believes Maksic.

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