Industry outlook: A2P messaging market worth $72.8 billion by 2025

Written by
GMS

Mobile messaging continues to grow – in fact, while many industries have struggled throughout 2020, telecoms has experienced a minor boom as the pace of digitalisation increases. There is no sign of any major reversal in this, as the safety and convenience of online shopping and remote working continue to hold a great deal of appeal.

Growing value

As a result, researchers MarketsandMarkets expect the A2P market to be worth $72.8bn by 2025. Much of this will be driven by authentication services – 2FA and OTP – which have played a major role in telecom resilience over the past year. Remote working and online ordering often require additional security, leading to more companies leveraging mobile messaging, in particular SMS, for authentication purposes.

Banks in particular have a pressing need to secure transactions (especially those dealing with customers in Europe, where PSD2 mandates “strong authentication”) and almost all turn to SMS as a universal channel. This further contributes to the increase in 2FA messaging traffic. Additionally, banks and financial institutions are increasingly using messaging for notifications and alerts, to keep customers abreast of changes to their accounts.

These customers are also becoming more accustomed to the immediacy of the “always on” digital economy, and so instant confirmations and service alerts via SMS are virtually a must. It is therefore no surprise that MarketsandMarkets have identified the banking and financial services sector as the main market in A2P messaging.

APAC region sees biggest growth

A recent Juniper report showed that the Asia-Pacific region is seeing some of the biggest growth, with the Indian Subcontinent alone expecting a 9.7% compound annual growth rate (a trend also identified elsewhere). Established markets such as Japan and China have been growing steadily for the last few years. Meanwhile, as developing markets in the region become more robust many multinational brands are seeking to make inroads, especially social media and ride share apps. These are also facing competition from home-grown rivals – and they all use SMS for activations, authentications, and alerts.

A high number of feature phones in the region also contributes to the growth of A2P SMS. Since these phones don’t receive emails, SMS offers an accessible communications solution that balances immediacy and reach. Operators in this region (and those with a lot of traffic into and out of this region) should be looking to take advantage of this growth, securing their connections and monetising their traffic.

As already stated, banking and retail are expected to be the most promising industry sectors in terms of A2P usage. Although largely driven by 2FA and notifications, this growth is also being driven by a realisation that messaging is an excellent medium for customer service.

Enable customer conversations with RCS messaging

Customer service messaging requires, of course, a way of creating a dialogue. As such brands are investigating more responsive OTT apps which support two-way messaging but, as Covid and its associated lockdowns die down, they are also looking into RCS, a trend identified in Mobilesquared’s Impact of Covid-19 on Business Messaging.

WhatsApp has already been positioning itself as a P2A channel, as a way for customers to reach out and contact brands. However, RCS could also prove invaluable to brands, being mobile-native and offering a compelling conversational experience. Over the next few years operators will need to highlight this aspect and drive its adoption, as it will be by investing in RCS that operators can make the most out of the boom in retail and banking that MarketsandMarkets, Mobilesquared, and Juniper are reporting.

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