Q+A: The humble text message is getting a major upgrade

0:00Welcome to Fear and Greed Q&A where we ask and answer questions about business, investing, economics, politics and more. I'm Michael Thompson. Now, text messaging has been around for decades now, but the humble SMS is about to get a pretty significant upgrade. A technology called RCS is designed to make the standard messaging app on your phone a whole lot more interactive businesses, essentially. As far as I understand, it can have two-way conversations with customers, you know, images and buttons and importantly verify who they are. It's pretty well established overseas. Now it's gaining momentum here in Australia. Hugh Haley is Senior Director, Partners and Careers APAC at SINCH, which is a great supporter of Fear and Greed Q. Welcome to Fear and Greed Q&A. Thank you, Michael. Did I get that roughly right in the intro? Because most of us have been using SMS forever. What is actually changing here? Surprisingly, yeah, really good. I'm not sure what I can add on top of it.

1:03You're no longer needed here. Yeah, I'll leave now. RCS actually is a present technology in Australia already. If you're using an Android device, you'll use RCS to send messages from Android device to Android device. What's changing is that iOS, Apple and Google Android are going to interconnect. So they're going to play nicely together. So that's the fundamental change. And then the upshot is that that gives businesses access to a kind of rich, sure, messaging environment. But the fundamental thing that's driving this is Google Android devices are going to play nicer with Apple devices. So peer-to-peer, you can send me a picture, you can join an iOS group chat. So there's kind of an uplift for peer-to-peer. But then also the benefit for businesses comes in effectively allows businesses to completely transform the way they could, they talk to their customers in that messaging inbox.

2:05Just David, just as a consumer, I think we've all had those kind of group chats where all of a sudden one person is using an Android phone. And it means that no one is getting the blue messages anymore. And welcome to the party. Indeed. And they do get excluded quite quickly. So is it about then replacing SMS or the two kind of co-exist essentially or is it just adapting what we currently have? Like, I mean, it's not going to be like a rapid change. Ultimately, a sort of user-to-user level that will be quite, that will be rolled out quite rapidly. But then the way that these, the operating systems are going to play nicely with each other is going to be launched slowly by carriers. So one of the reasons this hasn't already arrived in Australia is the way that they interconnect is at a carrier level. So Telstra, Optus, and TPG will need to do some work in order to make this happen. Now, it's too early to say, but we're pretty confident we'll be seeing one, at

3:09least one, tell co-live this year, which is exciting. I can't name who they are, but we'll be working to have RCS to a to a network live in Australia this year. The other two carriers will then subsequently need to do that bit of work to enable everyone to get access to the improvements of the service. And I imagine once one does, the pressure is on the other two to get moving pretty quickly. And also kind of in the environment that you've got in Australia at the moment with Spam and Scam, which is a real obviously being focused on by the government, which is obviously something that we've worked a lot on at Singe, but also as an industry, the improvements that as a brand you will get in RCS, you will have a verified branded originator. So I'll know that the brand that is talking to me is the brand that I expect it to be. Okay, which really matters then in terms of trust. We've talked a little bit about the business side of things. What is the big opportunity,

4:14apart from just being able to verify who you are and actually guarantee to your customer that they are receiving a message from the legitimate business. But there's a lot more in this, isn't there? The opportunity is bigger than what you can do with an ordinary text message that you are sending out from your business. Yeah, so if you, I've got some unofficial huge stats, which I'm happy to share, but I'm not sure Singe would necessarily stand behind them. If you go far, yeah, I'll ask for forgiveness later. So if you look at the kind of improvements that suddenly your traditional SMS business can move into, in effect, you're moving into two new areas. One is digital advertising or rich media advertising. And the other is the business of app on demand. So everything that you can do within an app, you can actually do on demand within your messaging inbox. So those are two pretty meaty parts of the mobile world. Now, me and my special AI assistant calculated it's about

5:22combined about half a trillion dollars annual revenue US, but that's the new addressable market. And that's really what's being spent on digital media advertising and what's being spent on building apps for businesses. I'm not going to suggest that I'll see us take all of that, but it certainly kind of have a meaningful sort of role to play in that space. It feels like you mentioned a few things there. One of them was kind of app on demand. But the part that gets me is what it actually looks like and what the interaction is with the customer. How that's different because we've been told for so long, when if you get a text message, it says do not reply to this SMS, this is unmonitored, all that kind of thing. Is it moving then in the other direction where customers will be able to essentially expect a reply and have a conversation and what kind of pressures that they put on businesses to be ready for that and to be able to engage? Yeah, ultimately, you can simply move RCS to improve your existing SMS business. So the most initial business that we

6:30do with the move from SMS to RCS is just verifying your agent, verifying your header, branding colors, giving you read receipts as well as delivery receipts, which is the initial uplift that you can get from a very basic sort of move to test out RCS. Now, as you kind of move up the value chain, you can move to say rich media. So I think if you want to send a video or an image or a carousel of some kind of information on your on a website, that's the next phase. Phase three of adopting RCS is really adding the conversation elements. And if you're using an existing tech, martec platform, the likelihood is that they're building for that listening capability. So at sort of big enterprise scale, the likes of Adobe Salesforce, those platforms are getting ready for this as a channel. So at the top end of town, you're going to be

7:33really well-served. There's also a kind of a mid-market level where Sinch Engage can help. Sinch Engage has a multi-channel inbox, which you can actually use with a chatbot or with an agent. So I wouldn't necessarily let the capability of the channel scale off, because that's not necessarily what it needs to be just used for. Right. Okay. The second component that you suggested there, in between essentially the more colorful version of just a text prompt and then the full engagement and interaction, that middle one feels like it could be the sweet spot for a lot of businesses. But nobody wants their inbox, their message inbox in particular to become essentially another social media feed full of advertising. So how then do businesses use this without creating

8:34essentially just really sophisticated looking spam? Yeah. I mean, obviously you need to have opt-in. The good thing about RCS is it will follow the same kind of regulatory framework as SMS. So if you have an SMS opt-in, you can send an RCS message in Australia. That's fine. Now, you're going to have to pay for this ultimately. So in order to stop spam channels, we would expect there to be a level of decision making by the brand to decide, am I sending the message that's relevant? Am I sending these messages too often? And brands are already doing that with SMS. I think the old days of spray and prey messaging of God. We're seeing much more personalization, trying to send the right message at the right time. You'll then also be able to add that personalization into the media within the message. So we've run some really cool campaigns

9:35in the States where we've been able to put personalized video into an RCS campaign. So calling it, you can use different software to bring together personalized elements within a video and then deliver that over RCS into the messaging inbox channel. Wow. And that is probably the key here as well that RCS is already a heck of a lot more established in places like North America and in Europe. Anything in particular that we should be taking from that, what have businesses there learned and without being too negative are there things that Australian companies should avoid? Mistakes that they should avoid, all the things that have worked that we should be copying. There's kind of two really strong initial adoption use cases. One, and this is really a cute in Australia, the trust and security that RCS gives your brand. The other one is that first rich element. So the first move as we tend to see tend to be in that marketing space. Banks are coming and

10:35following and curious, but they're not necessarily wanting to be the first move. I think the first the doctors that we see at scale of this are marketing platforms, but also actually just it might be a weird niche, but collections platforms. We've seen 66% increase of collections where you send the invoice within the rich field of RCS and you have a button click to pay. That that kind of really simple clean use case that's transactional, but then you can return an EJ at value and press that button. That works really, really well. So I think from an Australian business perspective, is I would keep your ears open as to when this becomes available via the platforms that you're using. We're obviously here to help, but there's going to need to be a phased roll out. The telcos will roll this out, but then also the tech platforms that you're working within will roll it out. You'll see different use cases coming on on board. It may be that your telco is the first

11:42place that you see this message coming out from where it's kind of announcing this is a new way of receiving messages from businesses. Terrific. Hugh, thank you for talking to Fear and Greed. Oh, a pleasure. That was Hugh Haley, senior director, partners and carriers. A packet cinch cinch is of course a great supporter of Fear and Greed. Find out more at cinchengage.com. That's s-i-n-c-h-e-n-g-a-g-e.com. I'm Oka Thompson and this is Fear and Greed Q&A.