A2P SMS Messaging Market is Complex, But Growing

I came across an interesting article regarding the A2P market. It’s entitled “Growing Employment Rate to Benefit BFSI A2P SMS Market in Switzerland.” The contents summarise a new report from Transparency Market Research about the A2P market in Switzerland, specifically how it relates to BFSI or Banking, Financial Services, and Insurance (BFSI).

You might be thinking that sounds boring rather than interesting, but what drew my attention was the relationship of employment to A2P SMS messaging. I see statistics all the time for SMS messaging and whether it’s growing or declining or which sectors use it the most. Rarely is there talk of the drivers behind the statistics with such specificity – at least in the title.

Apparently, Switzerland’s high employment rate is increasing the need for bank accounts for all those newly employed people. They in turn want to get updates via SMS, or their banks use SMS for authentication. Altogether, more bank accounts mean more A2P SMS messages. That makes sense.

But later in the article it’s mentioned that the banking industry in Switzerland is decreasing, so even though A2P is going up, it’s also going down. But not really down. Instead, the report says that the reduction in banks, combined with “disruptive applications and technologies” will simply “curb” the A2P marketing in that country until 2023. The overall growth rate will be a minimal 8% CAGR.

I’d say that’s still pretty good, for a market that’s as complicated as this appears to be.

Globally, the A2P market is predicted to grow too. According to Transparency Market Research, the value of the worldwide A2P market will be £45B by 2020, growing by 4.2% CAGR until then. But this overarching statistic hides some of the complexities in individual markets and countries.

How fast a market is growing depends on which specific market you look at. Above, it was the BFSI market in Switzerland. But you can break down the statistics in terms of messaging tools (cloud based or traditional managed messaging), or by national-only, international-only, promotional, or CRM messages.

One report published a couple of years ago (by marketsandmarkets.com) predicted the UK A2P market would grow at 32.9% CAGR until 2016. I guess we’ll find out once the year is over if they were right. But that would be an amazing growth rate given the other numbers above.

I’ve mentioned a few things that hint at how complicated the statistics and market can be. But when you step back and look at the overall picture, A2P usage is only going up. In every market, in every country I’ve seen reported in articles, the expectation is single to slight double digit growth – with the UK prediction being a standout well above that.

There are use cases for A2P messaging in most industries, even though most people think of just the financial sector. The IT, scientific, logistic, and retail sectors also use A2P for all sorts of different purposes. All of them though, integrate their applications with a messaging service.

And another emerging sector, the Internet of Things (IoT), is also going to be using A2P messaging. I imagine the use cases for IoT will likely be beyond anything we can think of now. For example, your refrigerator can send you a text when the water filter needs to be reordered, or notify you that it just ordered a new filter for you! It might also send you a text letting you know of a power outage or other malfunction. This connectivity with our household or work appliances and devices will be unlike anything we’ve seen so far.

Developers in these, and other sectors, have the opportunity to take advantage of the A2P growth by offering services that provide a connection to SMS providers. For example, a developer can become a reseller of SMS services (like those fastsms offers) by adding that capability into their software and charging the customers for the messaging and the development and support. Alternatively, developers can create standalone modules that interface with common business applications and an SMS provider. In this case the developer sells the module, and the business that uses it needs to purchase the required message credits.

However you look at it, A2P developers are likely to be in-demand now and in the coming years. SMS messaging will also be growing in use because of these A2P applications. If you’re a developer interested in working with a well-established and reliable SMS provider, take a look at our API or catch us on live chat and we’d be happy to answer your questions.