9th - Nov - 2017

Why Asia Pacific is the next big A2P growth market

In the last five years, the volume of text messaging being sent globally by businesses has almost doubled, and is expected to hit two trillion this year.

Impressive open rates for marketing messages, reliable authentication and notifications for the banking and healthcare sectors, plus effective relationship building for brands and retailers have been key drivers for an Application to Person (A2P) messaging market expected to be worth $58.75 billion by 2020.

However, while the A2P market’s recent growth has been driven largely by Europe and North America, Asia Pacific is about to enter a golden era for A2P, which is why multinationals and mobile messaging insiders are all making tracks east.

Here are five factors which explore the A2P potential in Asia Pacific:

  • Explosion in mobile banking

Asia Pacific has been the biggest contributor to mobile subscriber growth in recent years, which coupled with the rapid pace of mobile internet uptake has seen use of mobile banking apps and services skyrocket.

Mobile transactional services is one area in particular that is expected to contribute significantly to A2P growth in the region. Concerns over mobile banking security across the region has meant that demand for SMS based two-factor authentication services has also increased significantly.

  • Mobile retailing is booming

Many of the same factors have seen mobile retail explode in Asia, with the market growing 64% year on year, making it the fastest growing digital channel in Asia Pacific.

As in other markets, A2P is a key tool for multichannel retailers – advising customers when products are out for delivery or ready to collect in-store, or to deliver promotional vouchers and CRM messages.

  • Maturing businesses seeking operational efficiencies

Compared with those in Europe, Asian businesses have taken a very people-led approach to the majority of business functions. The norm is (or was) for actual humans to perform business-to-consumer functions rather than software. However, in recent years, in-step with maturing technology infrastructure and connectivity, businesses are now looking at ways of increasing operational efficiency, largely in areas such as CRM.

Mobile messaging and the use of chat bots for example, has seen many businesses in the West achieve significant improvements in customer service whilst also reducing costs.

This model is now being increasingly adopted by businesses across Asia Pacific and in tandem, major messaging providers have grown in the region, offering automation, one-way and two-way SMS as a software solution to customer engagement – a next step that is cost-effective and scalable.

  • Multinationals show appetite for Asia Pacific expansion

The increasing adoption and use of digital technologies, alongside affordable real estate and the availability of English speaking workers, especially within emerging markets like Bangladesh and the Philippines, has seen multinational growth in the region outstrip EMEA and North America.

This influx of multinationals will only contribute to rising spending on mobile applications, further increases in the mobile subscriber base, and increasing growth the A2P SMS market in the years ahead.

  • Legal frameworks required to make messaging more sustainable

While many factors will contribute to A2P growth in Asia Pacific in the coming years, at present the region has a problem with grey routes – messages sent via a third-party aggregator or operator where no interconnect fee, and hence no commercial agreement exists. And because there are so many countries within the region, it has so far failed to produce local legal frameworks to help make messaging become a more sustainable reality.

This is one of the reasons that the world’s leading A2P providers are now active in the region, as they are able to use their experience of Europe and other established markets where regulation is far more mature, to help forge these legal frameworks so that they can quickly take advantage in the region.

Author: Rob Malcolm, VP Marketing & Online Sales at CLX Communications

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