Blog by Sukshitha Rao, Subex
We live in a digital world where everything is available with a few clicks. Whether you want to buy something online, make payments, or log into a popular online service, an OTP (One Time Password) requested via SMS is all you need to complete the transaction. But this process is being replaced in a flash! A huge disruption is being witnessed where flash call verification is swiftly becoming the preferred choice for businesses and service providers as an alternative two-factor authentication process (2FA).
Juniper Research defines flash calling as ‘an authentication process that leverages mobile voice networks to authenticate users or actions.’
Essentially it allows authentication of a user by the last few digits of their phone number. Sometimes flash calling may require some kind of user interaction, such as adding a password/passcode onto a platform.
Flash calling on the rise
Flash calls are fast gaining popularity as it is considered cost-effective compared to SMSes, are swift and secure, and helps deliver an overall better customer experience.
According to Juniper Research, the number of flash calls used for authentication will grow from 60 million in 2021 to an estimated 5 billion in 2022. This is slated to grow exponentially at a CAGR of 128% to a staggering 128 billion calls by 2026! With the rising number of smartphone users, this translates into 20 calls per capita and offers a great opportunity for businesses to add a new revenue stream.
The study further reveals that the total number of flash calls by 2026 will be led by North America, followed by the Indian subcontinent, with the rest of Asia Pacific, Africa, and the Middle East as the subsequent larger markets.
How it will impact CSP’s
Reports suggest that authentication-based messaging is expected to generate $39 billion in revenue for mobile operators, which would account for about 5% of total billed revenue for 2022. However, as brands look to migrate their authentication traffic to voice, flash calls have the potential to substantially disturb SMS revenue, resulting in significant losses for CSPs.
Another foreseeable challenge is the increased competition from Over the Top (OTT) messaging apps. Operators have traditionally been slow to implement new services, making them less agile. On the other hand, OTT players are quick to identify market trends and pivot to cater to the changing demands of consumers. Various OTT players, such as WhatsApp and Imo are already looking to integrate flash calling within their apps, giving them a headstart to grab a large portion of the flash calling pie. All this means that there is a greater need for the telcos to monetize flash calls.
At the same time, flash calling by OTT players is not without challenges. There have been reports of users losing access to their accounts after they shared six-digit verification received on the platform with someone claiming to be from the company.
Monitoring and monetizing flash calls
As of now, most service providers don’t use the technology required to effectively identify and monitor flash calling traffic and, thus, are not in a position to monetize it. This problem is likely to become intense as the volume of flash calling authentication calls is likely to touch 130 billion by 2026, growing from just 60 million in 2021, according to Juniper Research.
Juniper Research believes that mirroring the business models of the established A2P SMS market, which relies almost exclusively on being charged on a per-traffic basis, will be key in increasing adoption amongst brands and enterprises and helping CSPs monetize from the flash calling disruption.
The telcos then must implement solutions that allow them to detect and validate this traffic to grow their revenue. Additionally, CSPs need to adopt cutting-edge technologies to create an environment that can fully monetize flash calls. It is crucial they leverage new-age solutions that can help them regain their power, as well as protect A2P revenue streams. The need of the hour is that CSPs look for solutions such as fraud management systems, which monitor signaling traffic in real-time and also encompass complex ML algorithms and pattern mining tools to detect any suspicious behavior in the traffic and monetize it effectively.