SMS usage falls amid rise of chat apps, soft tokens

Consumers here are ditching the SMS platform in favour of mobile apps like WhatsApp and WeChat.
Consumers here are ditching the SMS platform in favour of mobile apps like WhatsApp and WeChat. PHOTO: AFP

The roll-out of software-based or "soft" security tokens by banks and government agencies is set to speed up the decline of the humble SMS.

The popularity of SMS, or Short Message Service, has been steadily falling since peaking at 9.64 billion sent messages in 2011, according to the Infocomm Media Development Authority.

Last year, only 3.26 billion messages were sent over the mobile networks of the three local telcos Singtel, StarHub and M1.

Consumers here are ditching the platform in favour of mobile apps like WhatsApp and WeChat, which work with Wi-Fi and mobile data connections and can result in significant savings when communicating with a fellow user overseas.

And now, even organisations like banks and government agencies - which have been sending out one-time passwords (OTPs) via SMS for securing online transactions - are set to move on.

Soft tokens appeal to customers as they are as convenient as SMS, and can be installed in smartphones without requiring another device.

Yet soft tokens are also as safe as hard tokens. Security experts have said that SMS OTPs are vulnerable to interception by hackers.

UOB started the ball rolling in December last year with the launch of its soft token, followed by DBS in April and Citibank in June.

More than 200,000 DBS and POSB customers have already registered to use the soft tokens, which will eventually supplant hardware tokens as well as SMS-based OTPs.

Mr Clement Teo, principal analyst at market research firm Ovum, predicted that the yearly SMS volume in Singapore will dip below one billion over the next four years.

"The writing is already on the wall. When more users move to soft tokens, SMS traffic will plummet," said Mr Teo.

The Straits Times understands that the retail banking industry alone accounts for about 500 million SMS messages sent a year.

The total number also includes a small proportion of SMS alerts for large cash withdrawals at ATMs or credit card use.

Another major SMS user is government agencies. Amid fears that SMS OTPs are not safe, the Government is working with digital security systems maker Gemalto, among others, to develop a soft token that will allow citizens to transact more safely with government agencies.

"We are looking to introduce soft tokens progressively as (they) can provide greater convenience to users, including those based overseas," said a GovTech spokesman, adding that more details will be shared when ready.

Defending the longevity of SMS, M1 and StarHub said it is the "most ubiquitous" messaging platform as users do not need to download any app. One key use is public emergency notification, such as the system StarHub developed and launched in October last year for the Ministry of Home Affairs.

The system alerts the public via SMS if there is a major emergency near the mobile users' location.

A Singtel spokesman said it will continue to provide SMS if there is demand for it, noting: "Consumers also see value in (SMS) when travelling to countries where 3G or 4G data coverage is limited."

A version of this article appeared in the print edition of The Straits Times on July 25, 2017, with the headline 'SMS usage falls amid rise of chat apps, soft tokens'. Print Edition | Subscribe