The Pros & Cons of Text Messaging for Financial Institutions

Man Text Messaging on Phone Horizontal
(Last Updated On: February 24, 2022)

Beyond a Fad, Texting is a New Normal

Did you get the message? We’re back again to talk text messaging and your financial institution. This time, we review the pros and cons, while uncovering texting’s many uses throughout your institution.

9 out of 10 consumers want to use text messaging to interact with businesses. That includes your bank and credit union. And you’ve got lots of reasons to oblige.

Texting gets in front of recipients like nothing else. Enjoy a 98% open rate and far higher response rate (45%, really!) than phone or email. SMS is simply a better way of engaging your customer base.

So who uses it? Enough that we cannot list them all here. In fact, search “text messaging for credit unions”, and browse page after page of financial institutions touting their capabilities. And, of course, see the many providers for this service.

We understand. It’s not a simple yes/no decision. You’re adding another channel to your marketing, support, and service mix. That takes careful consideration. So we’ve put together a series of articles to help you with all aspects of a text messaging solution.

This one will help you understand the Pros & Cons of incorporating texting into your organizational strategy.

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Better Connect With Account Holders

Two Hands Holding Puzzle Pieces

People want to text. The data doesn’t lie. Whether at home (a practice pretty common right now) or on-the-go (it’ll happen again, eventually), texting is the medium of choice.

Using SMS (that’s Short Messaging Service, the typical acronym for texting) for your marketing and service is the fastest way to:

  • Begin customer interactions
  • Send out individualized account alerts or institution-wide notices
  • Facilitate member service
  • Push new offerings, even specific to recipients

And all of this can be done with no face-to-face communication.

Plus, because texting consists of, well, text, there’s a digital “paper trail” for your records. This lets you archive interactions for improving service and referencing issues. Compare that to listening to recorded phone calls; which do you think is easier?

A Tool Your Whole Organization Can Use

Messaging Icon Made With Crumpled Paper

Texting isn’t just for your marketing team. Your entire organization can implement text messaging to communicate, both internally and externally. For the former, it’s great if you don’t already use Slack or Microsoft Teams within your institution.

But you’re here for the external communications. Let’s take a look. Here are a few different use cases for each department:


This is the obvious one, so we’ll get it out of the way first. Your marketing team can embrace SMS to push product offers, rate reduction alerts, or special promotions to current members and potential customers. All without battling the email spam filter or Promotions tab.

Sounds like every marketer’s dream, right?

Marketers will likely use one-way texting (i.e. it doesn’t initiate a two-way, real-time chat) to push out communications. Other departments may be better suited to use the two-way conversation functionality.


Just as your members are getting inundated with emails, your employees are too. Your HR team can use text messaging to communicate with employees and internal stakeholders about relevant company announcements (i.e. office closures, holidays, reminders).

It doesn’t mean you have to take away any other methods of employee communications – it just adds another channel and boosts the likelihood that your colleagues will stay up to date on company news.

In all honesty, if you already have a Slack channel for HR, this is just going to be repetitive. If that last sentence made no sense to you, that’s ok, and this text solution could be a boon to staff communications!

Branch Operations and Account Services

Holding Phone Entering Text

Text banking is a great option for customers who want to bank on the go. It’s probably a feature you support today. But not like this.

Simple text commands enable account holders to read:

  • Account balances & statements
  • Payment due dates
  • Spending reports
  • And more as it is configured

All this can be done from their native messaging app.

You also have the option of providing basic customer service along with essential fraud alerts. These are outgoing messages. Members can also contact your text number (usually a 5-digit code, such as 999-99) with a basic command to get institution info.

For example, if they text “HRS”, your system can send them local branch hours. Or, if they text “ATM”, it will provide a short list of the nearest fee-free ATMs in their area.

Finally, you can let account holders turn on proactive alerts. That way, they’ll get a text if their checking account goes below $100, helping them avoid possible overdraft fees.

Yes, some of these are available within your mobile app. However, time it out. How long does it take to open up your app, sign in, and find one of these pieces of information? If it’s more than a few seconds, the text option is faster. And you know how we all love fast!

Plus, some mobile banking platforms don’t support notifications, so having an SMS platform can help mitigate weaknesses in your mobile app.

Sales and Lending

Using Phone in Hands

Instead of sending five follow-up emails that all go unread, what if your sales team could shoot a quick text? And, within minutes, a prospect conversation resumes.

How many loan applications do you see get started, then abandoned? What if you could reach out and help them get completed by text message? Yes, it is possible.

On that same note, what if the delay is on your side? Perhaps an underwriter is reviewing an application and needs more information, such as a pay stub? With a text platform, they could just request a picture. The applicant texts a photo of their recent pay stub. Done.

Some platforms even let you collect documents and signatures securely via text. It takes the convenience of Docusign and applies it to physical paperwork.

No more hassling with printing (“We don’t have a printer at home”), scanning (“Is that what this thing is?”), or faxing (“Mom, what’s a fax machine?”)! Just ask members to sign required documents, take pictures, and text them over. No more back-and-forth friction or delays.


What’s the hardest part about debt collection? Exactly, getting in touch with people. A low response rate is one of the large pain points. After all, fewer responses means fewer collections.

Turns out, texting is the best way to reach out and connect. You can send text-based reminders and follow-ups about due dates and terms. Plus, make a real connection with two-way, real-time conversations with individual members.

Imagine being in their position. Would you want to stop in to a branch, knowing you’re already behind on payments? Plus, with the challenges of COVID-19, branch visits may not be safe or possible. And financial issues are widespread.

Having the ability to reach out by text one-on-one to affected members helps everyone. And you’re not the “faceless lender” demanding their money.

Contact Center

Rotary Phone Off Hook
“Press 2 to continue holding…”

Raise your hand if you look forward to waiting on hold. “Your call is number 12 in the queue.” Hooray! Said no one ever.

Here’s the thing: Phone calls are an active effort. You can put it on speaker and try to do other things, but you’re always listening. Texts are non-interruptive. Send it. Go on with life. Address when you get a reply.

Your institution can field common inquiries route requests appropriately through text. Plus, it helps reduce the burden on your customer service team by avoiding unnecessary phone calls.

This allows you to resolve customer issues quickly and efficiently, while helping customers get answers to their questions. Without the active distraction of a phone call, hold time or not.


Texting solutions have a lot going for them. But it’s not all roses. To take advantage of the perks above, you need to plan for and address possible downsides. In this section, we will discuss some of the cons of a texting platform at your financial institution.

Compliance Concerns

Navigating federal regulations and compliance requirements is a headache. We don’t have to tell you that. And this is the largest challenge/objection to texting platforms we (and our industry partners) encounter. But it’s not insurmountable.

You may be familiar with TCPA. If you’re not, you will be. If you are, just nod along with us.

Without going into detail, the Telephone Consumer Protection Act of 1991 “restricts telephone solicitations (i.e. telemarketing) and the use of automated telephone equipment.” Failure to follow its rules could result in hefty fines.

Wall of Spam Containers
Don’t respect opt-in (or opt-out)? This is what your members see.

So, it’s essential your text outreach is compliant. The first step is to obtain member opt-ins before sending out any text-based communications. A trusted text messaging partner can help keep you informed on regulatory changes and best practices for maintaining compliance while providing a great member experience.

Technology Constraints

Like any new system you consider, it’s essential to consider how a texting platform will integrate with your existing tech stack.

Internal Computer Cables

The whole idea is to make communications and tracking easier, not add disconnected steps and processes. By ensuring your texting strategy is digitally linked to your core systems, you can provide the highest-quality service.

Member info needs to flow through proper channels (both for convenience and compliance). How are they added to lists? When they opt-out, does it happen instantly? For texting, results need to be fast.

Knowing what your system can do also helps you set up text campaigns. Without proper integrations, you risk losing out on powerful features and metrics.

Yes, this is about data, too! While you cannot track open rate, you can monitor responses, opt-ins, and actions taken. You can also set up groups, just as you would with e-mail.

Without this information at hand, you run the risk of missteps in communication from poor segmenting.

Your goal needs to be minimizing the manual effort necessary to integrate, support, iterate, and improve your texting platform. Unfortunately, this may involve substantial planning at the onset, taking valuable staff time, energy, and resources.

Message Size

Measuring Tape on Green Textile

Can you keep it short and sweet? It may seem like a minor concern, but message length is a key part of your text strategy. Get it wrong and you’ve got problems. Ever received those split-up text messages from someone? Yeah, that’s not good for your institution.

All communications must be clear and concise, which helps if you’ve planned out the most common ahead of time. However, this only works for your outgoing system-generated messages. What about those two-way support chats?

Phone conversations and emails have no such length limit. Ideally, don’t talk for 20 minutes straight, and keep your email to a few paragraphs at most. But there’s no technical limit. For text, it’s 160 characters (in your Western languages). Hard stop.

Sidenote: Some phones and providers can automatically process long messages so they arrive as one. This can be done by sending them as MMS (Multimedia Message Service) messages. Talk to potential or current providers to learn how their system works.

Let’s assume your messages are going out with traditional SMS. Which, if you want to maximize receipt and compatibility, you should. In that case, brevity is essential.

This will mean building a “style guide” for text-based support communications. It will also necessitate training with all staff participating so they know how to:

  • Remain within the length limit
  • Know when to end a message (“Congratulations! Your loan application was…”)
  • Have a standard way to show the message is part of a series “(1 of 3)” or “(1/2)”
  • Use a standard “signature” to identify who sent the message

Protip: If your financial institution already has an active Twitter account with personal DM-based support, use these processes for texting. Two main differences:

  1. On Twitter, you can start out public, then take the conversation private
  2. DMs (Direct Messages) no longer have length limitations (ok, it’s 10,000 characters, which is a lot)

Need for Resources

Working on Papers and Computer at Desk

Adding a new texting platform to your marketing mix requires resources, both financial and otherwise. With all you have going on right now, can you give it the attention necessary? Because that’s what it takes to be a success.

First, we’ll look at the cost. The platform and service is usually affordable. However, depending on your size and needs, this could still make a good dent in your marketing budget. Plus, you have to consider any costs to get your current systems “talking” to it.

We touched on this in the previous section, but now it’s blatant: Training. You’ll need to set aside time for it. Consider a provider that has materials ready to go, and may even conduct the training as part of your onboarding, plus on a regular basis.

This extends to any department using the system, but also others who may be a step removed. Imagine a member mentioning an alert they got via text to a staff member unaware of the platform at all? Doesn’t look good for anyone, and offers no help to the member.

Every person at your institution needs to know the basic purpose, operation, and goals of your texting solution.

If the concern of privacy just came to mind, you’re right. You’ll need to create a process to ensure all staff have access to the right features (and member data) to make it all work. On the flip side, that means blocking access to those who don’t need to see that information.

One More Unread Message

Man on Phone Silhouetted by Sunset

Text messaging is a powerful, scalable way to communicate with members and prospects without having to fight for valuable real estate in their email inbox.

It’s engaging, interactive, and immediate. We believe it makes good business sense to add text messaging to your toolbox. Of course, it’s up to you to weigh the pros and cons for your own specific situation.

Looking for more on text messaging? We’ve got it. Be sure to read our entire series so you can make the best educated decision. You’ll even be able to find the best providers in our industry!

Of course, we offer more than just info on text messaging. Be sure to Subscribe to the Learning Library so you can get content delivered (by email) specifically for your role. Unless you want those updates by text! In which case…no, we don’t do that (yet).

Image credits: freestocks, Volodymyr Hryshchenko, Quino Al, Hannes Johnson, Markus Winkler, William Iven, Bruno Reyna on Unsplash

Joe Winn - CU Geek

Blogger. Speaker. Part-time Jedi.

Focused on helping your bank or credit union grow in the face of emerging challenges.