My partners Kelly Ford, Chris Sugden and I are excited to have led Solutions by Text’s recent $35 million growth financing and to be partnering with this uniquely qualified team of compliance, messaging and payments experts. The Company offers the only compliance-first text communications platform in the market, and we see it as leading the way in regulatory- and carrier-compliant messaging solutions for consumer finance organizations.
Edison has been investing in compliance and payments solutions for decades -- including Bento for Business, Billtrust, ComplySci, GAN Integrity, gohenry, Prepaid Technologies and Softgate Systems. We see Solutions by Text as the next step in this evolution.
And this is not a small market.
More than 85% of Americans own a smartphone and 81% of adults in this country use text messaging on a regular basis, according to Pew Research Center. CTIA, the trade association representing the U.S. wireless communications industry, has estimated that more than 2 trillion texts are exchanged annually in this country alone.
A Compliance-First Approach
But SMS text messaging, as popular as it is, has never been ideally suited for business use, particularly in regulated industries. The platforms are inherently insecure, the casual nature of mobile texting makes oversight difficult and unclear compliance standards have left the technology on the sidelines for decades.
Solutions by Text (SBT) is changing all that with a high efficacy platform that is streamlining consumer communication and fully leveraging the power of SMS by taking a compliance-first approach to the market. Unlike competitors like Twilio, SBT uses compliant industry best practices and sound regulatory direction when establishing benchmarks and deliverables for its customers, taking the reach and convenience of text messaging and making it safe for the consumer finance industry.
After all, consumers across the board are demanding this type of access. They want mobile and text-driven engagement with the brands they do business with -- according to a study from a SMS marketing software firm, texts maintain a near-perfect open rate of 100% and 90% of consumers will open and read a text within 30 minutes of receipt -- and with 8 in 10 U.S. adults texting regularly, business needs to be able to meet them where they already are.
Shifting Regulations Driving Market Changes
There are regulatory tailwinds for SBT’s business model as well.
Effective as of today for the first time in the Bureau’s history, the Consumer Financial Protection Bureau (CFPB) acknowledged text messaging as a legitimate communications medium with its revision to Regulation F, which outlines what consumer finance companies can and can’t do in terms of modern forms of communication. Historically, SMS has been a gray area in the eyes of CFPB regulators, leaving many consumer finance companies cautious to try texting due to the risk of potential fines and penalties. But this revision -- which stands to broadly transform how financial institutions engage digitally with consumers -- amends CFPB enforcement of the Fair Debt Collection Practices Act to provide more guidance around what is and is not permissible via text messaging.
The result? It’s a new day for financial brands that want to communicate with their customers via SMS texting.
Solutions by Text's Head Start
SBT is uniquely well-positioned to capitalize on this changing regulatory landscape at just the right time. Given the size of the potential market for consumer finance SMS communications and the Company’s expertise and best-in-class infrastructure, it is poised to leapfrog its competitors by offering the compliant, secure and scalable services that brands need as the market starts to open up.
We’ve seen this already in SBT’s ability to beat and replace its closest competitor, the $54 billion market cap communications industry leader Twilio, in financial related use cases where compliant communication is critical. The platform’s ability to control who communicates, when messages go out and what those messages contain has proven to be a game-changer in terms of regulated communications, and we expect this advantage to only accelerate as CFPB and carrier regulations become more stringent on outbound solicitation. These higher compliance hurdles will box out those lacking SBT’s capabilities, particularly as the Company expands into loan origination and servicing, as well as payments. The opportunity in payments, in particular, is a rich area for SBT as consumers become more comfortable with transactions via text. As that evolves, having built-in compliance becomes more of a must-have than ever.
We are also excited to be investing behind a uniquely qualified team with an incredible mix of expertise across carrier and regulatory compliance, messaging program effectiveness and payments leadership at the executive and board level. SBT’s founders, Danny and Mike Cantrell, have impressively bootstrapped and grown the Company from day one, and we’re pleased they’ll continue on with us for this next chapter under the leadership of newly appointed CEO, Dave Baxter. Dave is a seasoned operator and payments industry expert, who Edison has known for years. He joins SBT after spending eight years at ACI Worldwide, following the acquisition of Online Resources, where he grew the original $20 million business to more than $600 million and took the ACI’s biller segment ranking from No. 12 to No. 1.
We’re also excited to be working again with a stable of exceptional C-level talent, including Rick Mora, former CFO of Solovis (Edison VIII), acquired by Nasdaq last year; and board directors Nick Manolis, former TrueCommerce (Edison V) CEO and Kemp Technologies (Edison VII) board director, and Ron Hynes, a payments industry veteran, who is currently Vesta CEO and previously served with Edison General Partner Kelly Ford on the board of Bento for Business (Edison VIII) prior to a successful exit to US Bank last quarter.
The Company is perfectly positioned at the convergence of communications, compliance and payments and has the talent to lead this growing sector for years to come. We’re proud to be partnering with SBT on this journey and are excited to work with them as they make the future of text-based transactions a reality.