Compliant SMS Federation for Financial Communications: Bridging Regulatory Requirements with Customer Preferences

Abstract

Financial institutions face the dual challenge of adhering to strict regulatory requirements for client communications while meeting customer expectations for convenient, familiar messaging channels. This paper introduces an innovative SMS federation system designed to bridge this gap. The proposed solution enables financial firms to communicate with clients via SMS while maintaining full compliance with regulatory standards for message logging, auditing, and data retention. By integrating a secure messaging application with virtual phone numbers and an SMS API, the system creates a compliant channel that appears as
standard SMS to end-users. This paper outlines the technical architecture of the system, discusses implementation considerations including integration with existing infrastructure, and explores the benefits and potential challenges of adoption. The SMS federation system presents a promising approach for financial institutions to enhance customer engagement without compromising regulatory obligations, potentially setting a new standard for compliant digital communication in the financial
sector.