Eric Hanselman

Welcome to Next in Tech, S&P Global Market Intelligence podcast, where the world of emerging tech lives. I'm your host, Eric Hanselman, Chief Analyst for Technology, Media and Telecom at S&P Global Market Intelligence. And today, we're going to be discussing some of the digital technologies that are helping us connect with customers and to discuss that, dig into some of these topics with me is analyst Raul Castañon Martinez.

Raul, welcome to the podcast.

Raul Castañon Martinez

Thank you for having me.

Eric Hanselman

Thank you for being here. We talked about a lot of different pieces of digitization of digital infrastructure. And I wanted to touch on something that's an area of your research that I think in a lot of cases, people aren't fully aware of some of the capabilities of what the actual piece of communicating with customers, what the technology is that underpins that. We think about things like CPaaS, call center as a service, calling platforms as a service kind of capabilities.

There are things that often aren't fully visible, yet they are the mechanisms that are actually allowing customers to go connect with merchants, vendors, all manner of businesses of large and small sizes, but there are pieces that I think we don't often see, but are critical technology and big parts of what are that full digitization process that organizations are going through.

Eric Hanselman

So before I go too far afield, really, what are these platforms? What are the jobs they do? Can you give some background in terms of where they fit and what they're really taking care of?

Raul Castañon Martinez

Yes. Thank you, Eric. So you're right. There are many underlying technologies that enable the digital experience. And in my research, I focus on the communications part, all the underlying communications infrastructure that make possible the digital experience.

And it's very interesting the way you describe it because for the end user, many times, we're not aware that this technology is there. And it's very relevant because I think it speaks of the user experience. Think about the excuses that every day we might have, like, for example, taking an Uber ride, ordering something on Amazon or Whole Foods and then having a food delivery service to our house and so on.

All of these services rely on digital communications, and they have progressed in a way in which the experience, the underlying technologies are basically invisible to us. There is all of this communication going on between our mobile phone or computer and applications behind the scenes to make this possible.

Eric Hanselman

It's one of those things that I think when people are aware of the direct communications piece, people understand call centers. And I'll refer to for those who watched the Super Bowl this last weekend. But the fact that you've now got a Super Bowl ad that as part of its marketing is identifying what that customer interaction experience is all about.

And for those who didn't see it, there's a major credit card company, and there's someone who calls in and expects that they've gotten an automated call system. And in fact, it's a real human, and their marketing pitch is, "Yes, if you call us, you can actually talk to a real human. You're not getting tangled in an interactive voice response system or automated attendant or whatever".

But the fact that there is a sort of high-level acknowledgment that there's somebody back there and some amount of infrastructure that supports it. But to your point, there's a lot of interaction. It's not just you pick up the phone and you're talking to a person. There's the integration of a lot of the data that's involved.

Sheryl Kingstone has been on, we've talked about what that full customer experience, the omnichannel, lots of different ways to connect to the customer pieces. There's a lot that's going on under the hood in terms of how that experience is being managed, ensuring that you actually have as integrated an experience as possible.

The thing that Sheryl's research is also pointing out that dovetails so nicely with everything that you've been doing, is that the quality of that integration is so critical to customer experience. But this is a market that's been around for a while, but there's been a lot that's going on in there. What's taking place in this market?

Raul Castañon Martinez

Yes, that's exactly right. We are more aware of the person-to-person communications, but there is a lot going on when we look at the application-to-person communications. And even in the example that you were giving when we are interacting via voice with a system, not a real person, even then you still have the combination of A2P, P2P communications going on and all of these infrastructure working in the background.

We can do this communication by different modes, be it our mobile phone SMS, Apple chat, WhatsApp and so on. So there is definitely a lot going on. And interestingly and very relevant, I think, is the real-time component that is taking place.

And we did say that for many of us the experience is really the infrastructure remains invisible in the background for us. But if you think back to when services like Uber and Lyft started, the user experience has significantly changed, whereas we used to get at the beginning an SMS message indicating that the driver is approaching. And that has changed now to real-time geolocation where you can track where your driver is on your phone in real-time with geolocation services.

Some of the changes that we are seeing now, there is an increased emphasis on real-time communications and services such as geolocation, the integration, as you mentioned, with back-end systems that allows me also to make a purchase with a real-time accountability to in-store inventory and then also real-time notifications on the status of delivery.

All of that is changing, and we became so used to that digital experience during the pandemic that those upgrades to the user experience, sometimes they go unnoticed. But all of that is happening behind the scenes. And all of that is putting pressure on enterprise organizations because they continually have to upgrade the user experience. And the user experience keeps changing and just trying to keep up with expectations from consumers who increasingly expects that real-time and precision in terms of the transactions they are making.

One more thing that is also taking place right now that I think will be big in 2024, given the volume of digital interactions that are taking place over digital channels, we have also seen a notable increase in fraud activity as a spam SMS, robocalls and so on. This is a critical issue for enterprise organizations because it is steadily educating consumers to be wary of incoming messages or calls.

And in many cases, these may be legitimate messages and voice calls, but just the influx of robocalls and spam SMS could turn away customers from taking those calls or those messages.

Eric Hanselman

That, I think, is a really important observation. And we've talked a little bit about that in a couple of different forums. I think actually, when we're talking with some of the financial technology pieces with Jordan McKee, yes, he was talking about the fact that now because there is this growing concern about spam calls, the number of calls that I think most of us get and take a look at it and go, I don't recognize the number. I'm suspicious of what that could be. I'm not going to answer a robocall. All those kinds of things really have a set of impacts on how businesses can actually interact with their end customers.

And in many cases, their employees, their end users because some of these channels start to become more or less effective. That means that the business has got to pivot to something else. And now the challenge is making sense of how you actually integrate all these different pieces, how you find technologies that your end users or your customers are going to trust.

There are a lot of different pieces that have to all come together. And in a world in which, as you were pointing out, customers expect to get a real-time up-to-the-minute service, and yet, businesses got to navigate the best way to communicate them -- communicate with them in ways that are going to be effective, they're actually going to reach them, aren't going to be overly creepy that they're communicating either too much, passing on too much information, conveying that impression that in some way you're being monitored more than the interaction makes you comfortable with, a whole set of things they're trying to juggle.

This winds up being a real challenge, but it's come a long way from the traditional call center to now being something where you have to integrate in digital platforms and we talk about digital infrastructure and the way in which it supports that. And these are a challenge. And some of those customer expectations really have a big part to play in how this gets managed and what businesses can actually do.

When you think about some of those customer expectations, it seems like something that really is putting a greater emphasis on a business' ability to integrate some of those technologies and who some of those players are because, of course, you've now had telecommunications companies, telcos have been out there for a while, you've got the cloud hyperscaler companies that are looking to play a role in this. There are a lot of moving parts in this market. I guess, that's a challenging thing to make sense of.

Raul Castañon Martinez

Yes. That's exactly right. It's a very difficult challenge to address because of the different moving parts when you think about the back-end systems, telephone network, digital channels, the mobile device itself. So there are many moving parts. And what this means is that they all have to come together. The different parties all play a role in addressing this problem.

For example, Google and Apple have a service where they enable organizations to identify themselves and they have check-marked so that when you receive either a message or a phone call from XYZ organization, Android devices and iOS devices will let you know who is calling and will let you know that the organization behind that message or that call has been verified.

And there are other services similar to these from companies like Truecaller and Hiya. And in addition to that, you also have some interesting new services that have been coming out actually over the past 6 months. These are still relatively new. Some of these services were announced last year at Mobile World Congress in Barcelona, the GSMA Open Gateway initiative. I know you're familiar with that.

I actually expect other interesting announcements at this year's Mobile World Congress, which will take place in a couple of weeks from today. There's already been some announcements actually, if you recall, from companies like Ericsson, Deutsche Telekom last year. Then, also last year, the 3 largest Brazilian mobile network operators made an announcement in partnership with Infobip. And then just as I think it was a couple of weeks ago, the 3 largest network operators in Spain also announced these new services that are focused on fraud prevention and identity theft.

Eric Hanselman

It was interesting because you are actually just following on Mobile World Congress preview and that was some of the things we were talking about, was taking some of that network visibility. It was really going from the outside in because a lot of what we've traditionally done is help to figure out how that technology, how the capabilities that we have internally within a business can be projected outwards.

But this is also taking in information from the network to be able to do some level of fraud identification to take a look at ways in which you can identify user location in ways that are privacy protecting, a whole bunch of different things that can potentially integrate it. But this just -- completely ratchets up the level of complexity that organization has to now deal with because you're now dealing with your outbound digital channels, you've got to be able to deal with the network that you're interconnecting with.

And this becomes a challenge. One of the things that you've covered, the embedded communications and some of what I think is probably that sort of next level of ratcheting this up. But how are they changing this market? And it sounds like this is maybe a response to some of this complexity that both sides of the table are trying to grapple with here.

Raul Castañon Martinez

That's a very keen observation. We talked about real-time component for A2P communications. And now what I have been describing as trusted communications, which is really becoming a critical requirement for outbound communications. And interesting thing, as you noted, is that it is another level of complexity beyond what enterprises were already used to.

What's interesting about this is that from my perspective, the open network APIs and the open gateway initiative by the GSMA are now an important milestone in terms of how the communications platform as a service model is evolving. If we go back to when this industry started out about 15 years ago with companies like Nexmo, which eventually became Vonage and now Ericsson, Twilio, [ Sinch ] for the premise was in enabling customer engagement communications.

This mainly focused on over-the-top communications, and that's why the talk back then was that these companies were a threat to the traditional network operator business, specifically SMS because if you can engage through digital channels at a low or practically no cost in some cases, then that practically destroys the value of SMS communications one might think, but there are some nuances here.

And with these advancements that we are talking about, what is happening is that the network operators are extending capabilities beyond just an over-the-top solution, and they are going deep into the network. So when we talk about the network capabilities, as you mentioned, the relying on the location of the device, the identity of the device itself, confirmation of whether device and the user have left the country and are roaming or was this number hijacked by some benevolent third parties and so on.

These capabilities are enabled by the network itself, which is really the domain of network operators and where they have the upper hand. So as they continue to deploy these services, like I said, they're already available in Spain, they will be soon in Brazil and also Germany, so we're seeing a very fast pace of adoption, I think that this will have a significant impact for enterprises. It is a complex problem to solve. But what I'm seeing right now is a very clever way of deploying these services, abstracting the complexity so that enterprises basically have a much more easier way to deploy these services and combat any fraud attempts to their customers.

Eric Hanselman

Interesting. So it sounds like this really is turning around some of that. What was the historical shift to over-the-top to now coming back to a world in which the operators -- the telecom operators are just as tightly wound into this whole equation and have just as important a role to play because there is such useful information that they can get out of the network and to allow them to blend that into this whole process of integrating customer experience. But I guess I've got to be able to take advantage of that.

Before we head too far down this because, of course, here we are in 2024, and we have to talk about generative AI and especially when you see one of the principal use cases of generative AI is leverage capabilities for customer interaction, this seems like an area where there's a lot of potential, a lot of risk. You mentioned fraud. What do we have to think about generative AI and where is this conversation in the customer connection context?

Raul Castañon Martinez

Yes, you're absolutely right. It's all over the place. Like other industries, telcos and cloud communications spenders also have a story to tell with GenAI. We were talking about fraud prevention, and GenAI is actually, as you will know, a looming threat because of the capacity that the third parties may have to trick some of the systems that may be in place to prevent impersonation. So that's a threat.

Eric Hanselman

I got a call from our corporate President last week.

Raul Castañon Martinez

Yes. No, that's a perfect example actually.

Eric Hanselman

So it raises some mistakes, but it's got the potential to also bring together customer information to be able to do some integration in ways that I think would be complicated in other environments. But of course, this is part of that whole story of that digitization journey organizations are in the midst of. Hopefully, it starts to play a larger role. What are things that the enterprises should be planning for in the ways in which they interact with customers?

Raul Castañon Martinez

Yes. So there's opportunities for accomplishing what has long been the holy grail of customer service, which is automation at scale. If you think about multiple digital channels the customers now have at their hands and enterprises are making available to interact with their customers and end users, that basically every channel that you have exponentially increases the volume of work that ends up in the lap of the customer or contact center agents.

And in the past, if you wanted to provide personalized service that meant typically relying on a live agent interacting with multiple systems in the back end to provide the precise solution that a customer requires. So if the volume is growing exponentially, we can expect that the capacity of call centers and contact center agents will very rapidly be reached. So then the solution is obviously automation at different points in the customer journey, and GenAI appears to be very promising to have a lot of potential for this type of automation, personalization and just improving the overall customer experience.

Eric Hanselman

It really is a complex set of interactions that organizations have to work with. But I guess these are areas in which communications platforms and call center services can help them get their arms around some of this even in this world of much more complex and demanding environments.

Raul Castañon Martinez

Yes, indeed, there are many changes. Organizations have to stay up to date. The good news is we are seeing a communications platform as a service companies and now the telcos stepping up to the challenge and just coming out with new services and features that should enable to ease this transition and help organizations address these challenges.

Eric Hanselman

It's a lot to get their arms around. This has been great, Raul. Unfortunately, we are at time, but thank you for all the perspectives, and I will point our listeners towards a lot of the research you've been doing and all the tie-ins with the customer experience team.

Raul Castañon Martinez

Indeed. Thank you very much. I enjoyed the conversation with you.

Eric Hanselman

And that is it for this episode of Next in Tech. Thanks to our audience for staying with us. And thanks to our production team, including Caroline Wright and Kaitlin Buckley on the Marketing and Events teams at our agency partner, The 199.

I hope you'll join us for our next episode where we're going to be talking about another angle of the artificial intelligence world, the investing perspective. When you think of large language models, LLMs, maybe LLM actually means lots and lots of money, but you'll have to join us then to find out. I hope you will because there's always something Next in Tech.