Interactive Voice Response Technology by FBMicrofinance


									CGAP IT Innovation Series

Interactive Voice Response
(IVR) Technology
Laura I. Frederick, with contributions from CGAP Staff and echange, LLC

Ana Maria dials 800-1-1414 at the public pay          updated is a basic requirement because clients
phone at her local tienda (store). A recorded voice   will need to retrieve accurate, current information
instructs her to press “1” on her phone to learn      through the IVR system. Some institutions may
about products, “2” to find the nearest branch        elect not to consider IVR because they value the
location, or “3” to listen to account information.    frequent face-to-face interaction between branch
She presses “3” and inputs her personal identifi-     staff and clients more than gains in efficiency
cation number (PIN) after a voice prompt. The         through an automated voice system.
voice system responds with her loan account bal-
ance, next payment due, due date, and all previ-
ous transactions. Using this Interactive Voice        How Does IVR Technology Work?
Response (IVR) system, Ana Maria is able to           IVR technology lets callers request information
quickly retrieve information a short distance from    from, or conduct business with, an automated
her home rather than traveling to the nearest         system by speaking into a telephone or inputting
microfinance institution (MFI) branch office and      information through its keypad. The caller will
waiting in line.                                      hear a recorded voice providing information rather
                                                      than a live attendant. For a microfinance institu-
                                                      tion, this information would generally include loca-
Who Should Consider IVR Technology?                   tions of branch offices, account or credit bal-
IVR technology may be a viable solution for MFIs      ances, client payment information, and general
that seek to enhance customer service and             information on the organization and its products.
reduce the bottlenecks in day-to-day operations       The client may be charged the cost of a local tele-
that are caused when large numbers of clients         phone call, or may dial in for free if the MFI
request simple information from staff at branch       installs a toll-free telephone access number.
offices. An investment in IVR technology would
only be cost-effective for institutions that have a   Information provided by the voice system is
fairly large number of clients, and that have         stored in databases that are accessed by the “call
clients who have access to telephones and are         flow application” according to the caller’s request.
comfortable with them and electronic technology.      Static data, such as product information or office
A management information system (MIS) that            locations, are pre-recorded and stored in a con-
includes a centralized database which is regularly    tent database. Dynamic information, such as a

                                                                Consultative Group to Assist the Poor
client’s loan balance outstanding, is retrieved         Costs
directly from the MFI’s MIS database or from a          • Initial development (customization) cost
mirror of that database at a different location.        • Set-up or installation fee
Text-to-speech (TTS) software converts this             • Usage fee (flat fee, or per minute, per record,
dynamic electronic data to a voice message that           per transaction completed, etc.)
the caller hears.                                       • Monthly or annual service fee for support
                                                        • Telephone charges (e.g., paid by client, by com-
IVR technology can support analog and digital             pany directly, or through hosting provider)
telephone systems, although the latter can
process many more calls at the same time. The           Initial costs of IVR technology may be as low as a
voice board that processes each call has only           few thousand dollars for a hosted solution or
between 2 and 24 ports in analog systems, but           between US$ 10,000–$ 50,000 for an in-house
between 30 and thousands of ports when digital.         system, depending on the number of ports and
Since the number of ports determines the num-           features installed. On-going costs may vary con-
ber of simultaneous calls the system can handle,        siderably depending on how often clients use the
an analog system can only process a maximum of          service. Additional costs are incurred for develop-
24 calls at any given time.                             ing marketing materials, training staff and clients,
                                                        and establishing a central system to manage PIN
Requirements for IVR Technology
• Easy telephone access for clients
• Affordable telephone charges for the client or        Microfinance Implementations
• Centrally-stored data accessible to the call flow     EDYPME Edyficar (Peru)
  application                                           Edyficar implemented IVR technology to limit the
• Frequent data updates so clients can access           amount of staff time at its branch offices con-
  accurate account information                          sumed by responding to client information
• Secured databases to prevent unauthorized             requests. Its objective was to reduce the number
  phone-based access                                    of client visits to a branch and the costs of serving
                                                        each account, while increasing the quality of cus-
                                                        tomer service. After considering several options,
Benefits and Costs of IVR Technology
                                                        including opening mini-offices for information
                                                        requests only, the organization began considering
                                                        technology-based solutions. Edyficar’s board, sen-
• Ability to serve large numbers of clients simul-      ior management, and staff all view technology as
  taneously                                             one of the institution’s key competitive advan-
• Client access to account and credit balances          tages and historically have been willing to invest
  any hour of the day, every day                        in technology to realize benefits in the future.
• Pre-recorded messages for consistent and
  accurate communication of information                 In 2002, Edyficar implemented a pilot IVR system
• More staff time for personalized tasks, such as       (called EDYFONO) hosted by Voxiva, Inc. The pilot
  business counseling or collection calls               was designed to help Edyficar understand (a) the
• Hosted solutions for young institutions with little   geographic areas from where clients would use
  technology experience to use IVR technology           the service more frequently, (b) the percentage of

           Consultative Group to Assist the Poor
                           callers that would be      with them, the focus group responded positively.
                           clients, (c) the econom-   However, because most of the focus group test-
                           ic status of those         ing took place in Lima, the results did not reflect a
                           clients using the serv-    lower aptitude for technology among rural clients.
                           ice, and (d) the most      Despite this, focus group testing was a good
                           popular services on the    means of evaluating client responsiveness prior to
                           IVR system.                rolling out the pilot project. Such testing is espe-
                                                      cially important for technologies that present a
                            Within three to four      new contact point or face to the customer, such
months of launching the new EDYFONO service,          as IVR or ATMs.
Edyficar received 1,500 calls per month, but only
about 50 percent of those calls were clients
accessing account information. The other calls        Invest in client education
were from people seeking more information             The challenge for Edyficar was to create aware-
about Edyficar’s services. A significant percentage   ness and encourage client adoption of technology
of calls came from outside the geographic regions     that is new to Peru. To overcome client low-litera-
where Edyficar operates, which drove up operat-       cy levels, Edyficar and Voxiva trained staff how to
ing costs without providing immediate benefits.       teach clients to use the service. The MFI conduct-
                                                      ed client demonstrations in branch office lobbies,
Based on the number of clients that used the          and distributed pamphlets and cards with the IVR
EDYFONO service, and the reduced number of            telephone access number and usage instructions.
visits to its branch offices, Edyficar decided to     It also attempted to tie adoption of the technolo-
install IVR technology in its main offices to pre-    gy to the loan cycle by setting a goal of issuing
pare for expanding the implementation.                PIN access codes to all clients within one week
Purchasing the system and installation support        of new loan disbursement. To reduce the chance
from Voxiva would cost less than paying Voxiva to     of clients forgetting their PIN codes, Edyficar
operate it. At present, Edyficar has suspended the    used the client’s government-issued identification
automated service while the transition takes          document as the basis for the access code.
place, and while the communications network in
its region stabilizes after having been acquired by   Despite these efforts, Edyficar found that only 15
a foreign operator. It is also upgrading its MIS to   percent of all clients that used the system were
integrate the in-house IVR system. Edyficar           able to successfully follow instructions. These
expects to re-launch the service in October 2003      clients were typically those with higher loan bal-
with the same functionality as before, and later      ances and better economic standing. The majority
add additional marketing features.                    of the MFI’s clients are poorer, and find it chal-
                                                      lenging to adopt new technology. Edyficar is con-
                                                      sidering some form of incentive to encourage
Lessons for Implementation                            these clients to use the IVR.

Carefully consider unique customer
attributes                                            Ensure technical back-up
Prior to launching EDYFONO, Edyficar and Voxiva       As long as the system’s servers remain on-line
conducted focus groups to determine how recep-        and telephone and power infrastructure are reli-
tive clients would be to IVR. Given the prevalence    able, the system should seldom malfunction.
of public phones in Peru and clients’ familiarity     However, where this infrastructure is not stable,

                                                                Consultative Group to Assist the Poor
it is critical to have clear manual back-up strate-    Cisco Systems,
gies, such as back-up power supply, an alternative
(mirror) server and database, and/or an appointed        ns110/ns44/ns45/ns250/networking_
person to answer the phone line.                         solutions_package.html
Design an easy-to-use information tree                 ITouch
Perhaps the most challenging aspect of an IVR            products1a.php3
system is designing an easy-to-use information         CATS,
access tree. It becomes more difficult as the
amount of information provided by the system
increases. If clients regularly become lost or frus-   Organizations surveyed
trated and hang up before obtaining the informa-       EDYFICAR, Ana Maria Zegarra,
tion they need, the system’s usage and cost-            Zegarra@Edyficar.Com.Pe, 511 422 9014
effectiveness will be limited. The most common-
ly-requested information should be one of the first
options offered by the voice system, and the           Other resources
institution should regularly revise the information    World Resources Institute’s Digital Dividend
tree design by tracking the paths clients take to       Project,
access information.

To Learn More

IVR providers
Most IVR providers offer hosted systems as well
as support for in-house options. Providers gener-
ally will enable customers to migrate from a host-
ed service to an in-house solution once there is
sufficient demand for the system installed, and
the institution has the capacity to purchase and
manage the technology. A key benefit of a hosted
system is the lack of capital investment required
to conduct a pilot test.

Because IVR technology is standardized, many
vendors offer a solution that can be customized
or bundled with other telephony services. Many
of these vendors also sell the technology under a
brand name:

          Consultative Group to Assist the Poor

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