Disliked but Needed IVR Systems to Keep Growing

Transactions via interactive voice response systems will grow at a compound annual rate of 8 percent between 2006 and 2010, according to TowerGroup’s recent report on telephone banking.

According to analyst and report author Jerry Silva, speech-based IVR systems, which rely on voice prompts (sometimes with a touchtone option as well) will be “inevitable” in financial services within the next five years. Some major banks, brokerage firms and other financial services companies have already deployed such systems, but for the most part, the industry is approaching this technology “with trepidation,” according to Silva.

The systems may bug consumers but they are needed to handle the huge volume of calls to banks, notes Silva. “If there were no IVR, staffing call centers with live agents would require hundreds of thousands more agents and billions of dollars spent in the United States alone,” writes Silva.

“‘If it ain’t broke, don’t fix it,’ means that today’s IVR is effectively supporting customer needs, and banks are hesitant to improve on something that may need no improvement,” Silva writes.

One problem, however, is that adding speech-based IVR systems have higher – as much as double – initial costs than touchtone-based systems, according to the report “Telephone Banking: Do U.S. Banks Need to Literally Listen to the Voice of the Customer?”

Another major challenge in the adoption of the systems is that the technology still fails to recognize valid commands in many instances, though accuracy has improved, according to the report. “Developing a voice-based menu system is arguably more difficult than developing a standard touchtone system,” the report said.

Another technology challenge is developing the proper interface with other banking systems.

On the other hand, the newer IVR systems use open architectures, which tend to fit in better throughout a technological infrastructure than the proprietary architectures used by many older IVR systems.