Interactive Voice Response Based Financial Services Solution for Mobile Banking in Rural India

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International Journal of Electrical, Electronics and Computer Systems (IJEECS)

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ISSN (Online): 2347-2820, Volume -4, Issue-1, 2016 52

Interactive Voice Response Based Financial Services Solution for Mobile Banking in Rural India

1Ashish Yadav, ²Jainish Patel

1Department of Electrical and Computer Engineering, New York University Tandon School of Engineering Brooklyn, NY 11201, United States

2Department of Electrical and Computer Engineering California State University, 800 N State College Blvd Fullerton, CA 92831, United States

Abstract—In this modern era of digital financial services, banking sector can provide better customer experience and convenience through technology. Mobile banking system allows customers to perform a number of financial transactions using their mobile phones. The urban users have choices to make from a large pool of options available, but for the rural users the options are limited. In this paper, we propose an interactive voice response system (IVRS) based solution for mobile banking and other day-to-day financial transactions for illiterate and semi-illiterate people in rural areas. The proposed system requires only voice calling feature (no data connectivity) on the mobile. This is a suitable option for environments of limited or no cellular data connectivity. It is further planned that the proposed solution will be made available n several local languages to ensure a wider outreach to the people.

Keywords-Barriers, Digital cash, Digital Financial Economic, IVRS,Mobile money

I. INTRODUCTION

Mobile banking has emerged as one of the most popular way of banking in many countries around the world.

When it comes to digital financial services, India punches below its weight. The 2014 intermedia financial inclusion insight (FII) survey of 45,000 Indian adults found that 0.3% of adults use mobile money, compared to 76% in Kenya, 48% in Tanzania, 43% in Uganda, and 22% in Bangladesh [1]. India has the second largest telecommunication market in the world with the 973.35 million mobile users across the country, of which 558.78 million are urban subscribers and 414.57 million are rural subscribers [2]. Hence, India has a lot of growth potential in the sector of mobile based digital financial services.

Cash is the main way of exchanging value for most poor households around the world, whereas the payment from cheques, credit card, and direct transfer among others are more common in the higher income households. Using cash to transit at a larger distance requires informal cash transfer mechanisms. Around 45% of Indian mobile users are in rural areas. Hence, through mobile banking, people in remote areas can easily access the different banking services like balance check, payments, and account

transactions.

The World Economic Forum estimates that there is a leakage of 5-25% of all government benefits, thefts and incorrect payments, which digital money can eliminate.

The four pillars that drive the adoption of digital money are as follows. (a) Institutional Environment: The effort made by the government to build the confidence and commitment of the private sector. (b) Enabling Infrastructure:ensuring that the financial and telecommunication infrastructure needed for digital money are in place. (c) Solution Propensity: ensuring that solutions are created to meet the needs of the consumer. (d) Propensity to Adopt: gaining consumer trust and encouraging them to adopt. Developed markets are usually driven by desire. For consumers in developed market it is more a question of form factor or choosing between different convenient ways to access financial services and make transactions. Developing markets are driven by the need to adopt digital money solutions [3].

The potential for the digital payment systems can be on the following basis. (a) Assessment of the financial needs of the poor: Assessment of needs can be differentiated and includes need for financial information, as well as for transactions. The needs can be defined at meso–level, micro-level, and macro-levels of the individual user. (b) Analysis of process of adoption of mobile finance application: Processes of adoption is the linking mechanism between the functionality of the technology and need of the users. Thus, rate and pattern of adoption within poor communities, as well as pattern of adaption and system performance, are likely to be good indicators of potential of the proposed solution [4].

II. BARRIERS TO THE ADOPTION OF DIGITAL FIINANCIAL SERVICES

One of the most important factor to be considered when launching new mobile services including M-Banking is compatibility with the end users’ life style. The major determinant for consumer adoption to mobile banking is security. The major reasons for the rejection of mobile banking are perception of risks, low computer and

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technological skills, and cash carrying culture of the people. In a research study, attitude of the people was found to be the major determinant of mobile banking adoption intention [4]. Next, we explain the barriers in the acceptance of digital financial services in day-to-day life of rural people in detail: (a) Network Penetration: The usefulness for an individual joining a digital network grows with the number of people and institutions that are connected to it. Several systems can co-exist only if they are interoperable. (b) Availability of Cash-in/Cash-out points:For the people that are part of the informal economy, the usefulness of a digital payment network also depends on how easy it is to convert the physical cash into electronic value, and vice–versa. This requires a sufficiently dense and reliable network of cash-in/ cash–

out points in order for people to adopt the system. This creates a chicken-and–egg problem, inherent in such two sided markets as agents would be interested in offering cash-in/cash-out services only if there are enough customers using the electronic platform, whereas, customers will be interested only if there are enough agents in the system. (c) Trust: People need to learn to trust a money system they are not familiar with. The digital payment service needs to operate without any hiccups or bugs otherwise trust in a financial system (digital or otherwise) can evaporate in an instant. This means that the provider has to invest heavily in the short term to roll out an absolutely reliable system with the hope of long term rewards. This is a daunting hurdle for many businesses. Word-of-mouth and repeated use is one of the best way for user to get comfortable. (d) Acceptance as a Store Value: Digital payment systems have generally not been perceived as fulfilling as a store of value between the exchanges. Further, their value is dramatically limited as only a means of exchange.

Whether digital payments are able to add this second function of money is primarily an anthropological question. Most of the mobile operators develop mobile money to drive customer retentivity rather than a distinct revenue source. At times, this leads them to avoid inter- operation of their mobile money systems with those of their competitors. Hence, there are a range of third party players who are vying to create more open, interoperable platforms [6].

Some of the other factors which play a hindrance in adoption of digital financial services are:

 Demographic factors plays a major role in the Internet banking.

 It requires knowledge and learning.

 Additional banking charges for these services.

 Poor telecommunication network.

 Insufficient balance in the account of younger users (specially in the age group of 21-25).

 Lack of interest in exploring newer technologies.

 Need to inform when payment has been done [5]

 Absence of an effective grievance addressing system.

III. ELECTRONIC BENEFIT TRASFER BY GOVT. OF ANDHRA PRADESH

The government of Andhra Pradesh has started a unique solution of distributing the payments to the people through the electronic benefit transfer (EBT). It is a one its kind initiative taken by any of the Indian States. EBT used by the government of Andhra Pradesh in the fiscal year 2012-13 that channeled $1.2 billion of NAREGA and Social Security Pension (SSP). It has built a rich ecosystem to deliver the payments electronically and is the first state in India to do so. It increased the payment convenience by reducing the distance traveled by the recipients from 1km for manual payments to 0.57 km for electronic payment in the tribal and non-tribal areas.

The transactions are always meditated by agents or other regional coordinators of the company, in which case the recipients are passive users of the technology and they are not being empowered by independent access to the payment system. Further, the system faced some issues such as the absence of an effective grievance addressing system, work on technological fixes by introducing solar powered battery for point of sale machines that can run without access to electricity, while recipients faced a shortage of touch points for cash out [7]. Keeping in mind all the issues discussed we next present the proposed solution for mobile banking.

IV. PROPOSED SOLUTION

The proposed solution is an interactive voice response system (IVRS) based financial servicessolution that will enable merchants to make and accept real time transactions at the time of purchase. The target users for the proposed solution are people who constitute a significant proportion of mobile users in rural areas. Most of the target users are illiterate, do not have access to smartphones, and even if they have access, they lack knowledge to use them, or do not have access to cellular data services. In case required, the proposed solution can also work over the voice over Internet protocol (VoIP).

The new user can set up their account by calling a toll free number and can use existing means of financial payments such as mobile banking, credit cards, net banking, through existing users etc. to add money to their account in the initial stage. Whenever, the user account balance reduces to zero or below say a minimum level, they can refill it using any of the existing techniques. The registration process will require the user to enter some basic information like name, age, gender, mobile number, language of preference, region, and security questions etc.Then, a numeric code will be sent to the registered mobile number after the completion of the registration process for future authentication of the financial transactions. The user’s registered mobile number will be used as the primary key for any financial transaction.

This secure numeric code can be reset based on a set of security questions that a user must answer while

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registering for the system. The proposed system will have options like initiate a transfer, complete existing transfers, register new users, available balance check, pending transfers, recently completed transfers, reset secure code, report irregular transactions, and get assistance among others. The options can be selected by doing the appropriate actions as guided on IVRS.

For the mobile-to-mobile transaction, consider a scenario where a user wants to make a mobile payment/send money to a merchant. In the proposed system, the merchant receiving the money will initiate a transaction by calling any of the IVRS’s toll free numbers and select the option of “initiate a transfer”. This will be followed by user authentication where the merchant will have to key in the secure numeric code to authenticate this transaction. The merchant will then enter the amount expected and the phone number of user from whom the amount is expected. The system will generate an audio response stating the amount of money and the source mobile number to the merchant. In case user’s mobile number is not registered, the merchant will be informed and asked if he wants to register this user. Once merchant confirms, the transaction will be initiated and will be added to the list of pending transactions for both the users. Merchant will then be able to listen to a one time password (OTP) specific to this transaction. Next, user will have to call the IVRS and select the option of

“complete existing transfers”. Post authentication, user can listen one by one to all the available transactions for completion and choose to accept/reject the transactions.

To accept/reject any transaction, user will have to listen to the amount and the receiver’s phone number in the language of choice and enter the OTP that the merchant provides. In this fashion, two secure codes and an OTP based transaction ensures a robust and a secure system.

In case user does not have sufficient money in its account, the transaction will be left pending. On successful completion of transaction, merchant can call and check the transaction status in the recently completed transfer. For the case when user does not have sufficient balance or is a new user, a cash payment can be made to the merchant to recharge or register the account, respectively.

V. ADVANTAGES OF THE PROPOSED SYSTEM

Demographic Factors: India is a land of various languages and dialects. There are 18 major languages that are specified in the constitution. The IVRS solution that we are proposing will be made available in several languages (especially major regional languages), ensuring it is easy to understand for both the merchants and the customers.

Availability of a large number of cash-in/cash-out points: As the solution will be made available for the merchants and the users alike, there would be a large number of point made available for the people to convert their digital money into cash and vice-versa. Our aim is

to reduce the distance they traverse to minimum along with enjoying the benefit of the digital financial. The merchants in the system can further be incentivized for providing cash-in/cash-out services and discounts in the initial roll out phase.

Minimum additional banking charges: The IVRS will be operated through several toll free numbers so that there are no voice call charges incurred by either the merchant or the customers. Further, a minimal flat charge per transaction (of the order of few cents) will be levied to ensure self-reliance and sustenance of the system. The transaction charges will be set to ensure an affordable service to low income group users and will be explicitly communicated to the merchant and the customer in the language of their choice before every transaction over the voice call.

Effective Grievance Addressing System: To assist users and promote this service, we will create a toll free helpline service. The helpline service would be made available 24 cross 7. In future, we can also include other features like a similar service through mobile text. Most components of this helpline will be automated and IVRS based.

Network Penetration: This is a major hindrance as various banking institutions and third parties have their own criteria and different regulations for data based services. However, with almost full voice coverage across the nation, the proposed IVRS does not suffer from these problems. Further, to ensure inter-operability and compatibility with other systems, the users having Internet access can create an online account and add money to their account by recharging through traditional methods of banking like Internet banking, credit cards, and other modes of fund transfer.

Collaboration, not Competition: The success of digital money is reliant on collaboration, not only to create a friendly regulatory and business environment, but also to share innovations between companies and countries [3].

Given that the proposed solution will be made interoperable with other existing methods, it will quickly become successful.

Security:The proposed solution has two secure codes and a one-time password (OTP) for robust and secure transmission.

Trust: We can offer incentive to merchants like a percentage cash back or discount on various product through suitable partnerships with various companies in the initial phase so that people are attracted to the solution.

Additionally, there is no requirement of special knowledge or need to learn the usage of smart phones for the rural people. The proposed IVR based system is a secure, scalable, easy to use, and reliable system that we believe is low cost method that can provide commercial quality service.

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ACKNOWLEDGEMENT

We would like to thank Dr. Abhinav Kumar, Asst. Prof., Dept. of Electrical Engineering, Indian Institute of Technology, Hyderabad for his guidance.

REFERENCES

[1] CGAP. (2013, Dec.). Direct benefit Transfer and Financial Inclusion Learning from Andhra Pradesh. [Online]. Available: www.cgap.org.

[2] Telecom Regulatory Authority of India, “The Indian Telecom Services Performance Indicators”, October - December, 2014, New Delhi, India, 8th May, 2015

[3] Naveed Sultan. (2015, Feb. 6). Digital money

symposium [Online]. Available:

http://blog.citigroup.com/2015/02/exploring-the- future-of-digital-money-at-the-citi-digimoney- symposium

[4] Richard Duncombe and Richard Boateng, “Mobile Phones and Financial services in Developing countries: A review of Concepts, Methods, Issues, Evidence and Future research Direction”, Univ. of Manchester, Manchester, M13 9PL, UK, 2009(ISBN: 978-1-905469-04-8)

[5] Faisal Iddris,”Barriers to Adoption of Mobile Banking: Evidence from Ghana”, School of Bus.

And Eng., Halmsted Univ., Sweden, Rep.

International Journal of Academic Research in Business and Social Sciences, July 2013, Vol.3, No.7 (ISSN: 2222-6990)

[6] Financial Access Initiative. (2013, Aug.). Big Questions in Payments. [Online]. Available:

www.financialaccess.org

[7] CGAP. (2013, Dec.). Direct benefit Transfer and Financial Inclusion Learning from Andhra Pradesh. [Online]. Available: www.cgap.org

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