IVA vs. IVR: Differences in Authentication Methods

As security and user experience become more essential, businesses increasingly rely on Interactive Voice Response (IVR) and Intelligent Virtual Agent (IVA) technologies for caller authentication and self-service. Understanding the nuances of IVR authentication is critical when choosing between IVA and IVR solutions. 

According to a Gartner study, 38% of Gen Z and millennial customers are likely to abandon interactions that can’t be resolved independently. However, only 14% of service issues are fully resolved via self-service, emphasizing the ongoing importance of phone channels for complex problems.

As a result, IVR and IVA systems are at the center of automated customer service, enabling seamless caller authentication and improved routing. Ensuring secure and efficient IVR authentication is crucial, particularly in highly regulated industries such as banking and finance and contact centers with high call volumes. 

Understanding authentication, IVA, and IVR

Authenticating callers is a critical first step, opening the door to a personalized experience, self-service authentication, and customized routing opportunities.

A well-designed call flow, with thoughtful authentication options, can balance security with customer satisfaction, increase containment, and improve overall operational efficiencies.

The primary goal of any modern, robust self-service IVR/IVA platform is to identify and authenticate the caller as quickly as possible with as little friction as possible. If the caller can quickly and easily authenticate, they’re more likely to engage with the platform instead of requesting assistance from an agent. 

Higher levels of trust and engagement also expand the types of self-service transactions offered through the platform. This kind of customer experience automation is specifically relevant for enterprises looking to handle large volumes of calls more efficiently and implement intelligent call routing measures. 

What is an IVA system?

An IVA uses virtual agent technology, conversational AI, and NLP (Natural Language Processing) to understand natural speech and engage callers in a more human-like interaction. 

Unlike traditional IVRs, which rely on strict menu options, IVAs can interpret open-ended questions, offer omnichannel customer support, and handle complex tasks with minimal agent transfer. 

By using voice-based authentication methods with IVA systems, contact centers can reduce caller frustration, shorten resolution times, and improve overall security and compliance. 

What is an IVR system?

An IVR system is a more traditional solution. It uses pre-recorded messages and keypad or simple voice prompts to guide callers through options. IVRs are well-suited for predictable, straightforward tasks, such as handling basic checks with PINs or simple KBA (knowledge-based authentication) methods. 

IVRs are less flexible than IVAs and offer a limited experience for complex needs. However, they are helpful due to their established presence, lower investment, and fit for predictable call flows.

5 Key differences between IVA and IVR

1. Technology and capabilities

Technology is a major differentiator between IVR and IVA. IVAs can handle more nuanced calls by leveraging advanced Conversational AI, Voice User Interface (VUI), and NLP. They can recognize intent, respond contextually, and integrate with back-end systems. 

While reliable, IVRs generally use static menus and are less adaptive. This difference affects how effectively each system can handle caller verification, fraud detection, and voice analysis.

2. User interaction

User interaction in IVAs often feels more natural. Callers can speak in their own words, and the IVA can understand and respond intelligently. 

IVRs, on the other hand, follow predefined paths. This can sometimes lead to higher caller frustration if the required information isn’t readily available or the user’s request does not match the IVR’s menu structure.

3. Integration with other systems

IVAs can integrate seamlessly with CRMs, security databases, and voice assistant technology, creating opportunities for intelligent call routing and reducing manual intervention. 

IVRs can also integrate but often require additional customization and may not handle complex scenarios as elegantly.

4. Scalability and future-proofing

IVAs can adapt and scale as new authentication methods emerge or existing methods evolve. For instance, if new voice-based authentication systems become available, an IVA can integrate these technologies more easily, keeping pace with changes in regulations, user expectations, and contact center threats. IVRs can be updated, but often at a slower pace.

5. Cost considerations

Although implementing an IVA may have higher initial costs, the return on investment can be significant through reductions in operational expenses, improved call deflection (transferring routine requests to self-service), and better authentication accuracy. 

IVRs may be less expensive upfront, but the ongoing costs of maintaining legacy systems and addressing fraud risks can accumulate over time. If you are concerned about the bottom line, evaluating solutions like Pindrop® Passport or Pindrop® Protect can demonstrate how improved security reduces long-term costs.

Authentication methods in IVA and IVR systems

Choosing the appropriate authentication method is crucial as organizations must balance the contact center’s needs, compliance requirements, security standards, and customer experience preferences. Authentication methods available for self-service IVR/IVA applications include: 

• Knowledge-Based Authentication (KBA) 
• Passwords
• Personal Identification Number (PIN) 
• One-Time Passcodes (OTP) 
• Biometrics 
• Multifactor Authentication (MFA)

Solutions like multifactor authentication can help your organization leverage an optimal mix of tools and strategies. These include optimizing IVR and agent productivity and identifying and mitigating authentication risks. Let’s learn more about these IVR/IVA authentication methods. 

Knowledge-based authentication (KBA)

KBA questions are the most commonly used mechanism in traditional IVR and agent-based authentication. To identify and authenticate the caller, prompts for Social Security number, account number, member number, date of birth, or phone number might occur.  

KBAs are commonly used because the caller is expected to know this information when calling the contact center. Unfortunately, fraudsters also know this information, as it is widely available across the dark web due to phishing, social engineering, and data breaches. Fraudsters understand the typical identity verification procedures financial institutions use and are equipped to answer them accurately.

Advantages

• The use of KBA is a relatively low-cost and easy-to-implement method as it only requires the technology to validate the information provided by the caller.
• Callers are expected to know the information and should be able to quickly provide it.

Disadvantages

• This presents a significant security risk as the information may be easily accessible or guessed by fraudsters.
• Information on file may be inaccurate or outdated, leading to caller frustration.
• Question types are limited in an automated IVR system due to speech recognition limitations 
• The National Institute of Standards and Technology (NIST) now advises against using just personal questions as the only form of authentication.

Password and PIN authentication

Traditional alphanumeric identifiers and passwords work well for online and mobile applications. However, this method is not often employed in a traditional IVR/IVA application. Voice verification for passwords and PINs finds it difficult to correctly interpret a caller’s utterance due to the significant phonetic overlap in sounds. 

Think “A,” “H,” and “eight,” “B,” “V,” and “D,” “P,” “C,” and “T”. Although this technology has come a long way, solutions for unconstrained alphanumeric sequences remain challenging. 

Advantages

• Most callers are familiar with creating and remembering simple passwords.
• Password-based authentication is relatively low-cost and easy to implement.

Disadvantages

• Secure passwords are complex, oftentimes unable to be spoken in recognizable words.
• The increased frequency of data breaches forces consumers to change passwords regularly, making them difficult to remember.
• A significant degree of phonetic overlap in sounds may impact speech recognition of passwords and increase callers’ frustration and friction when they speak their passwords character-by-character.
• In DTMF-based applications (no speech recognition), password entry via the keypad is challenging, degrading the customer experience.

A PIN is a commonly used way to authenticate a caller in self-service IVR/IVAs, specifically within the financial vertical, as most accounts have an existing PIN for transactional purposes. This is implemented by simply prompting the caller to say or enter their 4 or 6-digit PIN. There are both positive and negative impacts to PIN-based authentication.

Advantages

• PINs are more convenient than a traditional password.
• PINs are typically short and easy to remember.
• PINs can be more cost-effective than using other forms of authentication.

Disadvantages

• PINs pose a significant security risk as they are typically short and weak, making them easier to guess or crack.
• Using a PIN alone (single-factor authentication) is limited and may not provide sufficient security when allowing someone to gain full access to an account. 
• PINs are also subject to the same data breach risks as KBAs and passwords and are often sold on the dark web as a package deal for monetization by criminals.

One-time password (OTP) authentication

OTP has existed as an authentication mechanism for over 40 years. It is a hardware token that generates random codes for entry into a computer application. Over time, this evolved to sending a soft token to an email address on file. 

With the explosion of mobile phones, SMS-based OTP quickly gained widespread use, as it required only phones and not hardware tokens. Again, the primary use case for either SMS-based or email-based OTP was digital experiences. 

As businesses, particularly financial institutions, take action to modernize their IVR and self-service capabilities, it has become increasingly necessary to find more secure ways of verifying the identity of callers to allow them to transact. 

OTP is sometimes offered as an option for callers to receive an SMS-based code and then provide it to the IVR/IVA application to service their call.

Advantages

• Enhanced security as long as the OTP is only sent to registered mobile phone numbers or email addresses.
• OTP provides a form of fraud mitigation as it is only valid for a single session, which can make it more challenging for fraudsters to gain unauthorized access using the same OTP.
• Response to a numeric passcode is more effortless than providing a complex IVR/IVA application password.

Disadvantages

• User experience is cumbersome as the method requires users to switch between their IVR call and their mobile phone or email application to retrieve the passcode, which could ultimately lead to low success rates and decreased caller engagement.
• Security risks posed as hackers may access a caller’s email or mobile device and intercept the OTP.
• The total cost of ownership can be expensive, primarily if the IVR/IVA handles significant call volumes, which could outweigh the tool’s overall cost savings.

Multifactor authentication (MFA)

MFA in IVR/IVA platforms requires users to provide multiple forms of identification before they are granted access to information or services. Typical MFA strategies involve:

1. Something the caller knows: this is often an account number, member ID, social security number, or PIN.
2. Something the caller has: this is typically a mobile device that must be present for the caller to confirm their identity.
3. Something the caller is: this refers to biometrics, which are typically voice-based in an IVR/IVA environment. 

One way this may be implemented in an IVR application is to ask the caller to provide information (something they know), such as an account number. The next step in the process could be a mobile push or OTP to the mobile device on file for that account (something the caller has), and the final step might be to evaluate features of the caller’s voice as they provide their account number or OTP passcode (something the caller is). MFA can involve two or all three factors when authenticating a caller. 

Advantages

• By combining multiple forms of identification, MFA can provide a higher level of security than a single authentication method. 
• MFA can provide a more convenient and expedient authentication process when appropriately designed.
• MFA can reduce the cost per call by decreasing its average handle time.

Disadvantages

• If not appropriately designed, MFA could add friction to callers, negatively impacting the customer experience.
• Implementing MFA often requires integrating additional hardware and software, which can increase the cost of servicing calls.

Voice Biometrics Authentication

Biometric authentication offers a secure way to authenticate individuals based on different characteristics. Commonly used biometric technologies include: 

• Facial recognition 
• Voice analysis 
• Fingerprint analysis 
• Iris scans 
• Behavioral biometrics 

The use of biometric technology in IVR/IVA platforms is gradually evolving as organizations seek ways to improve security without compromising caller experience. Voice analysis is the most commonly implemented technology in self-service telephony applications that employ biometrics.

Advantages

• Voice biometric authentication is easy to use. The caller doesn’t have to remember a complex password, carry a specific device, or speak a particular language.
• Decreased vulnerability by providing a layer of security that is very difficult for unauthorized users to access and steal.
• It can be more cost-effective because it reduces the costs associated with other authentication methods, such as agent and OTP-based authentication.

Disadvantages

• Not all callers can use voice biometric authentication due to physical disabilities or medical conditions.
• Not all contact centers have speech-based IVR/IVA applications
• Some callers may be uncomfortable with voice analysis 

Selecting the right IVA and IVR solution

Security and compliance considerations

Whether choosing IVA vs IVR, organizations must ensure the selected solution meets their industry’s regulations and compliance standards. The correct authentication strategy can reduce the risk of fraud, help protect sensitive information, and enhance overall contact center security.

User experience and customer satisfaction metrics

Enhancing customer satisfaction involves minimizing friction. The chosen method should not overly complicate the process, whether using KBA, MFA, OTP, or voice authentication. Easy authentication leads to higher containment rates, greater trust, and improved loyalty. Consider how user-focused solutions can strike the right balance.

Cost-effectiveness and ROI

Solutions that streamline customer identity verification and reduce fraud can eventually lead to substantial cost savings. Improved IVR authentication can reduce call transfers, agent involvement, and security breaches. 

Moreover, advanced technologies that enable effective self-service reduce average handle times and associated expenses. 

Make the right choice for your business

When designing a modern IVR/IVA authentication module, organizations must carefully assess each authentication method’s potential risks and benefits. 

Balancing security, compliance, cost, and user experience is essential to help protect customer data, secure calls, and maintain high satisfaction levels.

Investing in a well-designed solution, whether it relies on IVR or IVA, can strengthen fraud detection, shorten resolution times, and improve overall outcomes.

To learn more about potential vulnerabilities, check out Pindrop’s IVR fraud detection and IVR containment solutions to enhance fraud mitigation strategies. 

Pindrop® Protect provides instant risk assessments for calls to the IVR analyzing voice devices and behavior. Request a demo to learn more.