Conversational AI is transforming the way we interact with intelligent machines and applications at breakneck speed and completely revolutionizing industries such as finance, retail, and healthcare. Over the last three years, interest in Conversational AI is in ascendance and the market is now estimated to be worth $5.1 billion and forecasted by Data Bridge to rise to $46.29 billion by 2028. At Aiello, we are excited to be part of the Conversational AI revolution at such a monumental time in the development of how humans communicate with machines.
Conversational AI refers to the combination of technologies powering automated speech-enabled applications which create human-like conversation between computers and humans. Of the technologies implemented for Conversational AI, the most important is Natural Language Understanding (NLU). These are algorithms that extract relevant data from raw natural language and filter them into something usable for future action.
Venture capital is right now in the midst of Conversational AI fever, with almost weekly reports of significant investments and acquisitions of Conversational AI startups. Just within the last week, Yellow.AI received $78.15 million for its Series C and Hootsuite acquired Heyday for $48 million.
Previously barriers in both hardware and deep learning made it difficult for the conversations between humans and machines to be fast enough and sound natural enough for them to offer real value.
What has changed is that in the last few years, the hardware and deep learning that drives Conversational AI has matured at a rapid pace. In terms of deep learning, we have witnessed a quantum leap in terms of speech recognition, natural language processing (NLP), NLU and speech synthesis. On the hardware side, we now have chips that are capable of powering highly complex AI models and recognizing inference from speech in just a couple of milliseconds.
These technical advancements have generated greater demand from businesses and consumers for Conversational AI. Gartner estimates that by 2022, 70% of white-collar workers will interact with conversational platforms daily and report a 160% increase in client interest in implementing Conversational AI since 2018.
Some of the tangible benefits to companies that are leading to these investments include:
We are already seeing significant deployments of NLU and Conversational AI in a number of verticals.
According to findings from the Digital Banking Report, 75% of financial institutions now consider using Conversational AI and data to determine their next path of action.
Many banks are investing in ‘Conversational Banking’ which is the amalgamation of AI Chatbots into their pool of customer service tools to augment conversations between customers and banks. It allows customers’ questions to be answered swiftly while sparing employees from monotonous tasks.
Conversation AI in retail, known as ‘Conversational Commerce’ gives consumers a superior online shopping experience by being able to promote the products, answering customer queries, and make accurate suggestions to customers on a 24 hours per day basis.
As this technology matures, the revenue benefits to retailers have become more evident. A report from Juniper Research predicts that the global number of successful retail chatbot interactions will reach 22 billion by 2023, with retail revenues from chatbots doubling each year.
Customers are reacting positively in the same way to voice technologies used in retail. Wunderman Thompson research from 2020 discovered that 27% of online shoppers currently use or have used voice assistants to make purchases. In 2022, it is estimated that $40 Billion of voice-based transactions will be made in the US and UK, primarily through smart speakers such as Amazon Alexa.
Within education, AI powered teaching assistants are now commonly utilized to respond to student questions and give instructions. The AI is able to understand the students’ specific needs and recommend personalized learning activities and suggest materials that are suitable to the student’s level. 79% of university students report that they have found these types of virtual assistants to be effective and efficient during classes. (Statista, 2018)
The recent embrace of conversational and NLU technologies, by both consumers and businesses is just an indicator of what is to come. At present Conversational AI is only able to respond to simpler questions, but further advances in deep learning and hardware will allow computers and people to have complex multi-dimensional conversations. The AI assistants of the future will be able to respond to human cues such as facial and body language.
Corporates will also be able to offer true Hyper-Personalized service to customers through gathering of data in numerous and seamlessly tailoring conversations to meet consumer’s needs. In this way, we can expect to see voice assistants and conversation technology to truly interact into people’s lives.
In such a rapidly changing market, customer expectations and demands for Conversational AI are only going to increase, with companies choosing to adopt early gaining clear competitive advantages. Laggards, at the same time, risk losing relevance in terms of customer experience and connection with clients.