• May 22, 2024

Last year, less than two percent of contact center interactions between customers and agents were automated, according to global consultancy Gartner. By 2026, the Stamford, Conn.-based firm predicts that number will rise to 10 percent.

Conversational AI, which automates all or part of an organization’s contact center customer interactions through both voice and digital channels is rapidly emerging as a transformative force in business. Industry verticals including customer service, education, financial services, healthcare, and others are leveraging conversational AI to engage in an automated way with users in a more natural and intuitive way than ever before.

According to a report by Grand View Research, the global conversational AI market was $12.9 billion in 2020 and is expected to grow at a compound annual growth rate of 37.3 percent from 2023 to 2030. The burgeoning revenues reflect the increasing importance of conversational AI to businesses worldwide. AI systems of all kinds are experiencing explosive growth, but conversational AI systems are growing due to a combination of factors, including advances in natural language processing (NLP) and machine learning, the rise of virtual assistants and chatbots, and increasing demand for personalized, 24/7 customer service.

“I think conversational AI will continue to grow rapidly,” Dileep George, co-founder of Vicarious AI, told Forbes. “The reason for this is that the technology is becoming more and more sophisticated, particularly in areas such as natural language processing and machine learning. We’re also seeing more businesses recognize the value of conversational AI in terms of enhancing customer experience and improving operational efficiency. By automating routine interactions and leveraging NLP to understand customer intent, companies can provide more efficient and effective customer service while freeing up their human agents to focus on higher-level tasks.”

The sector is so hot, Gartner last year decided to produce a “Magic Quadrant” for it.  In 2023, the global IT consultancy again evaluated the enterprise conversational AI space, noting that “many organizations are challenged by agent staff shortages and the need to curtail labor expenses, which can represent up to 95% of contact center costs. Conversational AI makes agents more efficient and effective, while also improving the customer experience.”

Magic Quadrants use a proprietary analysis to place industry vendors in a graph that plots “ability to execute” on one axis and “completeness of vision” on the other. Companies that exhibit a high degree of both (those in the upper right “quadrant”) are identified by Gartner as “leaders” in the space.

In its Magic Quadrant report on the space for 2023, Gartner noted there are three submarkets within the single broader enterprise conversational market—customer experience (front office) solutions, employee facing (back office) solutions and natural language processing resources—and that most vendors will not focus on all three.

The firm evaluated 19 providers and named eight of them as leaders: Amelia, Avaamo, Cognigy, Google, IBM, Kore.ai, Omilia and OneReach.ai. Other vendors examined in the report include [24]7.ai, Aisera, Amazon Web Services, boost.ai, eGain, Inbenta, Laiye, Openstream.ai, Sinch, Sprinklr and Yellow.ai.

One industry that has seen tremendous growth in conversational AI is healthcare. In a recent survey by Accenture, 60 percent of healthcare executives said that they are already using or planning to use conversational AI in their organizations.

“Conversational AI is transforming healthcare by making it easier for patients to access information and for providers to deliver care,” said Dr. Andrew Trister, Deputy Director of Digital Health Innovation at the Bill & Melinda Gates Foundation, in a recent interview. “From virtual assistants that help patients schedule appointments to chatbots that provide symptom triage, conversational AI is improving healthcare outcomes and reducing costs.”

Financial services have also heavily adopted the technology. A recent study by Juniper Research, predicted that 90 percent of banks globally adopted chatbots worldwide by the end of 2023.

Of course, as with any emerging technology, while the benefits of conversational AI are compelling, the technology is still maturing. A fragmented vendor landscape and complexity of deployments will result in measured adoption through the next two years, according to Gartner.

“Implementing conversational AI requires expensive professional resources in areas such as data analytics, knowledge graphs and natural language understanding,” said Daniel O’Connell, vice president and analyst at Gartner. “Once built, the conversational AI capabilities must be continuously supported, updated and maintained, resulting in additional costs.”

Despite these challenges, the growth of conversational AI shows no signs of slowing down. As more and more businesses and industries adopt conversational AI, we can expect to see even more innovative applications of this transformative technology moving forward.