Conversational AI: Is There an AI I Can Talk to?

Conversational AI
Source: Shutterstock/Alliance Images
Table of Contents

Many have experienced conversational artificial intelligence (AI) without even knowing it. Whether through voice assistants like Siri and Alexa or chatbots in customer service – it’s all around us.

When implemented effectively, conversational AI streamlines interactions with complex systems, making them faster and more user-friendly. It also enables businesses to provide cost-effective personalized support.

However, when executed poorly, it can replicate the frustrating experience of dealing with unhelpful automated responses.

In this article we talk about conversational AI’s fundamentals, components, distinctions, advantages, challenges, real-world examples, and future prospects.

What is Conversational AI?

Conversational AI encompasses various methods for enabling computers to comprehend, process, and reply to human language. It spans from basic natural language processing (NLP) to advanced machine learning (ML) models for handling diverse inputs and complex conversations.

One common use of conversational AI is chatbots, which employ NLP to understand user inputs and engage in conversations. It’s also applied in virtual assistants, customer service chatbots, and voice assistants.

Modern consumers expect seamless communication through mobile apps, websites, chat, interactive voice response (IVR), and messaging platforms. They seek a consistent, enjoyable, and personalized experience.

For businesses, intelligent automation powered by conversational AI is the key to meeting and exceeding these expectations across various channels and on a large scale.

It enables interactions that closely resemble human conversations, ultimately enhancing customer experience, increasing satisfaction, fostering loyalty, and boosting customer lifetime value (LTV).

Video source: YouTube/Boost AI

How Conversational AI Works

Creating an AI system that mimics human communication is a complex task that goes beyond mere word processing. It requires a nuanced interplay of context, comprehension, individual backgrounds, and the subtle cues of non-verbal communication.

The ability of conversational AI to understand and respond to human speech in a natural way relies on several technological components working together.

Machine Learning in Conversational AI

Machine learning comprises algorithms, individual variables called features, and datasets that teach computers specific tasks. The computer’s ability to recognize patterns and make predictions improves as more data is processed.

NLP in Conversational AI

Natural language processing (NLP) instructs computers in language comprehension. It corrects spelling, identifies synonyms, interprets grammar, and detects sentiment. It breaks down user requests into words and sentences, making it easier for the AI to understand.

NLP involves four steps: 

  • Input generation: Users provide prompts, either text or voice, through a conversational AI platform.
  • Input analysis: Text-based prompts use natural language understanding (NLU) to decipher intent, while speech-based prompts use automated speech recognition and NLU. It identifies the intent of the user’s request and extracts relevant information like context, preferences, and entities.
  • Output generation: Natural language generation (NLG) creates responses to prompts during dialogue management. ​​This enables the AI to respond appropriately to a simple query or a complex task, making the interaction more human-like.
  • Reinforcement learning: Machine learning techniques are employed for the AI to continuously improve its responses and performance over time through reinforcement learning, learning variations in user intents and how to enhance responses to better serve users.

Deep Learning in Conversational AI

Deep learning, a more advanced form of machine learning, enhances conversational AI by mathematically representing words and understanding user intent and specific information, like booking a flight.

It has greatly improved speech recognition, text-to-speech accuracy, and natural language understanding. It allows training with fewer examples and fuels advancements in open-ended and domain-specific conversations with users.

What Is the Difference Between a Chatbot and Conversational AI?

When it comes to automated human-computer interactions, the distinction between chatbots and conversational AI can become unclear. Often, these terms are used interchangeably. So, is conversational AI distinct from a chatbot? Let’s explore their fundamental connection:

Foundational Technology and Variations

Conversational AI forms the core technology behind chatbots. In essence, an intelligent chatbot is basically an application constructed upon a conversational AI platform.

However, not all chatbots rely on conversational AI. Many chatbots are manually scripted or rule-based, lacking genuine conversational capabilities. These bots offer one-time responses, lack interactivity, and are not much more advanced than traditional IVR systems.

Under the umbrella of conversational AI platforms, we find an array of applications, including the following:

  • Chatbots,
  • Agent-assisting bots,
  • Virtual personal assistants,
  • Automated messaging systems, 
  • AI-powered FAQ bots.

Conversational AI integrates advanced features, covering omnichannel user interfaces, language processing, contextual comprehension, intent management, response generation, advanced analytics, exception handling, and seamless integration.

Chatbot Functionality

In contrast, a chatbot is a computer application that simulates human conversation through text or voice input. Chatbots excel at real-time information retrieval, automating responses to user queries, and performing tasks without human intervention.

Chatbots are versatile in their support, spanning digital channels such as messaging and mobile apps, and websites, as well as voice platforms like IVR and smart speakers. They deliver scalable conversational self-service experiences to customers and employees.

The term “chatbot,” derived from “chatterbot,” is often used interchangeably with “bot,” “virtual assistant,” “AI chatbot,” “conversational agent,” and “talkbot.”

For simplicity, let’s group scripted and rule-based chatbots as “traditional chatbots.” Thus, we have traditional chatbots and AI-powered chatbots. Here’s a side-by-side comparison:

AspectTraditional ChatbotsAI-Powered Chatbots
ComplexityLowFocused and transactional
FunctionalityBasic answer and response systemsHandle complex dialogues
IntegrationSimple integrationIntegrate with multiple legacy/back-end systems
ScopeLimited scopeOperate within a broader scope
IntelligenceRequire explicit training for each scenario (lack “intelligence”)Specialize in task completion and interaction with multiple systems
Back-End EffortDemand minimal back-end effortRequire substantial back-end effort

5 Real-World Examples of Conversational AI [Top Companies]

Conversational AI, predominantly used in customer service – with a notable 54% of companies employing chatbots or similar technologies for client interactions – has expanded its horizons.

It now finds applications in diverse sectors, ranging from human resources to the Internet of Things (IoT).

As the demand for real-time, personalized communication grows, several industry giants have already positioned themselves at the forefront of the conversational AI technological wave.

Here’s a closer look at five of the industry’s rising stars:

  1. Nuance: With a legacy dating back to 1992, Nuance is a pioneer in voice authentication and call center software. Their flagship chatbot, Nina, boasts collaborations with Fortune 500 stalwarts like Coca-Cola and ING Netherlands, highlighting their dominance in the sector. With a staggering revenue of USD 1.4 Billion, Nuance’s expertise in omnichannel customer engagement is unparalleled.
  1. Watson Assistant by IBM: IBM’s Watson Assistant, generating a revenue of USD 303.8 Million, is a testament to the company’s commitment to innovation. This conversational AI platform is designed to offer users swift and precise answers. It can run in any cloud or on-premises environment. Handling the day-to-day questions allows human agents to zero in on the trickier issues, ensuring everything flows seamlessly.
  1. Azure Bot by Microsoft: Microsoft’s Azure Bot, with a revenue footprint of USD 143 Billion, offers a holistic environment for bot creation. It offers a comprehensive bot-building environment and supports more than 18 languages. It is used on various platforms, including websites and apps like Skype and Facebook Messenger. Azure Bot Service enables developers to build, test, and deploy intelligent bots interacting naturally with users.
  1. Lex by Amazon: Amazon’s foray into the conversational AI landscape is marked by Lex, a service that seamlessly blends speech and text-based conversational interfaces. With a revenue of USD 21.3 Billion, Lex harnesses advanced deep learning functionalities, such as automatic speech recognition (ASR) and natural language understanding (NLU), to deliver a dynamic user experience. It scales naturally as a fully managed service, making infrastructure maintenance easier.
  1. Dialogflow by Google: Dialogflow, formerly known as, is a conversational AI platform that can be used to create chatbots, voice assistants, and virtual assistants linked with many conversational platforms, including Google Assistant. It is a chatbot development platform that requires no installation, technical infrastructure, or coding skills. It can be easily integrated into various systems without additional coding.

5 Conversational AI Companions You Can Talk to

As mentioned, many of us use AI smart assistants for basic tasks. However, some might not know you can have a virtual AI companion, similar to chatting with friends.

These AI chatbots are both enjoyable to converse with and can alleviate loneliness.

Here, we highlight nine AI companion chatbots worth trying:

1. Replika

Replika is a widely popular AI companion with over 10 million users. It goes beyond regular chatbots by recognizing images for conversation.

Additionally, Replika offers voice calls for more interactive communication and an Augmented Reality mode for a realistic experience.

It can also serve as a mentor, helping you develop productive habits by storing and using personal information you share, such as pet names and country.

2. Chai

Chai is a platform for crafting and deploying custom chatbot companions. It harnesses the power of the GPT-J language model to replicate natural conversations.

Within Chai, there are five pre-designed bots ready for immediate interaction. These bots span various genres, such as friendly, horror, romantic, and well-being. After crafting your chatbot, you can invite friends or make it accessible to other users. 

Chai is accessible via a mobile app, offering an enjoyable and engaging experience, particularly for enthusiasts who relish creating their bots.

3. Kuki

A popular AI companion, Kuki utilizes AI markup language and machine learning for engaging conversations. Its advanced technology ensures a rich chatting experience.

In addition to conversations, Kuki offers various activities, such as playing Tic-Tac-Toe, exchanging gifts, enjoying quizzes, and more. It also provides other engaging activities and options to keep you entertained.

While customization options are somewhat restricted, Kuki’s chatbot remains captivating.

4. SimSimi

SimSimi, a widely used emotional chatbot, boasts 350 million global users. It sets itself apart with proficiency in 81 languages.

SimSimi excels at engaging in conversations closely, emulating human interactions. It even offers an option to filter out offensive language.

For those seeking enhancement, SimSimi can be trained using user-provided questions and appropriate responses.

​​5. Kajiwoto

Kajiwoto is similar to Chai because it allows you to create personalized conversational AI bots. You have the freedom to train and define your bot’s personality.

Alternatively, you can engage with AI companions made by fellow Kajiwoto users. Their search tool simplifies finding other users’ bots and content.

To begin, you can experiment with the bot in the public preview room and later establish a private chat space for more personal interactions. With numerous companions boasting unique traits, you’ll find yourself engrossed in hours of conversation.

Video source: YouTube/ColdFusion

What are the Benefits of Conversational AI?

Conversational AI solutions offer myriad benefits that enhance customer experience, streamline operations, and boost overall productivity.

The following are the top benefits of conversational AI:

Optimal Data Collection

Conversational AI uses various technologies to monitor conversations and track customer behavior, allowing for improved data collection about consumers’ interests. This data can be leveraged to improve sales and marketing approaches.

Higher Efficiency

Conversational AI can handle multiple tasks without human intervention, allowing employees to focus on more important tasks. This leads to better scalability and improved customer service. Additionally, AI is available 24/7, reducing the time taken for customer query resolution.

Better Cost-Efficiency

Conversational AI is automated and requires minimal supervision. This can reduce operating costs, especially in contact centers where AI can handle more calls than humans.

Better Customer Experience

Conversational AI enhances customer experience through personalized communication and problem-solving. It’s available across different time zones and can cater to customers at any hour, improving the customer experience.

Increased Accessibility

Conversational AI is omnichannel, meaning customers can interact with it through calls, text messaging, or mobile chat. This ensures that customers can engage conveniently without the need for human interference.

Allows for Personalization

Advanced conversational AI uses machine learning to create a personalized chat experience for every customer based on data like location, preferences, and account history. This leads to more effective resolution of customer queries.

Video source: YouTube/Quantilus Innovation

What are the Challenges of Conversational AI?

Conversational AI is a rapidly evolving field, and while it offers numerous benefits, several challenges of conversational AI need to be addressed:

Data Privacy and Security

Conversational AI systems often tap into vast user data to enhance their effectiveness. However, this immersion into personal data brings forth pressing concerns about data privacy and the potential misuse of such information.

As a result, businesses are under immense pressure to ensure robust data security and strict adherence to privacy regulations.

Understanding Context

A genuinely engaging conversation hinges on understanding the context. For AI, this means grasping user emotions, intentions, and the intricate nuances of human language. Without this depth of understanding, AI risks offering responses that feel out of place or entirely irrelevant.

Continuous Learning and Improvement

Like any skill, the proficiency of conversational AI lies in continuous learning. These systems thrive on regular training, adapting to user interactions over time. This evolution demands consistent monitoring, feedback loops, and system updates to maintain relevance and accuracy.

Integration with Other Systems

For AI to truly augment the user experience, it must seamlessly integrate with existing business systems. However, this integration often presents challenges, from compatibility issues to real-time data synchronization. Overcoming these ensures that AI can readily access and relay pertinent data.

Multilingual Support

Our globalized world speaks in myriad tongues. Catering to this diversity, conversational AI faces the challenge of supporting multiple languages without compromising accuracy. Beyond mere translation, it’s also about understanding and respecting cultural subtleties and regional peculiarities.

Handling Multiple User Inputs

Users have their preferred modes of interaction, be it text, voice, or other mediums. A versatile conversational AI should handle these varied inputs gracefully, ensuring a consistent user experience. Achieving this capability requires advanced algorithms and a diverse set of training data.

Cost and Resource Intensive

While the allure of conversational AI is undeniable, its development and upkeep come with a hefty price tag. The resources involved span skilled personnel, advanced infrastructure, and a steady stream of training data. It’s a balancing act for businesses, weighing these costs against the potential returns and benefits.

The Future of Conversational AI

The future of conversational AI holds exciting possibilities that promise to change how we interact with technology and each other. Imagine searching the internet using natural conversations instead of keywords; this approach transforms search engines into intelligent personal assistants capable of interactive, context-driven searches.

For businesses, this signifies improved interoperability and the ability to seamlessly connect with various systems, ultimately offering users a highly personalized and tailored experience.

Moreover, large language models (LLMs) effortlessly tailor responses to user inputs, synthetic voices add regional authenticity, and virtual avatars breathe life and engagement into every interaction.

In the virtual world of the metaverse, conversational AI elevates social interactions, offers seamless automated assistance, and crafts highly personalized experiences. Virtual avatars, endowed with human-like interactions, bridge the gap between the virtual and the real world.

Beyond personalization, chatbots equipped with high emotional intelligence can discern user emotions, providing empathetic customer service that extends beyond traditional ways, benefiting fields like psychology and mental health.

Chatbot development is changing with generative AI, where prompt engineering supplants conventional drag-and-drop methods, simplifying the creation and customization of chatbots.

As conversational AI continues to build up, ethical considerations come to the forefront. Ethical AI governance becomes imperative to safeguard data privacy and ensure unbiased AI interactions. Workbenches designed to monitor and mitigate bias levels will play an integral role in this landscape.

While GPT models have come in the era of conversational AI, they represent just the tip of the iceberg. Future strides in reinforcement learning will empower AI agents to learn autonomously, adapt to user feedback, and excel in crafting meaningful, context-aware conversations.

Conversational AI: Takeaways

Conversational AI represents a groundbreaking shift in how we interact with technology and each other. Its impact is increasingly evident, whether through the familiar virtual assistants’ voices like Siri and Alexa or the prevalence of chatbots in customer service. 

Powered by machine learning, natural language processing, and deep learning, conversational AI bridges the gap between traditional chatbots and advanced AI systems. 

When implemented effectively, it streamlines complex interactions, making them faster and more user-friendly, and empowers businesses to offer personalized and cost-effective support.

Future developments in reinforcement learning will enable AI agents to learn and engage autonomously, shaping a more interactive conversational landscape.

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Neil Sahota
Neil Sahota (萨冠军) is an IBM Master Inventor, United Nations (UN) Artificial Intelligence (AI) Advisor, author of the best-seller Own the AI Revolution and sought-after speaker. With 20+ years of business experience, Neil works to inspire clients and business partners to foster innovation and develop next generation products/solutions powered by AI.