What is Conversational AI

Mar 30, 2022

What is Conversational AI and Why is It Important?

Customers today are more "Spoiled" than ever, thanks to the constant innovations in the way businesses interact with customers. You cannot take your customer experience strategy for granted for the obvious reason - if you don't delight your customers, your competitors will.  

91% of customers who are not happy will leave that brand without complaining, says Kolsky.

Customer-centric businesses constantly look for ways to create delightful customer experiences. At the same time, they need to ensure that the new solutions are cost-efficient. Otherwise, the financial barriers might stop them. This is where Conversational AI comes into the picture, which promises superior customer experience at low operational costs. 

What is Conversational AI?

Conversational AI refers to a set of technologies, such as artificial intelligence, machine learning, natural language understanding (NLU), Automatic Speech Recognition (ASR), and Text-to-Text (TTS). Leveraging these technologies, you can build intelligent Chatbots and Voicebots capable of having human-like conversations. 

Why is Conversational AI important?

Traditional methods like IVR don’t have the capacity to handle complex problems, are un interactive, and offer only one-way dialogue. The user needs to listen carefully to input their answer is tedious and not up to the mark experience. Traditional methods also do not offer omnichannel support and are not disability friendly. 

Benefits of Conversational AI

Conversational AI Benefits

Personalized Experience

Unlike traditional IVR, AI Chatbots and Voicebots have the ability to offer personalized and custom experiences to a particular user based on their previous interactions.  

Quick Responses

Gone are the days when users would wait in long queues and keep on punching numbers. With Conversational AI, users can get real-time responses that are accurate and to the point. 

Omnichannel and Multilingual Support

Most Conversational AI has the ability to interact with the user on the channel they prefer and in their native language. 

Call, Text/SMS, WhatsApp, Facebook Messenger, and Mobile Apps are all supported. 

What's more, is that one can seamlessly switch between text and voice if need be. 

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Assist and Help Human Agents

Conversational AI can assist human agents in serving customers more efficiently by suggesting appropriate answers, fetching information, and scheduling appointments.

Increased Sales

By effectively communicating promotional sales, offers, and deals and offering a delightful customer experience, sales are bound to increase and help in the growth and expansion of business. 

Components of Conversational AI

Conversational AI has two main components: - Machine Learning and Natural Language Processing (NLP). 

Natural language processing helps in deciphering the response and converting it to human-understandable language and vice versa. Natural Language Understanding, Dialog Process, and Natural language Generation form part of NLP. 

Apart from that, in Voicebots, ASR (Automated speech recognition or speech-to-text) and Text-to-Speech technologies are also used.  

The working of conversational AI can be briefly illustrated by the diagram below:

How Conversational AI works?

Applications of Conversational AI

Contact Centers

The main use of conversational AI is to automate customer support. You can launch AI-Powered Voicebots and Chatbots on customer-facing channels to assist them 24x7.  

Also, Conversational AI can assist customer agents to provide a delightful customer experience. They can also be helpful in screening calls and lead generation. 


By providing 24*7 assistance, enabling faster transactions, generating leads, streamlining core banking services, automating claim processes, and aiding in the prevention of fraudulent claims, conversation AI helps immensely in the BFSI sector.  


Smart TV, Google Now, Alexa, Siri are some of the practical implementations and examples of Conversational AI in the IoT domain. 

Challenges of Conversational AI 

Speech Variation

Tone, sarcasm, slang, jargon, and noise are some of the factors that affect the performance of Conversational AI. Different regions have variations and accents too, these take time to be processed and stored for future responses. 

Privacy & Security

As with any other digital medium, storage of user information for processing and improvements in ML and NLP may raise concerns about user privacy. Not everyone is comfortable with their voice samples being stored online. This needs to be addressed with proper regulations and data protection laws. 

Final Thoughts

Conversational AI is truly next-gen tech, that opens a whole new world of opportunities. It has applications in a diverse set of areas. Yes, there are certain challenges with regard to privacy and security apart from speech variation, but those can be improved upon by more exposure and stronger data protection laws. With Conversational AI, real agents can multitask, handle complex problems and take on more important issues. It proves as a booster for innovation also and helps drive sales. 

A number of companies including Floatbot are using the power of Deep Tech AI to build powerful solutions, like Floatbot UNOFloatbot NEO, and Floatbot Armor 

Conversational AI is the future, where machines will assist in sharing the workload of real agents and provide cutting-edge support to offer a delightful customer experience. 

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