What is a Chatbot?

A chatbot is an artificial intelligence (AI) software that can simulate a conversation (or a chat) with a user in natural language through  messaging applications, websites, mobile apps or through the telephone.

Why are chatbots important? 

A chatbot is often described as being one of the most advanced and promising forms of human-machine interaction. Furthermore, from a technical point of view, a chatbot simply reflects the natural evolution of a Question Answering System based on  Natural Language Processing (NLP). Formulating answers to questions in natural language is one of the most typical examples of natural language processing implemented in end-use applications in various enterprises.

How do chatbots work?

Chatbot can look like a normal app, at first. There is an application layer, a database and APIs to call external services. In a chatbot scenario, chat interface replaces UI. While chatbots are user friendly, it adds complexity for the application to handle.

There's a general concern the bot couldn't understand the customer's intent. The bots are trained with the actual data first. Most businesses that already have chatbot must have conversation logs. Developers use the logs to evaluate what consumers are asking and what that means. Designed with a mix of Machine Learning models and tools, developers match questions that the customer asks and responds with the most appropriate response. For example: When a customer asks "Where is my receipt for payment?"So' I did not receive a certificate of payment' means the same thing. The strength of the developers is in training the models so that the chatbot can link both of those questions in order to generate the correct answer as an output. If there is no extensive data available, the chatbot may be trained using specific API data.

Types of chatbot:

Menu/Button based

• Most Basic

• Based on the decision tree

• Require user to make several

•  selections to dig deeper towards  ultimate answer

Keyword Recognition based

• It utilizes customizable keywords and  AI to determine what response should be given to user

• Ex. If user asks Best chef in noida 

• It will fetch best, chef and noida and provide output

• Disadvantage: gets confused when there are a lot of similar keywords

Contextual

• Most Advanced

• Utilize ML & AI to remember conversations with users to learn and grow over time.

• Ex. It will learn what a user likes to order from a restaurant and recommend it right away

Growth of chatbot sector

The chatbot market was valued at USD 17.17 billion in 2019 and is projected to reach USD 102.29 billion by 2025, registering a CAGR of 34.75% over the forecast period, 2020 - 2025. Due to their high usability and fully automated processes, the market for voice-activated smart devices is gaining strong traction.

"Approximately 1.4 billion people used messenger apps, according to a survey conducted by Facebook in early 2018, and are easily able to converse with a chatbot that is projected to have a positive impact on market growth over the forecast period.

"Though the development of chatbot is at a nascent stage, still its adoption rate is increasing. One of the major issues noticed over the last few years has been the relative lack of awareness and convenience, which is restricting market growth. Some of the major vendors, however, are looking to address the issues by incorporating interactive features into the product.

"Additionally, in the banking and financial industry, the attempt to mitigate the need for live call centres and slit excess costs is very evident and can be achieved with the introduction of the chatbot.