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Future of chatbots

Chatbots are computer programs that can simulate conversations with humans. They are increasingly being used in a wide range of industries and applications, including customer service, sales, marketing, and education.

They were first created in the 1960s but didn’t gain traction until the late 1990s. This was caused in part by the growth of the World Wide Web, which allowed anyone with an internet connection to access chatbots. In the early 2000s, the first AI-powered chatbots were developed. These chatbots were able to understand and respond to more complex questions, and they were able to generate more natural and engaging conversations.

The sophistication of chatbots has increased recently. They may now be trained to carry out a multitude of activities and have conversations that are indistinguishable from those with humans.

Chatbots will probably become even more integral to our lives in the future. They will be used to deliver news, entertainment, instruction, and customer service. They will also be utilised for the automation of jobs that are currently completed by people.

Chatbots have a very bright future. Chatbots will become even more advanced and powerful as machine learning (ML) and artificial intelligence (AI) technologies advance. They will be able to produce more individualised and interesting interactions as well as comprehend and reply to more intricate and subtle queries. Additionally, chatbots and other technologies like virtual reality (VR) and augmented reality (AR) will be increasingly closely connected. They will be able to provide people with experiences that are even more potent and immersive as a result.

Here are some of the significance of chatbots in modern-day businesses:

  1. Provide customer service 24/7: Chatbots can be used to provide customer service 24/7. This is important because customers now expect to be able to get help from businesses whenever they need it, regardless of the time of day or night.
  2. Reduce costs: Chatbots can help businesses reduce costs by automating tasks that are currently done by humans. For example, chatbots can be used to answer customer questions, process orders, and provide support.
  3. Improve customer satisfaction: Chatbots can help improve customer satisfaction by providing a more personalized and efficient customer experience. For example, chatbots can be programmed to remember customer preferences and provide recommendations based on those preferences.
  4. Increase sales: Chatbots can help increase sales by generating leads and qualifying prospects. For example, chatbots can be used to collect contact information from potential customers and send them follow-up emails.
  5. Gather data: Chatbots can be used to gather data about customers that can be used to improve products and services. For example, chatbots can be used to collect feedback from customers about their experiences with a product or service. Chatbots are also becoming increasingly important for internal business processes. They can be used to automate tasks such as HR onboarding, IT support, and sales lead generation.

Industry Adoption and Growth Projections of Chatbots

Chatbot is being  adopted rapidly across all industries. In a recent survey by Gartner it was found that 80% of businesses plan to implement chatbot technology by 2023. Chatbots are being used to improve customer service, streamline business processes, and automate tasks.

Some examples of industry adoption are:

  • Customer service were Chatbots are being used to answer customer questions, resolve issues, and provide support 24/7.
  • Sales and marketing in which Chatbots are being used to generate leads, qualify prospects, and book appointments.
  • IT support where Chatbots are being used to troubleshoot technical issues, reset passwords, and provide self-service support.
  • Healthcare systems where Chatbots are being used to schedule appointments, provide patient education, and answer medical questions.
  • Banking and financial services use Chatbots to answer customer questions about accounts, transactions, and products.
  • Education where Chatbots act as tutor, answer student questions, and deliver educational content.

Growth Projections

The global chatbot market is expected to grow from USD 5.4 billion in 2023 to USD 15.5 billion in 2028, exhibiting a CAGR of 23.3% during the forecast period. This growth is being driven by a number of factors, including:

  • The rise in adoption of chatbots across all industries
  • The increasing demand for customer service chatbots
  • The growing popularity of AI and machine learning technologies
  • The decline in cost of chatbot development and deployment

Key Trends

  • The rise of conversational AI: Due to advances in natural language processing (NLP) and machine learning (ML), Chatbots are becoming more sophisticated and conversational.
  • Chatbots are being integrated with other technologies, such as CRM systems, marketing automation platforms, and customer support software.
  • The use of chatbots for employee engagement and productivity by providing self-service support, answering questions, and delivering training materials.

The chatbot industry is expected to grow in the coming years. Chatbots are becoming advanced, more human and affordable, and businesses of all sizes are recognizing the benefits that chatbots can offer.

Current Market Size and Future Projections

The global chatbot market size was valued at USD 5.13 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 23.3% from 2023 to 2030 to reach USD 27,297.2 million by 2030.

Adoption Rates in Different Sectors

The following are the adoption rates of chatbots in different sectors:

  • Retail: 57%
  • Banking: 54%
  • Healthcare: 47%
  • Enterprises: 45%

These numbers show that chatbots are being adopted at a rapid pace across all sectors. However, the retail and banking sectors are currently leading the way in terms of chatbot adoption.

Cost Savings and Efficiency Improvements

Chatbots can help businesses save money and improve efficiency in a number of ways. For example, chatbots can:

  • Reduce customer service costs by automating tasks such as answering questions and resolving issues.
  • Generate and qualify leads, which can help sales teams close more deals.
    • Provide self-service support to employees, which can reduce the workload on IT support teams.
  • Automate administrative tasks, freeing up employees to focus on more important work.

Examples of cost savings and efficiency improvements achieved through chatbot adoption:

  • Retail: Domino’s Pizza has used chatbots to reduce its customer service costs by 20%.
  • Banking: JPMorgan Chase has used chatbots to answer over 10 million customer questions per month.
  • Healthcare: Cleveland Clinic has used chatbots to schedule over 10,000 appointments per month.
  • Enterprises: GE has used chatbots to reduce its IT support costs by 30%.

The chatbots help businesses save money and improve efficiency in a number of ways. As chatbot technology continues to advance, there will be more cost savings and efficiency improvements in the future.

Technological Advancements in chatbot

Recent improvements in machine learning (ML) and natural language processing (NLP) are driving technological advancements in chatbots. Chatbots can now comprehend and react to human language more naturally and human-like thanks to NLP techniques. Chatbots can learn from user interactions and gradually get better at what they do thanks to machine learning algorithms.

Examples of recent developments in chatbot technology:

  • Generative pre-trained transformers, or GPT models, are a class of neural networks that have the ability to produce text, interpret language, and provide thorough and enlightening answers to queries. Chatbots that are more chatty and interesting than conventional chatbots are being created using GPT models.
  • Contextual awareness: As chatbots get more sophisticated, they will be able to recognise the context of a discussion and adjust their responses accordingly. NLP techniques like entity linking and co-reference resolution are being used to achieve this.
  • Support for many languages: Chatbots are becoming more and more multilingual. Technological developments in machine translation are enabling this.
  • Chatbot integration: Chatbots are being connected with various technologies, including artificial intelligence and customer relationship management (CRM) systems. This allows chatbots to provide more personalized and effective service.
  • Conversational AI: Modern chatbots are more advanced and able to carry on more conversational, natural, and context-aware exchanges. To comprehend the subtleties of human language, such as idioms, colloquialisms, and slang, they employ NLP and ML. This makes it possible for chatbots to communicate with users more like humans.
  • Personalization: Using user data and past interactions, NLP and ML are utilised to tailor chatbot responses. By examining user preferences, behaviours, and previous interactions, chatbots can offer customised recommendations and responses that improve the user experience.
  • Sentiment analysis: Chatbots are now able to recognise and react in real time to the feelings and emotions of users. By utilising NLP, they are able to determine the emotional tone of the conversation and modify their responses accordingly, resulting in more relevant and empathic encounters.
  • Knowledge Integration: External databases and knowledge bases are being more and more integrated with chatbots. They are useful for jobs like information retrieval, e-commerce, and customer service since they can get real-time data and give current responses to user inquiries.
  • Self-Learning: Reinforcement learning and other machine learning methods are now widely used by chatbots to help them learn from and adjust to their interactions. As a result, they can gradually perform better without assistance from humans.
  • Hybrid Models: A few chatbots integrate machine learning (ML) techniques with rule-based systems. This hybrid model takes advantage of machine learning’s natural language and context handling capabilities while enabling more regulated interactions in scenarios where accuracy and compliance are crucial.
  • Low-Code and No-Code Solutions: Low-code and no-code platforms have made chatbot development more approachable for non-technical users. By utilising pre-built NLP and ML models, these platforms let organisations develop and implement chatbots more rapidly.
  • Ethical Considerations: As chatbots get smarter, ethical issues are coming into their own. The prevention of bias in chatbot responses and maintaining operational openness are becoming more and more important to developers.
  • Security and privacy: To improve the security of chatbots, NLP and ML are utilised. This include identifying possible security risks, spotting fraudulent activity, and protecting the privacy of user data.

Role of NLP and ML in Enhancing Chatbot Capabilities

NLP and ML play a vital role in enhancing chatbot capabilities. NLP enables chatbots to understand and respond to human language in a more natural and human-like way. ML allows chatbots to learn from their interactions with users and improve their performance over time.

Here are some specific ways that NLP and ML are being used to enhance chatbot capabilities:

  • Classification of user intents: Natural language processing (NLP) techniques are employed to categorise the reason behind a user’s speech. A user may like to schedule an appointment, submit feedback, or ask a question, for instance. After classifying the user’s purpose, the chatbot can react appropriately.
  • Entity extraction: NLP methods are used to user utterances to retrieve entities. Entities are particular things, like people, places, and products, or concepts. Chatbots can respond more precisely and comprehend the context of the conversation better when entities are extracted.
  • Conversational modelling: Chatbots are trained to become more interactive and conversational through machine learning techniques. The intricate process of conversational modelling entails using a sizable dataset of conversations to train the chatbot.
  • Customization: ML algorithms are employed to customise  the chatbot experience for each user. For example, the chatbot might learn the user’s name, preferences, and purchase history. This allows the chatbot to provide more relevant and helpful responses.

Here are some examples of how NLP and ML are being used to enhance chatbot capabilities in real-world applications:

  • Customer service were Chatbots are being used to answer customer questions, resolve issues, and provide support 24/7.
  • Sales and marketing in which Chatbots are being used to generate leads, qualify prospects, and book appointments.
  • IT support where Chatbots are being used to troubleshoot technical issues, reset passwords, and provide self-service support.
  • Healthcare systems where Chatbots are being used to schedule appointments, provide patient education, and answer medical questions.
  • Banking and financial services use Chatbots to answer customer questions about accounts, transactions, and products.
  • Education where Chatbots act as tutor, answer student questions, and deliver educational content

As NLP and ML technology continues to develop, we can expect to see even more innovative and sophisticated chatbots in the future.

Use Cases of Chatbot Across Various Sectors

Because chatbots can automate activities, offer prompt and effective customer care, and improve user experiences, they are useful in a variety of industries. Here are some noteworthy examples of chatbot applications across several industries:

Customer Service and Support:

      • Retail and E-commerce: Chatbots assist customers in finding products, checking order status, and providing personalized product recommendations.
      • Banking and Finance: They handle routine banking inquiries, help with account management, and provide information on transactions and account balances.


      • Telemedicine: Chatbots help schedule appointments, provide medication reminders, and answer general health-related questions.
      • Mental Health: Chatbots offer support and guidance to individuals dealing with mental health issues and provide resources for self-help.

Travel and Hospitality:

      • Booking and Reservations: Chatbots assist users in booking flights, hotels, and rental cars.
      • Travel Recommendations: They provide travel recommendations, weather updates, and local information for tourists.


      • Language Learning: Chatbots aid in language learning by engaging in conversations and providing vocabulary and grammar explanations.
      • Tutoring: They provide answers to academic questions and assist with homework and assignments.

HR and Recruitment:

      • Job Matching: Chatbots match job seekers with suitable positions based on their qualifications and preferences.
      • Employee Onboarding: They guide new hires through the onboarding process and answer HR-related queries.


      • Quote Generation: Chatbots help users generate insurance quotes and provide information about various insurance policies.
      • Claims Processing: They guide policyholders through the claims process and gather necessary information.

Real Estate:

      • Property Search: Chatbots assist in property searches by understanding user preferences and showing listings that match their criteria.
      • Scheduling Tours: They help schedule property tours and answer questions about properties.

Government and Public Services:

      • Information Retrieval: Chatbots provide citizens with information about government services, regulations, and procedures.
      • Reporting Issues: They allow citizens to report issues or concerns, such as potholes or utility outages.

Marketing and Sales:

      • Lead Generation: Chatbots qualify leads and collect contact information for sales teams.
      • Product Recommendations: They suggest products or services based on user behavior and preferences.

Manufacturing and Supply Chain:

      • Order Tracking: Chatbots provide real-time order status updates and estimated delivery times.
      • Inventory Management: They assist in checking inventory levels and placing orders for supplies.

Hospitality and Food Service:

      • Restaurant Reservations: Chatbots allow customers to make restaurant reservations and inquire about menus.
      • Room Service: In hotels, chatbots facilitate room service orders and handle guest requests.

Legal Services:

    • Legal Advice: Chatbots provide basic legal information and guidance on common legal issues.
    • Document Drafting: They help users create legal documents like wills or contracts.

Nonprofit and Social Services:

    • Donations: Chatbots facilitate donation processes and provide information about nonprofit organizations.
    • Crisis Support: They offer emotional support and resources to individuals in crisis.

What are the User Preferences and Behaviors?

In a recent Gartner survey, 79% of consumers said they would rather communicate with chatbots when they have straightforward inquiries or requests. Customers still favour speaking with human operators, nevertheless, when dealing with more complicated problems.  When it comes to basic inquiries like checking account balances or locating product information, 81% of consumers say they would rather communicate with chatbots.  63% of consumers said that when they have complicated queries, like those involving technical issues or purchases, they would rather speak with live representatives.  When they have a problem to be solved, 72% of consumers would rather deal with live agents.

Challenges Faced by Users

  • Chatbots have difficulty understanding natural language, which can lead to misunderstandings and frustration.
  • Chatbots often provide generic responses, which can make users feel like they are not interacting with a real person.
  • Chatbots are unable to handle complex issues, which can require users to switch to a human agent.

Chatbot technology is constantly evolving to overcome the challenges faced by users. For example:

  • Chatbots are becoming better at understanding natural language, which is leading to more natural and engaging conversations.
  • Machine learning (ML) is being used to personalize responses: Chatbots are using ML to learn about each user and provide more personalized responses.
  • Chatbots are being integrated with other technologies, such as customer relationship management (CRM) systems and knowledge bases. This allows chatbots to access more information and provide more comprehensive and helpful responses.

What are the challenges chatbots facing in nowadays?

Chatbots are facing a number of challenges

  • Chatbots have difficulty understanding and responding to natural language in a human way. This can lead to misunderstandings and frustration for users.
  • Chatbots give generic responses that are not tailored to the individual needs of the user. This can make users feel like they are not interacting with a real person.
  • Chatbots are unable to handle complex issues, such as those that require empathy, understanding, or creativity. This can require users to switch to a human agent, which can be disruptive and frustrating.
  • Some users are concerned about the privacy and security of their data when interacting with chatbots. They may also be concerned about the potential for chatbots to be used to manipulate or deceive them.
  • There are a number of ethical concerns surrounding the use of chatbots, such as the potential for chatbots to be used to create deepfakes or to spread misinformation. There are also concerns about the potential for chatbots to be used to replace human workers, which could lead to job losses.

As chatbot technology continues to develop, the chatbots will play more important role in our lives.

The chatbot developers making advancements to address these challenges:

  • Chatbot developers are using new advances in NLP to improve chatbots’ ability to understand and respond to natural language. This includes using machine learning to train chatbots on large datasets of text and code.
  • Chatbot developers are working to expand chatbots’ capabilities so that they can handle more complex issues. This includes integrating chatbots with other technologies, such as CRM systems and knowledge bases.
  • Chatbot developers are taking steps to build trust and privacy with users. This includes being transparent about how chatbots collect and use data, and giving users control over their data.
  • Chatbot developers are working to address ethical concerns surrounding the use of chatbots. This includes developing guidelines for the responsible use of chatbots, and working to ensure that chatbots are used in a way that benefits society.

Future of chatbots: 2024 and beyond

Chatbots are revolutionising customer service and data collection for enterprises. Chatbots assist in converting the annoying feeling of not being able to locate the information you require into a satisfying conversation with a company. The consumer receives the information they require from the brand in an economical, low-resource manner. However, because of their deep learning capabilities, these chatbots are meeting company demands and objectives and enhancing communication in several ways.

In order to interact with customers, an increasing number of businesses have been incorporating chatbots into their communications processes over the past few years. There have been more beneficial interactions as chatbots improve their ability to converse with clients.  Determining when to use chatbots and when human interaction is still required is crucial.

Companies are giving their chatbots additional artificial intelligence skills so they can address the unique problems that clients bring to them and comprehend inquiries that are more sophisticated.

Additionally, they are moving away from general and generic messaging, which could irritate and backfire on their customer, and towards more perceptive, tailored responses. Chatbots have developed into an omnichannel response system for company websites, apps, and social media accounts, particularly Facebook. Businesses may now satisfy customers’ need for round-the-clock interaction with their preferred brands and engage with their consumers more and easily fulfil big volume needs with chatbot integration’s easy scalability.

Additionally, chatbots can predict client behaviour, which can be used to determine whether a customer wants to be given more options, like making a purchase or getting information about their order, or whether they would like to have their queries answered by an agent by gathering more information. They also facilitate the speedier gathering of data and provision of solutions, resulting in a more efficient experience. Chatbots offer an additional means of contact for companies that receive a lot of calls, helping to reduce the volume of incoming calls.

The future of chatbots is very bright. Chatbots have the potential to revolutionize the way we interact with businesses, services, and each other.


It looks like chatbots have a bright future. The field of chatbot technology is continuously developing, and chatbots themselves are getting more intelligent and powerful. Chatbots will become more personalised, natural-feeling, capable of doing more complicated jobs, and technologically integrated by 2024. Additionally, a greater number of companies and organisations in all sectors should use chatbots. Chatbots have the power to fundamentally alter how we communicate with companies, services, and one another while also greatly improving our quality of life. They can facilitate quicker tasks, more effective completion of tasks, and easier access to resources and information. As chatbot technology advances, we should anticipate chatbots becoming more and more integral to

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