by Conversational AI, also known as chatbots, are artificial intelligent computer programs that can converse with humans via auditory or textual methods. Conversational AI helps complete various tasks like making reservations, getting information about products, and providing customer support through natural language conversations. The technology provides advantages like availability of customer service support 24/7, quick response times, and reduced operational costs. With growing internet penetration and popularity of social media platforms, there has been a rising need for efficient customer engagement solutions to enhance consumer experience.
The Global Conversational AI Market is estimated to be valued at US$ 10.65 Bn in 2024 and is expected to exhibit a CAGR of 22% over the forecast period 2024 to 2031.
Key Takeaways
Key players operating in the Conversational AI Market Growth are Google, Microsoft, Amazon Web Services, Inc., IBM, Oracle, Nuance Communications, Inc., FIS, SAP SE, Artificial Solutions, Kore.ai, Inc., Avaamo, Conversica, Inc. and Jio Haptik Technologies Ltd. These players are focusing on developing advanced AI technologies and establishing partnerships to strengthen their market presence.
The growing need among organizations to enhance customer support services and improve customer retention is creating new opportunities in the market. Technologies like natural language processing and machine learning are enabling development of conversational agents that can understand user queries like humans.
North America dominated the global market in 2020 owing to rapid technology adoption. However, Asia Pacific is expected to witness the fastest CAGR during the forecast period due to rising internet penetration and growing demand from countries like China and India. Key players are expanding their operations in the region to tap the market potential.
Market drivers
Surging demand from BFSI sector: Conversational AI is helping financial institutions provide 24/7 banking services to customers and reduce query response time. This is driving adoption among various banks, insurance companies.
Increasing mobile phone and social media users: Availability of conversational interfaces that can interact with users on popular messaging platforms is a major attraction. As mobile phone and social network penetration increases globally, it will propel the market growth.
PEST Analysis
Political: The adoption of the conversational AI technology is influenced by government policies and regulations around data privacy and security. Stringent laws can slow down the growth while supportive policies may encourage innovation.
Economic: As the technology helps businesses automate operations and customer interactions, it allows cost reductions. The technology also opens new monetization opportunities through advanced analytics of conversation data.
Social: People are increasingly using messaging and voice assistant applications for various tasks. The personal and engaging experience offered by conversational interfaces is driving their social acceptance. However, concerns around automation of jobs remain.
Technological: Advances in natural language processing, machine learning and computing power are helping chatbots and voice assistants to serve more complex requests through conversations. Integration of AI capabilities like vision and location awareness are further enhancing conversational experiences.
The market in terms of value is concentrated mostly in North America and Western Europe regions currently. This is due to advanced technological adoption and major presence of technology giants in these regions. The Asia Pacific region is expected to be the fastest growing geographical market for conversational AI during the forecast period. Factors like growing internet connectivity, increasing mobile phone usage and rising investments by key players are driving the growth in Asia Pacific region.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
