What is Conversational AI? How it is different from chatbots?

What is Conversational AI? How it is different from chatbots?
Unlocking the Power of Conversational AI

The fast-paced world of artificial intelligence has seen the rise of chatbots and virtual assistants that are now part of our daily life. Conversational AI, a thrilling component of this AI revolution, takes center stage in this blog. We'll dive into what it is, how it functions, and its extensive impact on our lives.

By 2030, the global conversational AI market is expected to be worth a massive $32.62 billion. During the pandemic, the number of interactions handled by conversational commerce agents shot up by as much as 250% in various industries. What's more, the use of AI in digital marketing has surged from 29% in 2018 to a remarkable 84% in 2020. This shows that AI is having a big impact in many areas, and we'll delve into how it's changing the game.

What is Conversational AI?

Conversational AI, often in the form of a chatbot, is designed to replicate human-like interactions. It leverages large volumes of data, machine learning, and Natural language processing (NLP) to achieve its goal. In essence, it strives to engage with users in a manner that feels as close to interacting with a human as possible.

Key Attributes of Conversational AI:

  • Recognizes both speech and text inputs.
  • Translates meanings across different languages.
  • Generates responses based on user intent.

The use of natural language processing (NLP) is essential in the functioning of Conversational AI. It enables the AI to understand and respond to a wide range of queries, even those expressed in varying linguistic styles.

How Conversational AI Works

The basic functioning of Conversational AI can be broken down into four key steps, as highlighted in the provided transcript:

Input Generation

Users initiate conversations by providing input, which can be in the form of voice or text. This input is typically submitted through a website or an app.

Input Analysis

Once the input is received, Conversational AI must decipher its meaning and identify the user's intent. This is where Natural Language Understanding (NLU) comes into play. NLU helps the AI understand the nuances of the user's request, allowing it to tailor its response effectively.

Dialog Management

The next step involves formulating a response. Conversational AI tries to generate responses that mimic human speech as closely as possible, making use of Natural Language Generation (NLG). The aim is to ensure that interactions feel natural and relatable to users.

Reinforcement Learning

Conversational AI chatbot continues to evolve through reinforcement learning. This involves analyzing the quality of its interactions and responses. By learning from each interaction, the AI can continuously improve its performance and refine its responses over time.

Difference between Chatbots and Conversational AI:

Specificity and Purpose:

Conversational AI is purpose-built for specific business needs. It is designed to address well-defined processes and flows, while chatbots,  are more generalized .

Connection to Business Systems:

Conversational AI platforms can be connected to a company's business systems, enabling them to interact with and retrieve data from these systems. This connection is less common with chatbots.

Contextual Conversations and Transactions:

Conversational AI platforms have the capability to drive contextual conversations and complete transactions, such as order bookings and flight bookings, while chatbots may not be as well-suited for handling such specific tasks.

Integration into Front-End Channels:

Conversational AI platforms can be integrated into various customer interaction channels, including email, chat, voice, and more. This allows for a consistent customer experience. Chatbots, on the other hand, may not have the same level of flexibility in integration.

Business Outcomes:

Conversational AI ensures precise alignment with business goals, adhering to defined user paths, corporate policies, and branding, guaranteeing conversations meet specific business needs. Unlike generative AI-based chatbots, AI chatbot development focuses on customized outcomes.

Generative AI with Bluebash

Custom Conversational AI Models

Custom models enhance Conversational AI by tailoring it to specific business needs. They're fine-tuned with domain-specific data, increasing their effectiveness. Custom Conversational AI models can provide several benefits:

Higher Accuracy:

By training the AI with industry-specific data, custom models can offer higher accuracy in understanding user queries and providing relevant responses.

Enhanced Security:

Custom AI models allow organizations to implement robust security measures and data handling protocols, ensuring that sensitive information remains protected.

Seamless Integration:

Custom models can be seamlessly integrated with existing systems and databases, facilitating efficient data retrieval and task automation.

Brand Consistency:

Organizations can maintain brand consistency in their interactions with customers by tailoring the conversational AI's responses and tone to align with their brand identity.

Applications of Conversational AI

Conversational AI is a versatile technology that has found applications across various domains. Let's explore some of the prominent Conversational AI use cases that make a significant impact:

Customer Support

In the world of online customer support, Conversational AI is instrumental. It can handle a wide range of customer queries, including frequently asked questions, account access, and general inquiries. By engaging with customers in a conversational manner, it offers a more user-friendly experience.                      

Many e-commerce businesses use Conversational AI to handle customer inquiries, assist with product recommendations, and guide users through the purchase process.

HR Processes

Human Resources processes can be optimized using Conversational AI. These applications extend to employee training, onboarding procedures, and updating employee information. Conversational AI streamlines these HR tasks, making them more efficient and user-friendly.

IoT Devices

Conversational AI is seamlessly integrated into voice-based digital assistants that control IoT (Internet of Things) devices. This makes managing smart homes and IoT devices more intuitive and accessible.

Healthcare Assistance

Conversational AI can assist in healthcare by answering patient queries, scheduling appointments, providing medication reminders, and even monitoring patient symptoms. It can be a valuable tool for telemedicine and remote patient care.

Education and E-Learning

In the field of education, Conversational AI can be used for interactive learning experiences. It can answer student questions, provide explanations, and offer personalized tutoring.

Real Estate

Conversational AI can answer inquiries about property listings, schedule home viewings, and provide information about neighborhoods and housing market trends.

Market Research

Businesses can use Conversational AI to conduct surveys and gather feedback from customers, making market research more efficient.

Mental Health Support

Conversational AI can offer mental health support, providing resources and guidance to individuals dealing with stress, anxiety, or depression.

It can be used to ensure legal compliance within an organization, helping employees understand and adhere to regulations and policies.

Gaming and Entertainment

In the gaming industry, Conversational AI can create more interactive and immersive gaming experiences by allowing players to communicate with in-game characters.

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The Current State of Conversational AI

While Conversational AI has made significant development in replicating human interactions, it's important to note that AI chatbots and virtual assistants still shows rudimentary problem-solving skills. Users are unlikely to be fooled into thinking that these conversational AIs are actual humans. However, they excel in specific areas:

Time and Cost Efficiency:

Conversational AI significantly reduces the time spent on repetitive customer support interactions. This efficiency improves cost-effectiveness by freeing up human resources to focus on more complex and involved customer interactions.

Enhancing User Experience:

Whether it's resetting a bank account password, booking a flight ticket,  guiding employees through an HR onboarding process, or even resolving simple issues, Conversational AI has made several processes more user-friendly and efficient.

The Future of Conversational AI

The future of Conversational AI is undoubtedly promising. As technology continues to evolve, we can anticipate several trends and developments in this field:

Improved Natural Language Processing

Advancements in natural language processing will lead to more sophisticated Conversational AI systems. These systems will better understand context, nuances, and emotions in user experience.

Seamless Multimodal Interactions

Conversational AI will evolve to seamlessly combine voice, text, and visual inputs, offering more holistic and immersive interactions. This will enable users to interact with AI in the way they find most comfortable.


AI will increasingly personalize interactions based on user history and preferences. This personalization will lead to more effective and engaging conversations.

Integration with Other Technologies

Conversational AI will become more integrated with other technologies, such as augmented reality and virtual reality, offering unique and immersive user experiences.


Conversational AI has emerged as a powerful technology that is reshaping how we interact with machines and access information. From providing seamless customer support to optimizing HR processes and controlling IoT devices, Conversational AI has found applications across diverse industries. Its ability to efficiently handle repetitive tasks and enhance user experiences is remarkable. For complex use cases, conversational AI is the way to go. Bluebash's approach represents a major leap in the field of conversational AI.

As technology continues to advance, the future of Conversational artificial intelligence holds immense promise. With improved personalization, and integration with other emerging technologies, the capabilities of Conversational AI are set to expand further. Whether it's in customer support, HR processes, or any other domain, Conversational AI is here to stay and help organizations deliver more efficient and engaging interactions. The future looks bright with this transformative technology, and it's thrilling to think about how it will keep changing and making our world better.