What is conversational AI?

When it comes to automating customer communications, chatbots and virtual assistants can be helpful—depending on the quality of the conversational AI that's powering them.

What is conversational AI?

Conversational AI (artificial intelligence) uses natural language processing (NLP) and machine learning to essentially simulate natural-sounding conversations with computer programs.

Instead of having a rigid set of standard answers that responds to preset questions or inputs (like traditional chatbots), conversational AI can provide more varied, context-dependent responses.

Through advanced machine learning, ASR (automatic speech recognition), natural language processing (NLP), and natural language understanding (NLU) technology, conversational AI can provide clear, accurate answers and resolutions for customers, using human-sounding dialogue.

Examples of industry use cases for conversational AI

Conversational AI is used across many verticals, particularly in customer service and support settings. HEre are some examples of conversational AI in healthcare, retail, HR, finance, and banking.

Conversational AI in healthcare

Conversational AI in healthcare can be used for a range of diagnostic, screening, and health management purposes.

Important conversational AI healthcare tools include symptom-reporting programs and intelligent appointment scheduling apps. These lessen the burden on healthcare providers by making sure patients see the right specialists and doctors aren’t overloaded with appointments that could've been resolved over a quick call or message.

Conversational AI in retail

In terms of retail, AI-powered virtual agents are great for providing support and guidance throughout the customer journey.

Not only can intelligent chatbots optimize your sales funnels by offering general information and promos or discounts, they can also reduce the volume of work for human agents by dealing with routine troubleshooting, after-sales support, and even customer surveying.

Conversational AI in HR

In very large global enterprises, there are a number of dedicated conversational AI recruiting and HR tools designed to help companies recruit, manage, and retain employees. (More on recruitment chatbots here.)

For HR departments looking to incorporate bots into their workflows, conversational AI agents can provide more efficient and engaging employee interactions and personalized conversational experiences.

When employees do need to contact HR, AI-enabled systems can empower HR team members by putting real-time, up-to-date information about policies, benefits, and more at their fingertips.

Conversational AI in finance and banking

When it comes to conversational AI for banks and other financial services providers, two key requirements are efficient (and effective) client service and a high level of security.

Thanks to natural language processing, AI virtual assistants can respond to bank account and other financial queries in seconds with personalized answers. This makes it possible for clients to receive an immediate and accurate resolution to routine requests such as canceling a lost or stolen credit card.

Considering how much conversational AI costs compared to expanding contact center staff— and the fact AI works 24/7, in multiple languages, and across multiple channels—it’s able to massively increase the scope of an organization’s support operations for a relatively low cost, while human contact center agents handle more complex customer calls.

Chatbots vs. conversational AI

Essentially, a chatbot is a computer program designed for human conversation. However, basic chatbots are based on predefined conversation flows and can have only a limited number of inputs and outputs—which means they can only answer very basic questions with straightforward wording.

On the other hand, a conversational AI chatbot or conversational AI bot uses natural language processing and machine learning to not only decipher a greater variety of questions, but also deliver more customized responses. It also keeps getting smarter as it learns more about patterns or frequently asked questions from customers. (Learn more about NLP in customer service.)

In other words, conversational AI chatbots are a type of conversational AI that's more advanced than what most people think of when they hear "chatbots." (Voice assistants like Amazon’s Alexa or Apple’s Siri are kind of examples of this.)

When looking at AI conversational chatbot technology, the main thing to remember is that not all chatbots use conversational AI.

Chatbots vs. conversational AI in customer service

In a customer service setting, with a traditional chatbot, a customer would have to choose between multiple choice answers to a preset question, like “Refund,” “Support,” and so on in response to “How can I help you today?” From there, they’d go down the branches of that question tree to (hopefully) resolve their issue. Not the best conversational experience.

Conversational AI, on the other hand, is much better at understanding more complex needs and conversational styles via NLP and deep learning, and keeps getting smarter as it learns more about patterns or frequently asked questions from customers. (Learn more about NLP in customer service.)

It can then pivot its responses and optimize as needed to give customers the answers they need without having to involve a human agent, which extends your customer self-service even further.

What are conversational AI platforms?

Conversational AI platforms are software systems that enable businesses to create automated, human-like interactions through voice, chat, and messaging. These platforms use technologies such as natural language understanding (NLU), automatic speech recognition (ASR), and large language models (LLMs) to interpret user input, provide relevant responses, and complete tasks without human intervention. They are widely used to power virtual agents, chatbots, voice assistants, and self-service experiences across customer service and internal operations.

Conversational AI within UCaaS and CCaaS platforms

A significant number of conversational AI solutions are delivered through Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) platforms. This is because these communication systems already manage the core channels—voice calls, messaging, and agent interactions—where conversational AI is most valuable. Integrating AI directly into UCaaS and CCaaS environments offers several advantages:

• Centralized communication data: Call transcripts, messages, and customer history flow through these platforms, giving AI models the context needed to deliver accurate responses.

• Real-time automation: Features like call routing, virtual agents, and agent assist can operate instantly since they’re built into the communication infrastructure.

• Streamlined deployment: Organizations can activate AI capabilities within the tools they already use, reducing the need for separate applications or complex integrations.

• Omnichannel consistency: AI can support users across voice, chat, SMS, and other channels within a single platform.

Because of these benefits, UCaaS and CCaaS providers increasingly position themselves as end-to-end conversational AI platforms, offering both communication tools and the intelligence layer that automates and analyzes interactions.

Core features of conversational AI platforms

• Multichannel support (voice, chat, messaging apps)

• Natural language processing and intent detection

• Automated workflows and self-service capabilities

• Integrations with CRMs and business systems

• Analytics to track performance and optimize conversations

Conversational AI platforms provide the technology foundation for creating intelligent, automated interactions at scale. When delivered through UCaaS and CCaaS systems, they benefit from built-in channels, data, and real-time infrastructure, making them a powerful solution for customer experience, employee productivity, and communication automation.

Benefits of conversational AI for businesses

Conversational AI offers a range of benefits for businesses across industries by enhancing customer interactions, streamlining operations, and improving overall efficiency. Whether deployed as a website chatbot, virtual assistant, or automated voice system, conversational AI can identify and address friction points in the customer journey in real time.

For example, if customers frequently abandon a process because certain information is unclear (such as how to get support, schedule a service, or understand product details), an AI assistant can surface relevant answers immediately, helping users move forward without needing to contact a human agent.

By automating routine questions and simple tasks, conversational AI also reduces the volume of repetitive inquiries that agents must handle. This allows human teams to focus on higher-value conversations that require empathy, problem-solving, or specialized knowledge, resulting in improved employee productivity and a better customer experience.

In addition, conversational AI can contribute to significant cost savings. Automated systems can operate around the clock, providing consistent support outside standard business hours and ensuring that customers always have a way to get help. This combination of efficiency, scalability, and always-on availability makes conversational AI a valuable tool for businesses looking to improve service quality while optimizing operational costs.

Conversational AI for enterprise

For enterprises, conversational AI can open the door to significant scale when it comes to handling higher volumes of customer inquiries and accelerating sales cycles while keeping hiring and expansion costs low.

Omnichannel communications

Most enterprise teams use and manage a large number of external customer-facing communication channels. As opposed to having a team of contact center agents supporting every single channel, conversational AI can integrate with and automate a certain portion of conversations across those channels. The result: more time and resources saved.

More personalized experiences

With the wealth of data being generated every day by all the external and internal conversations happening in an enterprise, conversational AI systems can both sort through and leverage this data quickly to personalize interactions based on individual user preferences, historical interactions, and context.

For example, conversational AI gives you a self-service solution that answers customer support questions on an enterprise’s website may have a reporting feature that highlights the most common types of questions that it answers. This would reduce the amount of time needed to analyze customer support messages, organize answers, and manually pull out insights.

Instant conversation intelligence

Not only do conversational AI tools generate responses to customers’ questions, they can also give companies a whole new level of conversation intelligence, in a much more accessible way than ever before.

Whereas contact center or customer support leaders used to have to read through hundreds or thousands of customer messaging threads to understand things like what troubleshooting issues were most common and which competitors were coming up the most often in sales calls, enterprise conversational AI tools today can quickly filter and present these insights to business leaders—in seconds, not hours.

Conversational AI and future growth

As a company grows, the demands on its communication systems also increase. A robust conversational AI platform is a key to scalability because it allows organizations to handle an increasing volume of interactions efficiently, without compromising on the quality of communication and responses to customers and other stakeholders.

Conversational AI refers to the technologies that enable computers to understand, process, and respond to human language in a natural, intuitive way. Through tools like chatbots, virtual agents, and voice assistants, businesses can automate interactions, deliver faster support, and enhance customer experiences across digital and voice channels.

Today’s conversational AI often lives within broader communication platforms, such as UCaaS and CCaaS solutions like Dialpad, where it can leverage real-time data, automate workflows, and support customers at scale. Its core benefits include increased efficiency, reduced operational costs, improved agent productivity, and more seamless, accessible user experiences.

As the technology continues to evolve, conversational AI is becoming an essential component of modern communication and customer engagement strategies, offering organizations a flexible and intelligent way to meet users’ needs anytime, anywhere.