Chatbots have undergone a remarkable evolution over the years. Initially, they were simple programmes that coulnly understand and respond to basic commands. However, with technological advancements, chatbots have become more capable of handling complex conversations. Today, artificial intelligence (AI)-powered chatbots have changed people’s perceptions of modern world technology. People have now started to feel comfortable communicating with machines and expect human-like conversation. AI received a massive boost when ChatGPT, within two months of its release, garnered more than 100 million users.
Technically, two distinctive branches have emerged under AI chatbots – conversational AI and generative AI (GenAI).
Conversational AI
In India, both businesses and consumers rely on the telephone and email as the most preferred channels to conduct business. However, these are slow in providing quick resolutions, with the average time-to-resolution using email reported at 2 hours and 17 minutes. This is where conversational AI comes into the picture. It is a software that simulates human-like conversation through text or speech using natural language processing and machine learning (ML). These bots differ from regular chatbots as they use AI algorithms to understand different user queries and give appropriate responses. They are widely used in customer service and support systems across industries to automate tasks or provide guidance. According to Deloitte, chatbots can reduce handling time by as much as 77 per cent.
GenAI
Venturing into the imaginative side of AI, GenAI is the creative powerhouse. GenAI chatbots utilise advanced deep learning techniques, particularly models such as GPT (Generative Pre trained Transformer) to understand user input, context and intent, and formulate appropriate and relevant textual responses.
Unlike traditional AI systems that rely on predefined rules, GenAI leverages vast amounts of data to generate original and innovative outputs. This ability to generate answers makes it superior to rule-based models. Some examples of generative models that have revolutionised the field of AI are ChatGPT and Google Gemini. As per data, India has accounted for the most ChatGPT app installations globally (18 per cent), followed by the US (17.5 per cent).
Market statistics
India is at the forefront of chatbot innovation. In 2020, while businesses around the world were still hesitant to use chatbots, 61 per cent of digital Indians saw the benefits of chatbots, and 45 per cent of Indian consumers were already using bots to shop online. Amid the surge in demand for GenAI tools, the number of Indian GenAI-based software-as-a-service start-ups has more than doubled since 2021, raising $590 million in funding as of May 2023.
According to a Bonafide Research report, the Indian chatbot market is projected to grow at a compound annual growth rate of over 30 per cent between 2023 and 2028. Over the next three years, chatbot companies in India are estimated to generate over 20 per cent of the business revenues for customers that run digital commerce platforms.
Use cases across industries
AI-powered chatbots can be tailored to different industries, such as banking, education, healthcare and e-commerce, to offer various benefits.
Some of the use cases of AI-powered chatbots across industries in India…
Banking
AI chatbots are being used by banks and credit unions to enhance the customer experience and improve operational efficiency, making banking more accessible. For instance, the National Payments Corporation of India has launched an AI-based chatbot, PAi, to create awareness around its products, such as FasTag, RuPay, UPI (Unique Payments Interface), and AePS (Aadhaar enabled payment system), on a real-time basis.
A report by the Reserve Bank of India (RBI) released in January 2024 stated that by the end of June 2023, 11 out of 12 public sector banks and 15 out of 21 private sector banks employed some form of chatbot or virtual assistant using AI and ML technologies. Remarkably, approximately 80 per cent of banks in India have adopted chatbots capable of engaging in conversations with human users.
Education
AI-powered chatbots help provide personalised and interactive education and learning experiences. For instance, BYJU’S has launched an AI-based chatbot, Osmo Genius Kit, to help children learn math and science through games and puzzles. Wipro has also launched an AI-based chatbot called Holmes Chatbot Platform to help its employees acquire new skills and technologies through conversational learning. Chatbots in education offer unparalleled accessibility, functioning as reliable virtual assistants that are accessible round the clock.
Healthcare
AI-powered chatbots can help businesses provide better healthcare and wellness services to their customers and employees. For example, Apollo Hospitals launched an AI-based chatbot, AskApollo, to provide health information, book appointments, order medicines, etc., for its patients. This will not only improve care delivery but will also lead to improved patient care outcomes. Globally, chatbots are reported to save the healthcare industry up to $3.6 billion by helping healthcare centres automate processes and take over tasks from the front desk.
E-commerce
AI-powered chatbots have a significant impact on the e-commerce industry by assisting customers with their queries regarding products and services and aiding in the purchase process. They have become an integral part of the industry, providing personalised recommendations based on customer preferences and past purchases, and further help with order monitoring, resolving frequent problems, streamlining communication, and automating repetitive tasks. By improving response times to customer queries, they make the whole experience more efficient.
Innovations in India
India has witnessed a splash of AI chatbots across various industries. In February 2023, India got its first ChatGPT-integrated AI chatbot, named Lexi, which was introduced by Velocity. It is incorporated into their in-house analytics platform and helps e-commerce companies by providing them with business insights in a simplified way.
Following that, Microsoft introduced Jugalbandi, an AI chatbot for rural India. Jugalbandi can retrieve information on government programmes and provide it to the users in their local language. Jugalbandi was first introduced to residents in Bhiwani in April 2023 and has since expanded to cover 10 of India’s 22 official languages and over 170 government programmes. Further, IndiGo has partnered with Microsoft to develop and launch an AI chatbot, 6Eskai. This chatbot uses GPT-4 technology and can handle customer queries in 10 languages, reducing agent workload by 75 per cent. Meanwhile, Air India has also launched an AI-powered agent named Maharaja.
In a significant move, in September 2023, the Ministry of Agriculture and Farmers’ Welfare launched an AI chatbot for the Pradhan Mantri Kisan Samman Nidhi scheme. It aims to provide access to scheme information and grievance resolution, with plans to expand its services to encompass weather updates, soil conditions, and bank payments. Further, Zomato has introduced a personalised chatbot called Zomato AI to help customers choose their orders. Meanwhile, Jio-backed Haptik has launched a GenAI platform, called Contakt, for building chatbots. It uses OpenAI’s GPT-3.5 and GPT-4 models by default, and clients can also access multiple large language models.
Upcoming trends
Entering 2024, Reliance Jio is also inching its way into this space with the launch of Bharat GPT in partnership with IIT Bombay. Bharat GPT is expected to be an AI product developed for Jio telecommunication products, activated by voice commands and gestures to reduce research hours and simplify the experience of using Jio across all platforms. In addition, Elon Musk-owned AI start-up xAI is extending its AI chatbot, Grok, to India.
According to the Reserve Bank Innovation Hub, banks are also exploring GenAl to solve long-standing problems that Al could not solve, and there are a few areas where the new technology can make a difference. GenAI can be explored to improve conversational bots.
Further, Google Cloud is exploring the possibility of working with the government to help it achieve its vision of “Make AI in India”. In the future, it is expected that chatbots will be integrated with augmented reality, and voice assistants and will provide high personalisation.
The way forward
Going ahead, the nation is poised to make significant strides in the AI-powered chatbot industry. However, business leaders believe that the evolution of simple rule-based chatbots to GenAI chatbots is the way forward to improve customer experience, increase innovation and develop conversational intelligence. According to an EY report, GenAI holds significant potential for India, contributing around $1.2 trillion-$1.5 trillion to the GDP over the next seven years.
However, there are some important considerations, including ethical issues, misinformation problems, data privacy, security concerns and technical challenges such as limited intelligence, that must be addressed. Nonetheless, the government is exploring the need to amend the Information Technology Rules, 2021 and introduce rules for regulating AI companies and GenAI models, which could be a significant milestone for the nation.
Niha
