Conversational AI Market by Deployment (Cloud and On-premise), Type [Chatbots and Intelligent Virtual Assistant (IVA)], Component (Solution, Services, and Professional Services), Organization Size [Large Enterprises and Small and Medium Sized Enterprises (SMEs)], Technology [Natural Language Processing (NLP), ML and Deep Learning, and Automatic Speech Recognition (ASR)], End-user (BFSI, Healthcare, IT and Telecom, Retail and eCommerce, Education, Media and Entertainment, Automotive, and Others), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2022–2031

Software and Services

IC20118249

Pages: 250

Jan 2023

Reports Overview

Global Conversational AI Market Analysis

The Global Conversational AI Market Size is predicted to be valued at $62,114.7 million by 2031, surging from $6,800.0 million in 2021, at a noteworthy CAGR of 25.5%.

Global Conversational AI Market Synopsis

The numerous benefits offered by conversational AI such as contactless customer service, increased customer satisfaction, and consistent customer support are some of the major factors driving the adoption of conversational AI during the forecast period. AI-powered customer support services offer deeper insights and increase customer experience. This in turn increases customer retention rates and revenue generation as well as improves brand image. Moreover, conversational AI enhances the customer support consistency of the organization by reducing the number of repetitious tasks customer support agents do on daily basis.

The challenges with chatbots such as limited functionality and high cost of installation may restrain the conversational AI market growth over the forecast period. Chatbots cannot respond efficiently to multi-part questions. Thus, customers often do not get a solution to their queries.

Conversational AI technology is adopted across a broad range of use cases and sectors. The wider applicability of conversational AI such as chatbots in numerous applications such as BFSI, healthcare, education, automotive, e-commerce, and others is anticipated to offer excellent opportunities to conversational AI market players during the forecast period. Presently, users increasingly prefer to communicate over chatbots. Thus, many organizations are adopting chatbots and intelligent virtual assistant (IVA) systems for resolving customer queries and increasing customer satisfaction. Conversational AI solutions can be effectively integrated with the company's websites and voice assistants systems. Therefore, the demand for conversational AI is likely to surge further in the upcoming years.

According to regional analysis, the North America conversational AI market accounted for the highest market share in 2021 and is projected to maintain its dominance over the forecast period. The significant demand for conversational AI in this region can be attributed to the factors such as the presence of major players and increased spending by organizations on advanced technology such as conversational AI to increase customer satisfaction.

Conversational AI Market Overview

Conversational AI is a technology that allows humans to communicate with machines using text and/or speech. Conversational AI solutions can be incorporated into a website or as part of an operating system. These solutions are becoming increasingly popular in numerous business activities majorly in customer services. Using advanced technologies including natural language processing (NLP) and Machine Learning (ML), conversational AI recognizes text and speech inputs. Established as well as emerging brands are increasingly utilizing this technology solutions to boost the customer satisfaction.

COVID-19 Impact on Conversational AI Market

The COVID-19 pandemic has had a positive impact on the conversational AI market. During the pandemic, many organizations and healthcare institutions adopted chatbots for fighting against the pandemic. For instance, the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO) are using chatbots to share information on pandemic-related queries. These solutions can be accessed by users via social media platforms such as Facebook Messenger and WhatsApp. People use conversational AI solutions such as chatbots to get solutions to their queries on safeguarding themselves against COVID-19 and to understand the authentic facts and news related to the outbreak.

In addition, the pandemic surged the adoption of chatbots in the retail sector, especially in e-commerce. During the pandemic, there was increasing demand for self-service and user-friendly alternatives to resolve problems, process returns, collect information, and more. Chatbots offer consumers 24/7 assistance and the capability to handle queries from the company's official website as well as mobile applications. Natural language processing (NLP) allows the chatbot to access the consumer's buying history and in turn offers personalized suggestions to the consumer.

The Surge in Adoption of Conversational AI Solutions in BFSI sector to Drive the Conversational AI Market Growth

Conversational AI solutions such as chatbots are increasingly adopted in BFSI sector to improve customer engagement. These solutions allow banks to increase their customer retention rate by offering prompt responses to their questions, thus, increasing customer satisfaction. Advanced technology adoption in the BFSI sector has enabled companies to reach out to more consumers. Many organizations are using conversational AI solutions for offering quick services to tech-savvy customers. Moreover, fundamental functions including bank balance inquiries, bank account details, loan queries, etc. can be managed by a chatbot efficiently, giving customer service representatives ample time for complex problems.

High Installation Costs along with the Inability to Handle Complex Queries Anticipated to Restrain Conversational AI Market Growth

Implementation of chatbots is often costly as every chatbot requires to be trained as well as programmed separately as per the unique business requirements. Users' queries keep evolving and managing queries requires additional programming and training, which raises the costs. In addition, it is challenging for chatbots to offer a satisfying consumer experience for complex queries. Conversations can be difficult for complex queries. These are some of the major challenges that may hamper the conversational AI market during the forecast period.

Rising Demand from E-commerce brands is Expected to Offer Excellent Growth Opportunities to Conversational AI Market Players

E-commerce brands are already at the forefront of leveraging the capabilities of conversational AI to resolve consumer concerns promptly, increase customer satisfaction, increase revenue, lead generation, etc. During the COVID-19 outbreak, online shopping emerged as the safest and most suitable sales channel for shopping. This in turn increased sales of e-commerce brands and customer queries. The e-commerce business is highly competitive. Hence, to maintain a competitive edge in the market e-commerce companies are offering post-sales support using conversational AI solutions, especially, chatbots. Chatbots are helping e-commerce companies in many ways including end-to-end post-sales support, recommending products, tracking engagement, and others.

Global Conversational AI Market, by Deployment

Based on deployment, the market is further divided int o cloud and on-premises. Among this cloud sub-segment is anticipated to show a fastest CAGR during the forecast period.