The hype around today’s chatbots did not come overnight. In 1966, a MIT scientist created Eliza, the first chatterbot, as it was dubbed at the time. Though simplistic (Eliza could essentially only repeat back what a user said), it attempted to simulate a chat with a psychotherapist—and marked the beginning of a decades-long fascination around conversing with machines. With several iterations along the way, eventually a mid-1990s chatbot, Alice, became the first program to pass the Turing test, a test which examines a machine’s ability to exhibit intelligent behavior indistinguishable from a human. Alice led to the proliferation of consumer-friendly chatbots, and by the late ’90s chatbots, or chat widgets, were commonplace in e-commerce.
The next round of chatbots like Siri and Alexa, among others, homed in on chatbots’ digital assistant skills. The largest leap, though, came in 2016 with the arrival of AI-based chatbots that took social media platforms by storm. Chatbots currently factor heavily in a number of industries (and their use will only grow as technology like that in ChatGPT is added to the mix):
Retail: Retail chatbots emerged in tandem with the internet era and have proved a top place for the technology to shine, with around 70% of chatbot conversations expected to be within this sector for 2023. Chatbots offer 24/7 support to help customers select and purchase merchandise, track packages, get answers to basic inquiries and more. Some retailers have also found creative, marketing-friendly ways to engage chatbots. In 2016 for example, mattress retailer Casper launched Insomnobot, a chatbot that interacted playfully with sleepless customers. The uses are endless, though companies will need to be aware of federal and state legal implications regarding consumer privacy.
Banking and Finance: Amid bank branch closures and staffing challenges in a post-pandemic era, financial institutions have leaned into chatbots to fill a customer service gap. The number of midsize banks using chatbots jumped from 4% in 2020 to 13% in 2021, with another 16% planning to invest or currently investing in the technology. Banks were early adopters of chatbot technology, offering customers bank statement access, credit card signups and even investment advice via the tools. Bank of America’s Erica assists online customers, and COIN is a high-tech app that analyzes complex loan agreements. With banking customers indicating a preference for the ease-of-use they find in AI chatbots, finance is an industry expected to continue to grow its chatbot usage.
Health Care: In the 1960s, the first chatbot attempted to serve up therapy. Now modern mental health apps such as Woebot, Wysa (which recently received a breakthrough device designation from the FDA), and others, aim to do the same, albeit with far more eloquent chatbots. Chatbots can aid in mental health screenings and emotional support, and they can do so with ease of access and low costs to users. However, without much legislation regarding mental health apps, questions exist over the privacy of sensitive medical information. Aside from mental health, traditional health care providers can simplify administrative tasks with chatbots that handle scheduling, triage, tracking medicine side effects and more. A Canadian health care system is even using conversational AI to provide emotional support for its own physicians and health workers.
Real Estate: Close to a third of the real estate industry uses chatbots, making it one of the most profitable sectors for conversational technology. Apartment Ocean is one such app that gathers information about potential clients, allowing agents to focus energy on qualified leads. This and similar apps can generate leads, scour properties targeted to clients, and even give virtual tours—leaving agents to the work of relationship building. For small firms especially, a chatbot can provide ease of access to clients 24/7, a helpful proposition in the fast-moving real estate world.
Hospitality: Many people have probably interacted with a restaurant reservation chatbot at some time or another. Chatbots do everything from booking sought-after tables to placing food orders and are viewed by some as a key tool for the hospitality sector to personalize experiences. FEEBI is a chatbot designed specifically to answer restaurant customers’ questions all hours of the day. In the hotel sector, Hybrid.Chat is a popular option; it interacts with guests from the time of booking all the way through their stay, covering things like room preferences, virtual check-ins and reservation changes.
Recruitment: An up-and-coming area for chatbots, the recruiting industry is an ideal place to put this technology to work. Programs like Mya help companies screen candidates from large pools of job applicants and handle some of the administrative legwork that can otherwise occupy recruiters’ time. Companies will want to keep an eye, though, on anti-discrimination legislation in regard to chatbot screenings.
Chatbots remain a hot topic as industries continue optimizing their usage, understandably so given that on the whole, chatbots can save billions of dollars. The earliest adopters took advantage of chatbots decades before generative AI like ChatGPT, finding new and efficient approaches to customer service and time management in the process. As the potential applications of chatbots again seem on the verge of industry-transforming expansion, the underlying—and sometimes quite obvious—legal issues will face greater scrutiny from lawmakers, regulators and consumers alike.
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