What is conversational AI? | A guide for your business

The advent of AI has left many people foggy about the emerging technology's place in the world. A recent Forbes Advisor survey found that 35% of customers would not trust a business that uses artificial intelligence. Some of this reluctance is relatable, given the lack of clarity regarding AI. 

Even as a business leader, you may feel like you're a little cloudy on it yourself. This article will burn away the fog, allowing you to better understand conversational AI and its role in enhancing user experience, cutting costs, and elevating financial efficiency in this new day.

Conversational AI 101

Artificial intelligence is a broad term encompassing a wide array of technologies that mimic human skills. AI branches out into everything from natural language processing and machine learning to deep learning and robotics. So what is conversational AI and where does it fit in?

What is conversational AI?

Conversational AI is a type of artificial intelligence designed to imitate the human use of language. For conversational AI tools, the goal is to facilitate natural language conversations between humans and machines in real time. The application of this technology is as varied as it is novel. It can be as simple as using voice assistants like Siri or Alexa.

Business leaders have put these emerging AI tools to good use. Conversational AI can function as a helpful virtual assistant, create a smooth user experience, and provide immediate customer interaction.

Key components and technologies involved

Conversational AI relies on natural language processing, a field of technology that allows machines to understand and process human language to produce human-like interactions. Programmers design AI to adapt and improve through machine learning. Machine learning provides computers the ability to learn and adapt without explicit programming from humans. Think of this like an immersive language program for computers. The system processes huge amounts of data to become better at its task. This means a conversational AI tool's conversational intelligence will improve as it has more conversations. More data yields better results.

The growing relevance of conversational AI in various industries

The rising tide of AI offers businesses from all types of industries a number of promising new opportunities in the coming years. A whopping 64% of companies expect AI to increase productivity. Some estimates predict artificial intelligence annual market growth north of 37% between 2023 and 2030. The same study suggested North America will be the largest market for artificial intelligence, with Europe and the Asian Pacific following closely behind. Healthcare, finance, and manufacturing are all expected to drive the growth of AI in the coming years.

The power of AI in the financial sector

Like most industries, the financial sector has seen revolutionary applications of AI, promising fewer human errors, greater efficiency, lower costs, and greater profits.

More specifically, many companies have used AI-powered finance tools to automate accounting procedures, increase overall operational efficiency, predict future trends, aid decision-making, and reshape the customer journey. Finance AI offers your company the ability to automate menial, time-consuming tasks that many companies still do by hand.

AI-powered financial insights

AI has the power to yield critical insights by analyzing vast amounts of data using advanced algorithms. For instance, AI in finance possesses the ability to perform predictive analysis. This helps predict market trends, allowing your business to forecast expenses well and gain an edge over competitors.

Likewise, AI in accounting can provide up-to-date, reliable financial data. Perhaps more importantly, AI systems can analyze and detect any anomalies or discrepancies that may arise. This allows you to catch unreconciled accounts or be warned of potential instances of fraud before things spiral out of control.

Some AI-powered systems can track cash to debt ratio and make recommendations for strategic investments based on your company's positions now and projected positions and markets in the future.

Benefits of conversational AI in the financial industry

This section goes in-depth to explain the numerous benefits conversational AI brings to the financial industry. Conversational AI can drastically increase a company's financial health and empower its decision-making by analyzing data, enhancing user experience, and increasing the efficiency of operations. For a broader take, check out this article on AI and its growing role in accounting.

Enhance customer experience and engagement

Customer satisfaction is paramount. Conversational AI can drastically enhance customer experience and engagement by providing users with a tailor-made, personalized experience that cares for their own unique concerns and keeps them coming back for more.  

Many companies have begun utilizing a chatbot that answers customer queries in real-time without human agents. Machine learning allows the chatbot to improve with each customer conversation, meaning it learns how to understand user intent or issues better and provide helpful solutions.

Some companies also use conversational AI to provide users with a virtual assistant that personalizes the user's experience and can make personalized recommendations. For instance, an insurance company may use a virtual assistant to help customers choose the right plan for their healthcare needs. Personalized user experience drives higher user engagement.

Streamline operations and cost savings

Waste is the everpresent enemy of a profitable business, but AI can be a valuable ally in the fight against inefficiency. Bookkeeping and accounting can utilize AI to automate the accounting process.

Automating your accounting with the right AI finance software can significantly streamline your company's operations. AI-powered automated accounting reduces the need for manual input, with the goal of eliminating human error, account discrepancies, and unnecessary redundancies. AI bookkeeping eliminates waste in your accounting practices and procedures.

Likewise, many companies have created AI-driven systems to facilitate employee reimbursement, enhancing efficiency and workflow while decreasing errors and menial tasks performed by humans. AI-powered employee reimbursement uses entity recognition to extract relevant information. The more content it sifts, the better it becomes through machine learning.

Since an AI-powered automated accounting system requires less direct human input, your accounting team will be able to focus on higher-level issues without being bogged down by menial tasks. A recent Harvard study found that the proper use of AI could increase the productivity of highly skilled workers (such as accountants) by as much as 40%.

Personalize financial insights and recommendations

Conversational AI can offer your startup company up-to-date financial insights for today and data-driven recommendations for tomorrow, ensuring you have the best info to make the right decision both now and in the future.  

AI-powered automated accounting provides readymade data at a glance, allowing you immediate access to your company's present financials. A well-vetted automation process ensures the financial details are accurate, reliable, and up-to-date. For instance, your system may be set up to monitor cash flow and provide early warning for problems indicated by issues such as delayed payments, unforeseen costs, or discrepancies in accounts.

Your startup can also gain a marked advantage using AI-powered predictive analysis. Predictive analytics utilize historical data, stats, and AI to predict trends in the future. Predicting trends allows for better budgeting and revenue forecasting, meaning you have data-driven recommendations.

So, a hypothetical business called Carl's Coats that sells winter gear might use predictive analysis to anticipate inventory needs based on weather patterns, consumer behavior, and various economic factors. Depending on the data, Carl's Coats may need to increase or decrease their inventory to anticipate the needs of the upcoming season. In this example, the personalized financial insight guides the company's ordering, helping them avoid either the wasted expense of too many parkas or the lost revenue of needing more outerwear.

Empower financial inclusion

AI helps equal the playing field for startups by providing them with financial tools and predictive analysis typically available to larger, more well-established companies. Smaller startup companies can leverage AI to serve their customers and their own financial health in a cost-effective manner.

AI-enabled customer service can be a game-changer for small businesses. For example, utilizing a chatbot is far more cost-effective compared with employing a team of around-the-clock human agents to assist customers with questions. Likewise, featuring a virtual assistant can help guide a user through a purchase when no sales agent is around. Finally, automating increases productivity for highly skilled employees, which is especially important as your business is growing. This keeps your best and brightest employees from being bogged down with repetitive busy work.

Similarly, many startups lack the labor force to carry out routine audits. AI-automated accounting can conduct routine audits, notifying you of discrepancies, cash flow issues, or potential instances of fraud. Roughly half of new businesses fail within the first 10 years. How many businesses could have survived if an error was caught earlier?

Enhance your finances today

What's the place of AI in the world? As the fog clears, we've seen that AI-powered financial insights can streamline your company's operations while cutting costs and elevating efficiency. Likewise, AI can drastically improve user experience and engagement through tools such as chatbots or virtual assistants, ensuring your customers aren't left in the dark, no matter the time of day.

If you're ready to jump in or just want to learn more, consider reaching out to professionals who can help your company start a new day.