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Get Ready for Chatbots - Part 1


What Are Chatbots?
Why Is Everybody Talking About Them?

Chat is becoming more and more relevant as an interaction channel between customers and companies. Recent advances in artificial intelligence are enabling the development of powerful chatbots that can understand natural language. With little experience in this topic so far, the insurance industry is just becoming aware of the emerging opportunities.

Synpulse has been exploring chatbots extensively by building our own chatbot prototypes at our Innovation Lab and studying them in detail. In this first part of our article series, we will provide a brief introduction to chatbots and explain why they are one of the most discussed tech trends today.

What is a Chatbot?

Chatbots are computer programs that can chat with people autonomously, for example via Skype or Facebook Messenger. In a business context, this means that customers can interact with a company via chatbots just like they would with traditional customer service (Figure 1 and 2). Chatbots have debuted in 2016 for business use and we expect them to become the primary way customers engage with businesses in the next few years.

Figure 1:
Synpulse Chatbot Showcase - Two examples of conversations with chatbots in natural language. The dark bubbles contain the user input and the light ones show the chatbot's response.

Figure 2:
Basic principle of a chatbot

Chatbots also serve as a basis for interactions in spoken language, thus enabling virtual assistants like Siri on smartphones or Amazon Alexa in smart home applications.

Why Are Chatbots Suddenly So Popular?

Technological Progress

The concept of chatbots is not new, and the first chatbots have been around since as early as 1966. Traditional chatbots use rule sets to understand the user’s input. The capabilities of these rule-based chatbots are very limited as they can only properly respond to messages that are covered by their predefined linguistic rules.

In the recent past, significant progress has been made in the fields of machine learning and Artificial Intelligence (AI). These technologies can be used for Natural Language Processing (NLP). This has led to the development of modern AI-based chatbots that are vastly superior to traditional rule-based chatbots when it comes to processing user input, and which are even able to self-improve by learning from past conversations.

New Consumer Behavior

Customers increasingly tend to use digital channels to interact with their insurers. Moreover, customer expectations relating to the availability and user-friendliness of these channels have risen significantly in recent years. Nevertheless, the majority of customers do not utilize their insurers' existing digital channels (e.g. customer portals and apps) or abandon using them after only a short period. Last but not least, today the number of messaging app users has already surpassed the number of social network users and chat has become the most popular form of communication.

Rich Chatbot Ecosystem

In Spring 2016, Microsoft and Facebook have received wide attention when they announced that they will open up their messaging apps to chatbots and provide their own AI-powered platforms for chatbot development. Since then, other tech giants like IBM, Google, and Amazon have followed suit and chatbots can be deployed on many popular messaging platforms such as Facebook Messenger or WeChat. Additionally, numerous start-ups are also offering their own chatbot solutions.

The development of chatbots is further being fueled by the growing range of services offered by cloud computing platforms such as AWS or Microsoft Azure. These platforms provide services such as voice or image recognition which can easily be accessed by chatbots via Application Programming Interfaces (APIs).

Figure 3: Chatbot ecosystem examples

Today, we are living in exciting times where the combination of technological progress, new consumer behavior, and the availablity of a rich ecosystem have caused a surge of interest in chatbots. Many technology leaders predict that chatbots will become «the next big thing» and that they will replace mobile apps and revolutionize the way companies interact with their customers.

Stay tuned for the next part of our article series where we will discuss how chatbots can be used by insurers to fundamentally reshape and improve their customer service.

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Are you curious about trying out our prototypes? Would you like to talk more about chatbots? You can reach us directly, using the contact details below.

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