Chatbot Development, Chatbot News, Chatbots, Emerging Technology

The AI Chatbot Explosion in Various Regions around the World

For the first couple of years, chatbots were primarily used in customer service but now have expanded onto other verticals, such as enhancing the customer experience (CX) and improving business efficiencies, to name a few. You might’ve heard chatbots being called by other names, such as virtual agents, digital assistants, virtual customer assistants, and conversational AI bots.

By Dr. Tony Hoang
March 26, 2021

For the first couple of years, chatbots were primarily used in customer service but now have expanded onto other verticals, such as enhancing the customer experience (CX) and improving business efficiencies, to name a few. You might’ve heard chatbots being called by other names, such as virtual agents, digital assistants, virtual customer assistants, and conversational AI bots.

COVID-19 as a catalyst

Seventy-six percent of businesses are investing in long-term IT changes, with COVID-19 acting as a catalyst. Companies are digitizing to protect their employees and serve customers facing mobility restrictions as a result of the COVID-19 crisis. Artificial intelligence–powered (AI-powered) chatbot spending will hit $78 billion in 2022, exploding past the $24 billion predicted in 2018. The fastest- and largest-growing technology category is software, with 40 percent going into AI/cognitive systems with a five-year compound annual growth rate (CAGR) of 43 percent. Investments are focused on two verticals: deep learning and machine learning applications (broad applications in all fields); and conversational AI (chatbots, personal assistants, virtual agents, etc.). In terms of size and growth, the United States is the largest market size in conversational AI, with Southeast Asia having the highest CAGR. The United States will lead the development and adoption of conversational AI, with increasing investments in AI/machine learning from private equity. Furthermore, growing government spending on AI-powered technologies will accelerate the market growth moving forward. As more consumers and businesses use chatbots, the demand for improved functionality and value results in an explosion of investment and attention.

Why is there an explosion in AI chatbots?

Seventy-four percent of consumers favor AI chatbots when they’re looking for immediate answers. In the retail sector, businesses that use AI chatbots have seen an improvement of efficiency by 47 percent, innovation by 40 percent, and helpfulness by 36 percent. Key factors that are fueling the growth involve the increased demand for lower-cost AI chatbot development costs, improved customer support services, and omnichannel development.

How it started in Southeast Asia

In 2018, e-commerce giants wanted to penetrate the Southeast Asian market, starting first with Thailand, which has the world’s largest consumer-to-consumer (C2C) market. They found that 95 percent of merchants in Thailand saw social media as a viable business platform. Surprisingly, 70 percent of customers in Thailand said they use social networks or online social tools to talk about, post, or trade products and services on a daily basis. Small business owners were constantly asking themselves how to improve sales. Previously, some of the reasons for failing to increase online sales were that the customer needs more product information, wanted to compare products with other products, and had difficulties with finding products. These recurring, repetitive problems paved way for chatbots to step in to support small businesses in the region. Furthermore, 58 percent of web traffic in Southeast Asia comes from smartphones, which is consistent across age groups, allowing AI chatbots a large opportunity for growth.

Slow adoption in Europe

The market for chatbots is still fairly young, but Europe is lagging behind other markets due to data privacy, ethical questions, fear of failure, and market uncertainties. A big difference between the European and the US market is a perception about data privacy. While Americans seem to be less concerned with giving away data and the like to third parties, Europeans still feel uncomfortable sharing any private data. When Facebook made its jump to Europe, one was regularly pressed to not share private photos on Facebook or put anything out there that could possibly give any clues on personal habits.

Connectivity barriers in Africa

Businesses are slowly introducing chatbots in Africa as more of the population adopts mobile interactions through social media. Roughly 46 percent of the African population have mobile devices (~half a billion people). However, the African mobile and wireless markets are highly concentrated. For instance, in 27 countries, one player has more than 50 percent market share. Monopolies are still present in Africa—11 in international gateway services and 6 in wireless internet services. Additionally, with more than half of the population yet to subscribe to a mobile service, a big challenge for Africa is to connect the unconnected and unleash the economic potential of increased connectivity. Such challenges would also involve the problems of moving text-based interactions to chatbot technology.

Flip-flop in Australia

Initially, Australia was lagging far behind the world in the realm of AI adoption. Due to COVID-19, Australian companies and their customers have turned to chatbots and online messaging channels to deal with a huge surge in customer inquiries, cancellations, and other issues. In the last year, there has been a near six-fold (5.6x) increase in Australians using chatbots via messaging channels, such as WhatsApp, Facebook Messenger, and SMS, to communicate with brands since May 2019. During COVID-19, messaging spiked by 20 percent in one week and 39 percent in three weeks in mid-March 2020 and early April 2020, when global call centers closed and lockdown measures were announced.

The road ahead

The largest inhibiting factor for chatbot development in developing countries at the moment is the language barrier. If transactions were done in English, it would be a simple matter. However, other languages can be far more complex in both grammar and structure. Chatbots must be trained in the nuances of the language in order to feel natural to customers, hence improving the customer experience.