By Wayne Thompson

A chatbot is a computer program that uses natural language processing (NLP) and artificial intelligence to simulate human conversation and derive a response. Essentially, it’s a machine that can chat with you or respond to your chatter.

Chatbots can save time and money when used to handle simple, automated tasks. Need a few examples? Chatbots can:

  • Send you notifications about family birthdays.
  • Order your favorite Chinese food with a simple command.
  • Help book your next vacation getaway.
  • Update you on your account balance and when your next payment is due.

How hot are chatbots?

Bots were hot in 2017 but many bots are still primitive. 2018 will be the year of the next generation bot, often called the intelligent virtual assistant (IVA). These assistants incorporate more sophisticated NLP and deeper AI to infer a better response.

They can understand emotion through deep learning facial recognition models that detect happiness, anger, surprise and sadness. They recognize location and use opt-in historical data about your transactions to foster a more human interaction. Plus, these assistants learn continuously over time through machine learning.

Some of the smartest chatbots even consider what I like to call the now moment – analyzing the temporal state of what you are doing now to better understand and assist you. This type of relevance and intelligence will lead to a much higher adoption rate.

When meeting with customers, I’m beginning to see a lot of interest in intelligent virtual assistants from financial service companies. And incorporating AI into these assistants is a top priority. One bank is building a personal investment advisor that uses supervised learning to predict and suggest what securities or funds a client should buy.

The advisor bot also considers market sentiment of stocks as part of the stock pick. Sentiment is calculated by applying text analytics on articles and posts about the stock. The bank wants its financial advisor bot to answer tough questions like, “What the is the impact of interest rates on crude commodities prices?”