Module 1
AI Governance: Creating Trust, Compliance, and Data Privacy

Module 1
The Future of AI in Business

Module 1
Glossary of Common AI Terms

Introduction to Chatbots

Welcome to our lesson on chatbots. In this module, we will explore the evolution of chatbot technology, its capabilities today, and how you can leverage them to better engage and serve customers.

A chatbot is a software application designed to simulate human conversation. It can chat with a user in a natural language like English, Chinese, or any other language. They can be as simple as providing pre-written responses to specific inputs or as sophisticated as understanding and generating human-like responses in real time.

Chatbots (bots) have transformed remarkably since their origins in the 1960s when Joseph Weizenbaum created ELIZA, a simple program that mimicked conversation by following pattern-matching rules. ELIZA laid the foundation for later chatbots using more advanced artificial intelligence.

Chatbots can efficiently address common inquiries, route users to the right channels, collect feedback through surveys, and drive transactions. Their ability to understand natural language makes the experience smooth and conversational. However, human-like interactions require thoughtful design.

Effective chatbots actively listen, personalize responses, know when to admit limitations, and follow ethical principles. Well-implemented chatbots strengthen brand voice through dynamic, conversational experiences at scale.

At the same time, chatbots should complement human agents, not aim to replace them entirely. There are still limitations in chatbot capabilities for complex or sensitive conversations. With a balanced approach, businesses can utilize chatbots for automated tasks while retaining human touchpoints for building relationships.


Distinguishing Traditional Bots from AI-Driven Bots

Traditional chatbots:
  • Follow a set of pre-defined rules. If the user input matches a rule, they return the corresponding response.
  • Have limited flexibility in that they can only understand and respond to specific inputs. Any deviation from the expected input might confuse the bot.
  • Have no learning capability. These bots do not learn from user interactions. Their intelligence remains the same regardless of how many conversations they’ve had.


AI-driven chatbots:
  • Follow Natural Language Processing (NLP). They employ algorithms to understand and generate human language.
  • Utilize continuous machine learning to improve responses over time based on user interactions.
  • Have contextual understanding. They can remember past interactions and use that context in future conversations.
  • Understand nuances, emotions, and slang, providing a more human-like conversation experience.

Today’s AI-powered chatbots can simulate meaningful dialogues, personalize interactions, and handle frequently asked questions independently. This creates new opportunities for businesses.

Integrating chatbots into messaging apps, websites, and other touchpoints facilitates instant, 24/7 customer engagement which allows businesses to collect user data at all times. This data can be used in business intelligence, customer service and marketing, among other use cases.

As chatbot technology keeps advancing, there is tremendous potential to transform customer experiences and gain insights through AI-powered conversations. In the coming lessons you will learn how the chatbot has evolved through history from the 60’s to today and how A.I. is transforming the ‘bot’ into something akin to an ‘assistant’.