ARTIFICIAL intelligence (AI) has indeed influenced how we work, live and communicate today. Recent data from the International Data Corp. showed that worldwide spending on digital transformation will reach $4 trillion in 2027, with AI and generative AI pushing the investments.

Meanwhile, the IDC Business Value Engineering 2023 Survey noted that businesses in APAC consider conversational AI to be critically important in their investments in the next couple of years.

As the AI domain continues to evolve, Infobip, a global communications platform, is seeing conversational AI gaining more ground in the APAC region. In fact, a third of customer communications will be powered by AI by 2026.

More than a buzzword, we see that conversational AI is fast becoming a language that is shaping the future of business when it comes to communication between companies and customers. But are Philippine enterprises ready to deploy AI? At the same time, are their customers willing to engage with AI when they have concerns? The key here is to understand how conversational AI works and what value it can bring end-to-end.

Conversational AI vs. generative AI

While much of the focus both globally and here in the Philippines has been on the rise of generative AI in creating new content, its cousin, conversational AI, has also quietly made great strides over the past decade. These two distinct AI technologies have, in many ways, greatly affected how we humans interact with machines due to their power to not only mimic natural human conversation but also automate everyday tasks and processes.

We at Infobip define conversational AI as a type of AI that can simulate human conversation, while generative AI produces various types of content, such as text, imagery, audio and synthetic data.

Conversational AI is a wider term that refers to the technology that enables computers to communicate with humans using text and speech patterns that are naturally familiar to people. Known as chatbot technology, it uses natural language processing (NLP) to convert spoken or typed words into structured data. By using voice recognition and interactive messages, these automated systems are able to respond to user commands with greater accuracy than traditional search engine algorithms can.

Conversational AI can also serve as virtual guardrails to ensure generated AI responses do not go off track while ensuring responses sound more fluid and "human sounding" due to development in voice recognition and natural language programming. Thus, conversational AI enables companies to create more personalized interactions with their customers, who are looking for deeper connections with brands.

This is where conversational messaging channels come into play.

Conversational AI to conversational experiences

The landscape of customer communication is quickly changing, fuelled by the widespread adoption of messaging apps, virtual assistants and digital platforms.

Infobip analyzed more than 473 billion digital interactions on its platform in 2023 between businesses and consumers to identify the latest global business messaging trends. Our Messaging Trends 2024 report recorded a 137 percent increase in mobile app messages compared to 2022, a 73 percent rise in social media messages and a 63 percent increase in chat app messages.

Globally, brands are using WhatsApp as their primary channel for conversational support, where they send 90 percent of support messages. However, we have noted that brands are diversifying their channel mix to better reach their consumers in specific regions.

Here in the Philippines, Viber stands as a strong regional player, with a 34 percent increase in interactions on the app. Meanwhile, SMS (37 percent) and email (32 percent) remain as additional support channels for Filipinos.

Brands in retail, digital commerce, financial services and telcos across Asia-Pacific are using their customers' preferred channels to address their informational needs. Many APAC brands and organizations are utilizing conversational commerce solutions powered by conversational AI and the cloud, using communication platform as a service (CPaaS) and software as a solution (SaaS) tools with their internal and external applications.

Specifically, those in retail and e-commerce tap conversational AI to automate repetitive customer queries on basic information such as store hours and location, provide uninterrupted customer support, and generate leads through click-to-ad links as part of their marketing campaigns. Conversational AI is also increasingly impacting the health care industry by assisting in diagnosis, managing patient care and analyzing medical data.

Investing in conversational commerce solutions

Our Infobip data showed that 70 percent of APAC organizations plan to increase spending in conversational commerce solutions over 2023–2024 to provide more personalized customer experiences. As such, we see an accelerated adoption of conversational commerce among businesses in the region.

In the Philippines, however, enterprises are not rushing to deploy AI to level up their customer communications initiatives. Business executives are studying the impact of using this technology, while also weighing its benefits to improve their operations.

Three things have been on their radar:

1. Data privacy and security, as AI systems require vast amounts of data to learn and make decisions;

2. AI accuracy and risk, as AI systems can inadvertently perpetuate biases; and

3. Integration and scalability, as AI integration can be a complex process, requiring significant changes to infrastructure and workflows.

The use of AI, particularly conversational AI, requires careful planning and a flexible approach to technology adoption to ensure long-term success. With the right knowledge and tools about conversational AI, backed by the government's own AI roadmap as a guide for improved productivity and competitiveness in the digital business landscape, local companies have the opportunity to effectively connect and engage with Filipinos — whether they are dealing with a human agent, a chatbot or a combination of the two.

Cecile Perez Tizon is the head of sales for Asia-Pacific at Infobip, an omni-channel communications platform for advanced customer support and engagement, authentication and security, using SMS, voice messages, email and mobile app messaging.