Chatbot Market Size By Application (Customer Service, Social Media, Payment/Order Processing, Marketing), By Interface (Standalone, Web-Based, Third-Party), By End-Use (BFSI, Media and Entertainment, Healthcare, E-commerce, Retail, Travel and Tourism), By Type (Rule-Based, AI-Based), By Deployment Model (On-Premise, Cloud) Industry Analysis Report, Regional Outlook, Growth Potential, Competitive Market Share & Forecast, 2018 - 2024

Industry Trends

Chatbot Market size estimated at USD 250 million in 2017 and is anticipated to grow at a CAGR of over 31% from 2018 to 2024.
 

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The chatbot market growth is attributed to the growing popularity of these platforms among enterprises as they allow users to create bots effortlessly by providing a user-friendly interface. These platforms simplify the entire working of the chatbots by providing the entire infrastructure and communication features necessary for solving customer queries. The rising implementation of AI and machine learning algorithms. which employ computational methods for learning, understanding, and delivering human language content to develop user-interactive online applications will augment the market growth. Another factor accelerating market growth is the growing investments in technology to develop new innovative solutions. Market players, including both startups and established companies, are investing heavily in Natural Language Processing (NLP) technology to develop platforms. These investments enhance marketing & promotions through the chatbot platform, increasing customer service, transactions, and purchases.
 

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By Application

The payment/order processing application segment will grow at a CAGR of around 30%. The chatbots that assist users for making payments and processing orders will provide benefits to both the customers and businesses fueling market growth. They assist in solving customer problems and also speed up monotonous tasks. They allow easy & quick payments through integrations with the platforms such as Siri, Slack, and Facebook Messenger, due to which the market will witness a heavy demand for these platforms from 2018 to 2024.
 

By Interface

The third-party interface segment will hold a chatbot market share of over 25% by 2024. Third-party chatbots offer cost-effective solutions; however, there are certain security issues related to these systems. The security structures are finalized by third parties, which means that the organizations have no control over the safety features of a chatbot. As organizations collect and store large amounts of critical personal information from the users, their security has to be maintained.
 

By End-Use

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The healthcare industry is anticipated to grow at a CAGR of above 30% as the sector is witnessing a huge usage of online interactive platforms, offering various benefits to the patients and healthcare organizations. These platforms perform the billing processes, insurance claims, provide 24/7 support & assistance to existing patients, and enable inventory management, boosting their usage in the healthcare industry. Healthcare organizations are widely implementing such platforms to deliver enhanced service to patients, save the doctors’ time, and ensure billing accuracy.
 

By Type

The AI-based segment is expected to witness the fastest growth rate over the forecast timeline with a CAGR of over 50%. The rising investments by technological players in the field of AI and machine learning will support the development of chatbot solutions. The usage of these solutions is increasing in various sectors including education, healthcare, BFSI, retail, and travel. For instance, the Indian Railways uses AI-based chatbots to handle passenger queries. These solutions help in enhancing traveler experience by delivering enhanced passenger safety, amenities, and better service delivery.
 

By Deployment Model

 China Chatbot Industry Share, By Deployment Model, 2017

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The on-premise deployment model held a dominant share in 2017 and is projected to maintain its dominant position until 2024 with a share of above 60%. The market growth is attributed to the rising implementation of applications using on-premise model, which allow the enterprises to have more control over the user experience and securely manage & examine all chatbot interactions within the enterprise’s environment. However, the growing popularity of cloud-enabled platforms due to their enhanced performance and availability will spur the growth of cloud deployment market.
 

By Region

The Latin America chatbot market will grow at a CAGR of over 5% between 2018 and 2024 due to the heavy adoption of cloud-based solutions and the proliferation of mobile applications owing to smartphone penetration in the countries, including Mexico and Brazil. In this region, Brazil is expected to dominate the market in 2017, in terms of market share due to the large-scale deployment of AI-based user-interactive applications. For example, in July 2018, Bradesco a Brazilian bank, adopted chatbots to offer customer services in digital banking technology. This will assist the bank to expedite its service offerings with agility and fluency.
 

Competitive Market Share

Companies present in the market are emphasizing strategic acquisitions and investments in various complementary product companies to execute their growth strategies. For example, in July 2017, Facebook Inc. acquired Ozlo, an AI-based chatbot developer to enhance its AI capabilities. Established companies are making rapid investments in R&D, focusing mainly on the areas of machine learning and cloud to develop new products to gain a competitive edge when compared to their customers. In July 2016, Google, Inc. introduced its New Cloud Natural Language API, assisting developers to access Google-powered sentiment analysis, syntax analysis, and entity recognition.
 

Some of the key players operating in the chatbots market include Google, Microsoft, ReplyYes, Kik, Poncho, Babylon Health, LivePerson, Baidu, Slack Technologies, and WeChat.
 

Industry Background

The chatbot technology began its acceptance in the early 1990s with the introduction of Eliza, which was an NLP computer program designed to imitate human conversations by matching human prompts with pre-defined responses. With the increasing proliferation of smartphones and digital assistants including Apple’s Siri, Microsoft’s Cortana, and Amazon’s Alexa, the implementation of machine learning to develop chatbot applications has increased significantly. These applications are gaining prominence in the enterprises as they facilitate interaction with customers. The rising investments in the AI are anticipated to spur market growth over the forecast timeline.