Chatbot Market

Chatbot Market Outlook - 2027

The global chatbot market size in BFSI was valued at $494.68 million in 2019, and is projected to reach $3,392.96 million by 2027, growing at a CAGR of 27.3% from 2020 to 2027. 

In the wake of COVID-19, branding & advertising is expected to significant growth, owing to rising focus on product expansion and lead generation strategies through intelligent virtual assistants.

Chatbot is Artificial Intelligence (AI) software that is used to conduct an on-line chat conversation by simulating a conversation via text or text-to-speech. It helps to converse with a user in natural language through messaging applications, websites, mobile apps, and through the telephone. Furthermore, chatbots are implemented across the BFSI sector to provide better user experience, interact with customers in place of advisors, speed up response time, ease workloads, and others.

Surge in integration of chatbots with social media, increased awareness toward chatbot, and rise in need toward improvement of customer relationship management (CRM) are some of the factors that fuel the chatbot market growth. However, increase in installation cost of chatbots at the initial stage and lack of product differentiation restrain the growth of the market. 

Furthermore, implementation of technologies, such as interference engine, cloud-based deployment, application programing interface (API), and natural language processor (NLP), is expected to provide lucrative opportunities for the expansion of the chatbot market in BFSI during the forecast period.

The solutions segment dominated the chatbot market share in 2019, and is projected to maintain its dominance during the forecast period. The demand for chatbot in the under this segment is expected to increase in the coming years, owing to enhanced technological features in chatbot software such as natural language processor (NLP), cloud-based deployment, multilingual features, interference engine, and others.

The report focuses on the growth prospects, restraints, and the chatbot market trends. The study provides Porter’s five forces analysis to understand the impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers, on the chatbot market in BFSI.

Segment review

The global chatbot market in BFSI is segmented into component, platform type, end user, application, and region. In terms of component, it is classified into solution and service. On the basis of platform type, it is bifurcated into web-based and mobile-based. Based on end user, it is divided into banks, insurance companies, and others. On the basis of application, it is segmented into customer support, branding & advertisement, data security & compliance, and others Region-wise, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. 

The report analyses the profiles of key players operating in the market, which include [24]7.ai, Inc, Acuvate, Aivo, Artificial Solutions, Creative Virtual Ltd., eGain Corporation, IBM Corporation, Inbenta Technologies Inc., Next IT Corp., and Nuance Communications, Inc. These players have adopted various strategies to increase their market penetration and strengthen their foothold in the industry.

COVID-19 impact analysis

The outbreak of the COVID-19 pandemic had a significant impact on the chatbot market in BFSI, owing to global fear of the virus and complete lockdown & shutdown of bank branches, financial institutions, and others. In addition, during this outbreak, banks, insurers, and financial services providers improved user experience by facilitating quick issue resolution and providing timely services through online chats. However, the chatbot market in BFSI is projected to prosper in the coming years after the recovery from the COVID-19 pandemic. 

Top impacting factors

Increased awareness & advantages of chatbots over other customer support options

Rise in awareness toward chatbot and its benefits, such as 24/7 availability of services, augmented response capacity, increased return on investment (ROI) for customer support, and streamlined processes for repetitive inquiries, drives the market growth. In addition, the usage of chatbots offers major benefits in the BFSI sector, such as improvement in net promoter score (NPS), enhancing customer satisfaction by reducing response times, and increase in customer convenience in terms of product offerings, thereby fueling the growth of the chatbot market in BFSI.

Rise in need to improve the customer relationship management (CRM)

Adoption of chatbots has increased in the banking, financial services, and insurance sectors primarily to accelerate lifelong relationship with their customers, provide timely services, and maintain brand loyalty in the market. Customer relationship management serves as an important factor for the growth and profitability of banks in the present age to seek competitive advantages. In addition, chatbot helps in customer engagement and focuses on understanding the customer’s needs & customized requirements in the market. Therefore, this has led to significant increase in integration of chatbots, as it has the potential to simplify the entire user experience and improve customer relationship management (CRM) in the banking, financial services, and insurance sectors.

Continuous technological advancements in chatbots 

Incorporation of enhanced technological features into chatbot software, such as natural language processor (NLP), interference engine, cloud-based deployment, application programing interface (API), and multichannel, is expected to provide lucrative opportunities for the market. Moreover, the demand for artificial intelligence and audio speech-based chatbots is expected to increase in the coming years. Therefore, this is expected to become the major factor to provide potential benefits to the chatbot market in BFSI.

Key benefits for stakeholders 

• The study provides in-depth analysis of the global chatbot market share along with the current trends and future estimations to identify the imminent investment pockets.
• The report provides information regarding drivers, restraints, and opportunities with impact analysis.
• Porter’s five forces analysis illustrates the potency of the buyers and suppliers operating in the industry.
• An extensive analysis of the key segments of the industry helps to understand the trends in the global chatbot industry in BFSI.
• The quantitative analysis of the global chatbot market in BFSI from 2020 to 2027 is provided to determine the market potential.