An Overview of Conversational Agent: Applications, Challenges and
Future Directions
Ahlam Alnefaie
1
, Sonika Singh
2
, Baki Kocaballi
1
and Mukesh Prasad
1
1
School of Computer Science, FEIT, University of Technology Sydney, Australia
2
Marketing Discipline Group, Business School, University of Technology Sydney, Australia
Keywords: Chatbot, Conversational Agent, Artificial Intelligence, Real-world Application.
Abstract: Recent years have seen the increased use of artificial intelligence technologies such as conversational agents.
Conversational agents, also referred to as chatbots, are used to interact with users using natural language.
Thus, various fields have started to adopt conversational agents such as education, healthcare, marketing,
customer service, and entertainment. However, determine the motivations that drive the use of conversational
agents and clarify their usefulness are challenging. This paper presents an overview of the evolution of
conversational agents from an initial model to an advanced intelligent system and their deployment in various
real-world applications. Moreover, this paper contributes to information system literature by comparing the
different types of conversational agents based on their roles and interaction styles. This paper also highlights
the current challenges of conversational applications along with recommendations for future research.
1 INTRODUCTION
In recent years, a significant number of artificial
intelligence (AI) applications have been developed
for organizations to automatically manage users'
inquiries. A conversational agent or a chatbot is a
smart program that simulates human language
through adopting machine learning and AI
techniques. The modes of communication with
conversational AI agents involve text, voice, emoji,
and other types of inputs as interaction techniques
with users. In the multichannel environment,
conversational agents can reduce the time users spent
seeking the right information. Consequently, the
pervasive use of conversational AI technology has
created a critical dependency on researchers that call
for a specific focus on conversational AI application
evaluation (Venkatesh et al. 2018).
Conversational systems can enhance the
experience of digital users in various domains such as
education, e-commerce, healthcare, finance,
marketing, and business. Each conversational agent
has access to specific knowledge of its domain to
converse effectively. For instance, education
conversational agents help tutor content and
university-related information (Hiremath et al. 2018).
The conversational applications in healthcare assist
patients with answers to specific health-related
queries (Kadariya et al. 2019). Business conversational
agents act as a customer service tool to improve
customer experience (Nuruzzaman and Hussain,
2018). Other conversational applications in a general
domain are developed to conduct conversations on
open topics and support users' needs.
Despite the rapid adoption of conversational AI in
the industry, conversational AI and its applications
have received limited attention in the academic
literature. This paper synthesizes conversational AI
applications and their evolution in various industries.
Therefore, a literature review has been conducted to
comprehensively compare conversational agents in
different domains. This study also identifies the
current challenges of conversational applications and
provides future research directions towards the
effectiveness of conversational AI usage.
The paper is organized as follows. The first
section briefly describes the technological concepts
of conversational agent applications; the second
section discusses the history of conversational agents
and the growing interest of the research studies; the
third section presents a classification of
conversational agents based on their roles and
interaction styles; the fourth section highlights the
conversational applications in various domains. The
last section discusses the current challenges of
conversational applications and highlights directions
that need further research.
388
Alnefaie, A., Singh, S., Kocaballi, B. and Prasad, M.
An Overview of Conversational Agent: Applications, Challenges and Future Directions.
DOI: 10.5220/0010708600003058
In Proceedings of the 17th International Conference on Web Information Systems and Technologies (WEBIST 2021), pages 388-396
ISBN: 978-989-758-536-4; ISSN: 2184-3252
Copyright
c
2021 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
2 RESEARCH BACKGROUND
2.1 Understanding Conversational
Technology
Conversational agents or chatbots are considered as a
type of dialogue system in the field of human-
computer interaction (Følstad and Brandtzæg, 2017).
As the name suggests, chatbots refer to an Internet
robot that can chat with humans. Chatbots are not
usually stand-alone applications that can be installed,
but rather, they work in an integrated way within
websites or messenger platforms (Parthornratt et al.
2018). Chatbots often use AI algorithms to analyse
the users' input before sending an appropriate
response (Rahman et al. 2017). In addition, speech
recognition technology is critical here to understand
the users' responses (Haridas et al. 2018).
A conversational user interface (CUI) bridges the
interaction of humans with dialogue systems to mimic
social chatting. CUI term referred to the collective
term for a variety of assistants that mimic human
conversation (Lister et al. 2020). CUI has usually two
styles of interaction: voice-based and typing-based.
Voice User Interfaces (VUI) is what users interact
with when communicating with spoken language
applications (Cohen et al. 2004). For example, Apple
Siri, Amazon Alexa, Windows Cortana, and Google
Assistant (aka voice assistants) are typical examples of
CUIs using voice-based interaction. Typing-based
chatbots rely on textual input and output and are
usually integrated with social media sites such as
Facebook Messenger bots. Furthermore, the chatbot
applications enhance the CUI capability using natural
language processing (NLP) and natural language
understanding (NLU) techniques to smartly understand
the intentions of each user input (Braun et al. 2017).
User Experience (UX) is a major term in the discipline
of human-computer interaction (HCI). UX concept has
a variety of different definitions in the relevant
literature. The ISO 9241-210 definition of user
experience is "A person's perceptions and responses
resulting from the use and/or anticipated use of a
product, system or service" (Mirnig et al. 2015). A
critical factor that influences user experience with new
technology is a user onboarding design. The user
onboarding design is the introduction process that
gives users a guided message to the new product to
enhance the experience of using the product (Cascaes
Cardoso 2017). A common type of onboarding method
used in conversational interface is using greeting
statements or menu-based questions. Further studies
need to investigate the type of onboarding design that
influences first-time interaction with users.
2.2 History
The interest in conversational technology has
increased considerably since the 1950s when the
initial studies focused on the interaction between
humans and computers in accordance with the
communication theory. Table 1 shows a summary of
the conversational applications development
timeline. In 1950, Alan Mathison published an article
titled "Computing Machinery and Intelligence" to test
computers' ability to think like humans. Alan
Mathison's famous research establishes the
foundations of AI conversational agents (Pinsky
1951). ELIZA was the first chatbot developed in1966
by Joseph Weizenbaum, which the main purpose is to
act as a Rogerian psychotherapist based on the model
of mirroring the previous user prompt. However, it
was unable to keep the flow of conversation ongoing
and had limited capability of recognizing human-like
feelings (Weizenbaum 1966). PARRY was another
historic chatbot, developed in 1972 by Kenneth
Colby, at Stanford University, which simulates a
person with paranoid schizophrenia. PARRY with its
embodied conversational interface has more features
than ELIZA (AbuShawar and Atwell, 2015).
Artificial linguistic Internet computer entity
(ALICE) was developed in 1995 by Richard Wallace,
which utilizes XML platform called AI mark-up
language to determine the heuristic conversation rules
(Tabet et al. 2000). In 2001, SmarterChild chatbot was
developed, and integrated within windows messenger
to communicate with users as a personalized
conversational interface. Apple launched its voice
assistant, Siri, in 2010, which communicates with users
through a natural language interface employing both
voice and textual interaction modalities (Aron 2011;
Guzman 2017). In 2015, Amazon introduced a voice-
based chatbot designed as a smart speaker called
Alexa. Then, inspired by Alexa, Google released a
smart speaker in 2016: Google Assistant. In 2017,
Samsung, started developing Bixby, to have an
intelligent voice-based assistant similar to Siri.
Recently, Google has launched the most state-of-
the-art AI chatbot called Meena, a 2.6 billion
parameter end-to-end trained neural conversational
model. Meena can hold sensible conversations that
are more specific than existing best-performing
chatbots (Adiwardana et al. 2020). Facebook has also
announced a new AI chatbot, Blender that has more
human features than Meena. However, Blender is
limited in filtering Reddit datasets that may have
harmful languages that influence the responses
(Gjurković and Šnajder, 2018). The following section
proposes a classification of conversational agents
An Overview of Conversational Agent: Applications, Challenges and Future Directions
389
Table 1: Timeline of conversational agents’ development.
Agent Year Creator Interaction mode Role
ELIZA 1966 Joseph Weizenbaum Text Rogerian psychotherapist
PARRY 1972 Kenneth Colby Text Simulate a person with paranoid schizophrenia
ALICE 1995 Richard Wallace Text Practice human-like conversation
SmarterChild 2001 Robert Hoffer Text
Personal assistant
Siri 2011 Apple Text/Voice
Alexa 2015 Amazon Voice
Bixby 2017 Samsung Text/Voice
Meena 2020 Google Text
Blender 2020 Facebook Text
according to two categories based on their role and
interaction styles. While the first one depends on
showing the different roles conversational agents can
take, the second classification focuses on technical
aspects characterizing user interaction styles.
3 METHODOLOGY
This review aims to present an overview of the
evolution of conversational agents and their
deployment in various real-world applications. To
review existing studies on conversational agents in
various domains, we follow the literature review
process based on the standard approaches (Nakano
and Muniz, 2018; Webster and Watson, 2002). All
searches were limited by the English language and
publication date (2010– 2021). The review included
two phases. The first stage was collecting studies
regarding conversational agents from relevant
journals and conferences. The second phase was
analysing the literature based on the specific domains
to present the potential role of conversational agents
and derive directions for future studies. Furthermore,
titles and abstracts were scanned to remove irrelevant
articles. In addition, we conducted a forward
snowballing search method by examining the
citations to the included articles.
4 RESULTS
4.1 Types of Conversational Agents
Conversational applications may consist of a dialog
system, an avatar, and an expert framework to process
queries efficiently. Broadly, the conversational
agents can be classified based on the role/tasks
accomplished: general-purpose and task-specific.
The second classification is based on interaction
styles with users that involve two types of interaction
styles: menu-based and text/voice-based. Figure 1
presents the broad classification of conversational
agents. These criteria may influence the core design
philosophy of conversational agents or which
principle needs to be considered in understanding the
communication or the tasks of the conversation for
which the conversational agent needs to be designed
(Braun and Matthes, 2019). The general-purpose
conversational agent is a multi-tasking agent and
plays the role of a personal virtual assistant. It is
usually integrated as a virtual assistant on platforms
such as mobile, desktop, and smart speaker (Siebra
et al. 2018). These applications perform general tasks,
and users can ask general questions. For example,
users ask information about the weather, the nearest
restaurants, opening email applications, adjusting the
calendar, and any other personal inquiries. Siri, Bixby,
Cortana, Alexa, and Google Home are examples of
virtual assistants that play a general-purpose role
(López et al. 2017). The task-specific conversational
agent performs specific tasks for users, working as an
assistant agent for a particular domain such as online
tutor, therapist, and customer service (Kalia et al. 2017;
Ko and Lin, 2018; Ranoliya et al. 2017).
The integrated platforms for this type of agent
include websites and social media applications. For
example, the Facebook messenger is a popular
chatbot used by firms to target consumers (Pereira
and Díaz, 2018). Social media platforms such as
Twitter, Kik messenger, WhatsApp, and WeChat
application also embed the chatbot platform (Xie et
al. 2019; Yamaguchi et al. 2018). The menu/screen-
based conversational agent uses pre-defined rules to
produce limited numbers of answers. The users, in
turn, can only ask pre-defined questions, and the
subsequent responses are generated from the chatbots'
knowledge base. The user interface of a menu-based
conversational agent has a limited number of end-
WEBIST 2021 - 17th International Conference on Web Information Systems and Technologies
390
users' prompts. The implementation of this type of
conversational agent is straightforward and does not
require any machine learning algorithm (Dahiya 2017).
A limitation of this conversational application is unable
to answer the different kinds of questions not included
in the pre-defined list of options in the dataset. The
benefits of a menu-based agent are enhancing the ease
of use factor and navigating the conventional flow of
information (Hornbæk and Hertzum, 2017). However,
the limited number of response options constrain the
users' expressive capacity. This type of conversational
assistance is popularly used in the retailing industry.
For example, Domino's Facebook Messenger bot
offers buttons as communication modes with
consumers (Sotolongo and Copulsky, 2018).
Figure 1: Classification of conversational agents.
The text/voice-based type of conversational
agent is more advanced and utilizes machine learning
algorithms to generate an appropriate response. This
type of agent interacts with end-users allowing them
to unconstrained input through typing text or voice by
speech and long sentences during the conversation.
For example, If the user asks, Where is the nearest
store to my location?the agent uses the keywords
nearest”, store, andlocation”, to determine the
best answer to reply to the end-user. The text and
voice-based agents apply deep learning algorithms to
develop the ability to detect and recognise keywords
(Khanpour et al. 2016). A dialogue manager is the
main part of the design, which collects keywords
from the conversational interface and sends it to the
knowledge engine. Then, the knowledge engine
classifies the type of questions and searches for the
answers from the knowledge database (Setiaji and
Wibowo, 2016). Conversation datasets are available
through many open source platforms (Serban et al.
2015). Compared to the menu-based ones, text/voice-
based conversational agents provide higher levels of
flexibility in the ways in which users can express their
prompts. However, there is also a higher possibility
of misrecognized prompts that may negatively affect
user experience.
The next section discusses the application of
conversational
in various domains such as education,
finance, banking, travel, healthcare, and E-commerce.
4.2 Applications in Various Domains
Conversational systems play an important role in
many sectors such as education, healthcare, finance,
travel, and business. Table 2 presents the role of
chatbots in various domains. Figure 2 shows that
chatbots' potential usage in the industry (Suhel et al.
2020). In education, a conversational application is
useful for learning with the right conversation
scenario design, leading to less complex knowledge
structures. Prior research has focused on the role of a
chatbot that can serve for teaching and learning
purposes. Sánchez-Díaz et al. (2018) developed a
formal methodology for implementing an intelligent
chatbot as a tutor for a university-level course.
Clarizia et al. (2018) proposed an ontology-based
chatbot in the educational domain, which uses NLP
techniques to develop keyword detection skills to
provide the correct answers to students. Therefore,
chatbots can work as assistants for teachers and
students during the learning activities such as
identifying grammatical and spelling mistakes,
assigning projects, and checking homework.
Figure 2: Chatbots usage in the industry (Suhel et al. 2020).
Kerlyl et al. (2006) focused on a negotiated open
learner model to develop conversational agents and
intelligent tutoring systems to support student
reflection on their learning. A chatbot's ability to
negotiate and incorporate small talk capabilities can
positively influence the enjoyment of the interaction
and engagement with a chatbot, thereby improving
the learning experience for students. Hien et al.
(2018) developed a chatbot that can provide services
for students and academic staff with high accuracy of
user intent identification and context extraction. Both
user intent identification and context information
have quite promising results i.e., a high score of the
context information extraction indicates the ability of
An Overview of Conversational Agent: Applications, Challenges and Future Directions
391
a chatbot to provide the correct answers, as shown in
Figure 3.
In the finance industry, chatbots are deployed as
customer service agents in large-scale inquiries for
financial industry clients to provide the information
and features of services like car loans, home loans,
and FAQ for customers who already have a car loan
contract. Okuda and Shoda (2018) examined the
features of ‘Sony bank' chatbot and developed the
user stream function to visualize how many users
have passed through different contexts. Visualization
of the user stream function can provide insights
regarding which script locations require more
detailed responses to develop the conversation
suitability of the chatbot. Altinok (2018) proposed a
framework for the finance-banking domain to build
German language banking through the finance
chatbot to keep the state of the conversation between
the chatbot and customers. The achievement of
Altinok (2018) is promising, and the project is still in
progress to introduce the success metrics and evaluate
the dialogue manager module. Duijst (2017) proposed
a chatbot for banks, which investigates the factor of
personalization for improving the user experience of
chatbots in the finance section and found that
personalization has no significant effect on the user
experience of chatbots for the finance industry, as
shown in Figure 4 (Duijst 2017).
Figure 3: The F-score results (Hien et al.2018).
Figure 4: Plot of the effect of Task & Personalisation with
the UX of chatbots (Duijst 2017).
Table 2: Chatbots’ role in various domains.
Stud
y
Chatbots’ Role Domain
Kerlyl et al. 2006;
Sánchez-Díaz et al. 2018;
Clarizia et al. 2018; Hien
et al. 2018; Prasad and
Ran
j
ith, 2020
An intelligent tutor for a university level course.
Providing education system information and services on behalf of the
academic staff.
Improving the security and automation of a lab by the voice-based agent.
Education
Okuda and Shoda 2018;
Altinok 2018, Duijst 2017;
Milhorat et al. 2019; Suhel
et al. 2020; Khan and
Rabbani, 2021
Providing financial-product sales.
Online customer support in banking industry.
Answering a question about customers account, bill payment, credit card
payments, and schedule meetings
Bank/Finance
Kowatsch et al. 2017; Oh
et al. 2017; Huang et al.
2018; Martin et al. 2020;
Espinoza et al. (2020)
Providing guidance for consumers or their carers when they have
medical problems.
Providing diabetics with diets and information regarding foods to be
avoided.
Provi
d
in
g
information for
p
reventin
g
COVID-19
p
andemic
Healthcare
Argal et al. 2018; Sano et
al. (2018), Alotaibi et al.
2020
Providing information or services through conversation-like interactions
for tourism and travel.
Consumers use travel chatbots to book a trip, plan a vacation, discover
new experiences, and make reservations at hotels.
Travel/Tourism
Gupta et al. 2015;
Brynjolfsson and Mcafee,
2017; Chung et al. 2018;
Zarouali et al. 2018;
Rakhra et al. 2021;
Offering features to brands, such as sending advertisement messages,
asking for customer feedback, and collecting customers' preferences.
Providing an online experience and customer service through social
media sites.
E-commerce
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In the banking sector, a conversational agent can
play several roles to help end-users, such as
answering a question about users account, bill
payment, make a transaction, credit card payments,
and schedule meetings. Milhorat et al. (2019)
investigated the power of chatbots in bank services by
developing a dialogue management system to provide
a suitable answer and avoid making generic fallback
utterances. They experimented with 226 user
interactions and provided 187 correct answers and 39
fallback utterances. Their result showed that user
utterances could be handled if the system had the
addition of a coherent statement response component.
Conversational agents are widely used in the
healthcare industry with the primary aim to provide
guidance for consumers or their carers when they
have medical problems (Kowatsch et al. 2017; Oh et
al. 2017). Huang et al. (2018) utilized user data to
develop the AI healthcare chatbot that can provide
people with diabetes with diets and information
regarding foods to be avoided. AI medical
applications can offer useful personalised
information to individuals in efficient ways
(Kocaballi et al. 2019a). However, further studies are
needed to assess patient safety (Laranjo et al. 2018).
Recent research investigates the power of AI
technology to provide information for preventing
COVID-19 pandemic (Miner et al. 2020). Developing
AI-based chatbot applications can have a role in
defeating COVID-19 and increase the efficiency of
healthcare management (Martin et al. 2020).
Espinoza et al. (2020) proposed a web-based chatbot
for COVID-19 screening and redirecting users via
links distributed through multiple channels (social
media, email, text messages) to handle the screening
questions to assign each question into a risk category
with a specific set of actions and triage patients to the
right health care option.
Chatbots can also provide information or services
through conversation-like interactions for tourism and
travel. Consumers use travel chatbots to book a trip,
plan a vacation, discover new experiences, and make
reservations at hotels with higher ratings. Argal et al.
(2018) developed a chatbot to improve user-machine
interactions in the travel domain through collective
user preferences to provide better user-centric
recommendations and accurate travel information to
the user. Sano et al. (2018) implemented a tourism
chatbot that is based on hierarchical cluster analysis
and agglomerative nesting algorithm to give users a
balance between time allocations versus the quality of
their tour for tourism sites.
The main business objectives of the firms are to
achieve sales, enhance customer service and
engagements (Solem 2016), and these can be achieved
using AI technologies (Brynjolfsson and Mcafee
2017). The researchers have investigated the
effectiveness of the Facebook chatbot applications for
brand engagement, and they found that the consumer
engagement of brands on Facebook results in positive
user-generated content and consumer involvement
(Leong et al. 2018; Shareef et al. 2018). Lee and Ko
(2019) reported that chatbots with customizing
functionality, sociality, creativity, and hedonic value
all influence perceived brand relationships and brand
loyalty. Bhawiyuga et al. (2017) designed a chatbot
system that can communicate with customers through
the Telegram service and provide automatic answers to
the customer-to-seller questions in less than 5 seconds.
Conversational agents can offer many features to
brands, such as sending advertisement messages,
asking for customer feedback, and collecting
customers' preferences that often drive consumers'
brand engagement. Luxury brands such as Burberry
and Tommy Hilfiger started to adopt chatbots to
communicate with their customers and provide an
online experience through social media sites. At least
two reviews of the literature found that chatbots can
be effective for customer satisfaction and marketing
strategies of brands (Chung et al. 2018; Zarouali et al.
2018). However, more studies are needed to
investigate the impact of using conversational agents
as a marketing channel with careful consideration of
customers' perceptions. Conversational applications
can enhance online shopping by providing
recommendations and information for online
customers, leading to improving browsing the
products that can be challenging and time-consuming
through websites given the variety of features a
product can have. For example, Gupta et al. (2015)
developed a website-based chatbot as an online
automated assistant that is able to help customers to
make a decision about which product is suitable for
them and provide product suggestions.
5 CHALLENGES
Today most brands rely on social media sites to
develop the customer-brand relationship and provide
information to the customer. However, social media
sites with a large amount of content and poorly
structured posts can make it difficult for customers to
find products and information easily and quickly. In
this scenario, a conversational agent to make it easier
for a customer to contact with a brand and find
information. Making conversations relevant and
designing and evaluating satisfactory user
An Overview of Conversational Agent: Applications, Challenges and Future Directions
393
experiences are still challenges for conversational
applications design (Kocaballi et al. 2019b).
However, conversational agents are a promising
alternative as compared to using other marketing
channels and customer service technologies. Existing
chatbot applications in the customer service industry
have many drawbacks such as poor interactive user
interface, not multilingual, do not support third-party
integration, and cannot detect customers' emotions
(Nuruzzaman and Hussain, 2018).
6 CONCLUSION AND FUTURE
DIRECTIONS
Conversational applications have received increasing
attention in numerous fields like virtual assistance,
education, finance, healthcare, and e-commerce due
to their advantage of supporting the use of natural
language interfaces. This paper describes the
technological concepts of conversational agent
applications, and the history of conversational agent
development, and implementation of conversational
applications in various domains. This paper compares
the different types of conversational agents based on
their roles and interaction modes. This paper
highlights the areas for future research directions
towards conversational agents for brands, especially
for marketing and customer service toolkits, as the
conversational applications may prove effective in
improving customer-brand engagement and lead to
the success of marketing strategies.
A few recent studies have focused on the
effectiveness of conversational agents for online
marketing and brand strategies (Chung et al. 2018;
Zarouali et al. 2018). A promising area of research is
to investigate the potential of online conversational
agents as an online marketing tool and how
conversational agents can enhance customer
engagement. Future research can focus on developing
a methodology to investigate the consumers’ attitudes
of using conversational applications and the factors
that influence user satisfaction of using
conversational agents. The UX quality assessment is
a current research topic regarding the HCI discipline
(Kocaballi et al. 2019b). Further improvement in
conversational application design can be achieved by
evaluating the UX of conversational agents for a
specific domain and exploring the characteristics of
conversational agents that need to be improved based
on the users' perspectives to enhance the conversation
outcomes and capabilities.
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