NLP Unplugged: How Conversational AI is Creating the Next Generation of Chatbots

As we discuss in our latest chatbots research, most chatbots are integrated with NLP technology, which allows the chatbot to determine the meaning from language. This is where natural language is broken down and converted into data elements; enabling the computer to decipher its meaning.
NLP is a subfield of linguistics and AI, and its aim is to supply machines with the ability to understand and respond to both tech or voice data. This NLP does not only allow the chatbot to understand this language, but it also allows for the chatbot to reply in the same medium, similarly to how humans converse. NLP combines both statistics with computational linguistics, machine learning and deep learning models. This allows for the chatbot machines to process human language in the form of both text and speech and be able to understand its full meaning.
Natural Language Understanding
NLU is a further subset to NLP, and its aim is to extend its machine linguistic capabilities.
NLU uses different algorithms to interpret the natural language, derive meaning, identify context, and draw insights from the text or speech data. It is also able to understand how the same words may have different contextual meanings and overcome language flaws, such as spelling mistakes, thus removing the ambiguity recognised by NLP.
Conversational AI Maturity
Conversational AI combines NLP and NLU with traditional conversing software such as chatbots, voice assistants and interactive voice recognition systems, and this is communicated through a spoken or written interface.
Juniper Research has identified three models for conversational AI:
Scripted Chatbots
Scripted chatbots are rule-based chatbots that use decision trees to utilise a set of manually pre-defined rules to respond to customer questions, however, these chatbots only have a limited number of responses. These chatbots are built to respond to specific types of questions such as a brand or enterprises’ FAQ (Frequently Asked Questions) section.
In these scripted chatbots, each command is written independently and if the user’s query does not align with these pre-defined set of commands, or if the query does not have relevant keywords, then the chatbot will respond with an error message.
Although these chatbots are beneficial, as they are quick to develop and can answer a large proportion of simple customer queries, they are limited in their application. The fact that users have to enter specific keywords in order to get an answer from this chatbot can lead to user frustration, which in turn, can lead to the user no longer engaging with that brand or enterprise.
NLP Chatbots
NLP chatbots can respond to customer queries with a larger array of suggestions due to the inclusion of machine learning capabilities.
Using syntax analysis, NLP chatbots are able to deconstruct the user’s input and analyse its meaning to provide the most appropriate response or action.
Contextual Chatbots
These chatbots are the most advanced type of language processing. Contextual chatbots use AI and machine learning to remember past conversations and are capable of learning patterns of behaviour in order to adapt over time.
These contextual chatbots use NLU to understand language semantics to decipher sentiment and intent. Moreover, these chatbots are capable of contextualising within the conversation and are therefore able to circumnavigate mistakes in spelling and grammar in order to keep the conversation flowing.
Want more insights and statistics?
Download our latest chatbots whitepaper, which evaluates how open language technologies, such as ChatGPT, will disrupt the provision of chatbot services. You can also visit our infographics area, where you'll find an infographic containing our latest chatbots market statistics.
Latest research, whitepapers & press releases
-
ReportOctober 2026Fintech & PaymentsAccounts Payable Automation Market: 2026-2031Our Accounts Payable (AP) Automation research suite provides an insightful analysis of this rapidly growing market; enabling stakeholders to understand future growth, key trends and the competitive environment.
VIEW -
ReportOctober 2026Fintech & PaymentsCrypto-gaming Market: 2026-2035Our Crypto-gaming Market research suite provides an insightful analysis of this rapidly growing market; enabling stakeholders - from crypto-gaming and sportsbooks operators, prediction market platforms, business-to-business (B2B) gambling platforms and software providers, to crypto payment processors and regulators - to understand future growth, key trends, and the competitive environment.
VIEW -
ReportOctober 2026Telecoms & ConnectivityRetail Roaming Market: 2026-2031Our Retail Roaming research suite for mobile network operators (MNOs) and mobile virtual network operators (MVNOs) provides detailed analysis and strategic recommendations for the next era of retail roaming.
VIEW -
ReportSeptember 2026Fintech & PaymentsEmbedded Finance Market: 2026-2031Embedded finance is one of the fastest-growing markets in financial services, and is about to accelerate even further. Our Embedded Finance Market research provides detailed analysis of the key drivers behind this growth, and what these mean for stakeholders in this market.
VIEW -
ReportSeptember 2026Identity & SecurityApplication Security Market: 2026-2031Our Application Security research suite provides detailed analysis of this emerging market; allowing application security providers to gain an understanding of key security trends and challenges, potential growth opportunities, and the competitive environment.
VIEW -
ReportSeptember 2026Fintech & PaymentsBanking Fraud Prevention Market: 2026-2031Our Banking Fraud Prevention research suite provides a comprehensive and in-depth analysis of the types of fraud currently impacting the banking sector, and the evolving methods that can be used to overcome them.
VIEW
-
WhitepaperOctober 2026Fintech & PaymentsAccounts Payable Automation ~ How Businesses Are Reducing Operational Costs
Our complimentary whitepaper, Accounts Payable Automation ~ How Businesses Are Reducing Operational Costs, analyses how AP automation is combatting costs by decreasing the need for manual processes, and provides strategic insight into a number of key trends in the AP automation space.
VIEW -
WhitepaperOctober 2026Fintech & PaymentsCompliance or Anonymity - The Crypto-gaming Operator’s Dilemma
Our complimentary whitepaper, Compliance or Anonymity - The Crypto-gaming Operator’s Dilemma, analyses the current regulatory landscape of the crypto-gaming market.
VIEW -
WhitepaperOctober 2026Telecoms & ConnectivityReimagining the Future of Retail Roaming – How Mobile Network Operators Must Adapt
Our complimentary whitepaper, Reimagining the Future of Retail Roaming – How Mobile Network Operators Must Adapt, explores the emerging opportunities for MNOs within retail roaming.
VIEW -
WhitepaperSeptember 2026Fintech & PaymentsEmerging Markets: The Next Opportunity for Embedded Finance
This free whitepaper examines how a combination of multiple factors is driving North America towards saturation for embedded finance.
VIEW -
WhitepaperSeptember 2026Emerging TechnologyVibe Coding: The Fastest-growing Threat to Application Security Today
Our complimentary whitepaper, Vibe Coding: The Fastest-growing Threat to Application Security Today, examines the state of the application security market; considering its impact on different verticals, and how it is being employed in these verticals to best combat malicious attackers and keep sensitive data safe.
VIEW -
WhitepaperSeptember 2026Fintech & PaymentsThe Fraud Frontier: Securing Banking in an AI-driven Era
Our complimentary whitepaper, The Fraud Frontier: Securing Banking in an AI-driven Era, examines the rapidly evolving state of the banking fraud prevention market.
VIEW
-
Fintech & Payments
Accounts Payable Automation to Save Global Businesses 6.2 Billion Hours by 2031, Accelerated by Business System Integration
October 2026 -
Fintech & Payments
The 25th NextGen Payments & RegTech Forum Arrives in Athens, Greece
October 2026 -
Fintech & Payments
Crypto Gaming: Wagers to Reach $1.3 Trillion by 2035, as Crypto Rails Widen Global Access Despite Regulatory Challenges
October 2026 -
Fintech & Payments
Juniper Research Unveils Identity & Security Award Winners for 2026
October 2026 -
Retail Roaming Revenue to Fall $4 Billion By 2031, as Regulatory Restrictions and Competition Bite
October 2026 -
Fintech & Payments
Soft POS to Surpass 100 Million Installations in 2030
September 2026