What is an AI Chatbot?
Last Updated September 28, 2026
An AI chatbot is a conversational software application that uses artificial intelligence to interpret what a user says and provide a relevant response. AI chatbots can range from intent-based systems that select approved answers to generative systems that create responses dynamically using large language models and enterprise information.
How AI chatbots work
- Receive a customer message
- Interpret intent, entities, and context
- Retrieve relevant knowledge or customer data
- Generate or select a response
- Call an approved workflow if action is needed
- Confirm the result or ask a clarifying question
- Escalate to a human when necessary
AI chatbot vs. rules-based chatbot
Types of AI chatbots
Common types include intent-based chatbots, generative AI chatbots, customer-service virtual agents, employee assistants, and agentic chatbots that can execute multi-step workflows.
Business and customer service use cases
- FAQs and knowledge search
- Order status
- Billing and account questions
- Appointment scheduling
- Returns and exchanges
- Troubleshooting
- Case creation
- Lead qualification
- Employee IT and HR support
How to reduce hallucinations
Ground responses in trusted enterprise content, restrict access to tools, validate sensitive actions, evaluate representative conversations, and maintain a clear human escalation path.
How NiCE applies AI chatbots to CX
NiCE combines conversational AI with enterprise knowledge, routing, customer context, and workflow orchestration so chatbots can participate in the broader customer service journey rather than operate as disconnected widgets.
Chatbot metrics
- Task completion
- Resolution
- Fallback
- Escalation reason
- Repeat contact
- Customer effort
- Answer accuracy
- Workflow success
Related Glossary Topics
How NiCE is Redefining Customer Experience
NiCE offers the industry’s only unified AI platform for customer service automation. CXone revolutionizes how organizations automate customer service from start to finish—with channels, data, end-to-end workflows, and enterprise knowledge converging to improve customer experience at scale. With domain specific AI trained on the industry’s largest CX dataset, an open framework with endless integration possibilities, and a complete suite of advanced AI applications, CXone is one platform built for organizations of all sizes to deliver seamless customer service experiences, boost operational efficiency, and drive better outcomes.
Agentic Experience Automation
AI Agents for Sales and Marketing
AI Agents for Proactive Engagement
Engagement Orchestration
Workforce Empowerment
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