Bank of America has launched its AI chatbot Erica (BAC)

REUTERS/Shannon Stapleton

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Bank of America has announced the launch of its chatbot, Erica, at Money 20/20 on Monday in Las Vegas, Reuters and CNBC report.

The project was first announced in April and will be available to customers in late 2017.

Erica will operate via both audio and text, and will be hosted on Bank of America's own mobile app. It will analyze customers' personal financial data to generate recommendations for how to best handle their finances.

The chatbot will use predictive analytics to bring up topics proactively, rather than simply responding to questions posed by the customer. For example, it may recommend that a customer make higher monthly payments toward an outstanding bill to reduce interest charges over time; or if a customer asks to learn their bank balance, it will be able to warn them if they're close to going into overdraft without being prompted. 

The decision to launch in-app signals a departure in Bank of America's bot strategy. The bank announced that it would work on its bot with Facebook Messenger back in April, but it now appears the first iteration of the bot will be launched in-app.

There are several reasons why the bank could have decided to go this way. For one, it might have decided that the risks of disintermediation from using an external messaging app were too high — if consumers were to associate Facebook Messenger with banking services, rather than BofA, that could result in an erosion of loyalty.

Another possibility is that BofA concluded its own app offered a more secure way of delivering a bot service than the use of a third party. It's worth noting, though, that the bank has not explicitly said it will not launch Erica on Messenger in the future, so this remains a possibility. 

Advancements in artificial intelligence, coupled with the proliferation of messaging apps, are fueling the development of chatbots — software programs that use messaging as the interface through which to carry out any number of tasks, from scheduling a meeting, to reporting weather, to helping users buy a pair of shoes. 

Foreseeing immense potential, businesses are starting to invest heavily in the burgeoning bot economy. A number of brands and publishers have already deployed bots on messaging and collaboration channels, including HP, 1-800-Flowers, and CNN. While the bot revolution is still in the early phase, many believe 2016 will be the year these conversational interactions take off.

Laurie Beaver, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on chatbots that explores the growing and disruptive bot landscape by investigating what bots are, how businesses are leveraging them, and where they will have the biggest impact.

The report outlines the burgeoning bot ecosystem by segment, looks at companies that offer bot-enabling technology, distribution channels, and some of the key third-party bots already on offer. The report also forecasts the potential annual savings that businesses could realize if chatbots replace some of their customer service and sales reps. Finally, it compares the potential of chatbot monetization on a platform like Facebook Messenger against the iOS App Store and Google Play store.

Here are some of the key takeaways:

• AI has reached a stage in which chatbots can have increasingly engaging and human conversations, allowing businesses to leverage the inexpensive and wide-reaching technology to engage with more consumers.
• Chatbots are particularly well suited for mobile — perhaps more so than apps. Messaging is at the heart of the mobile experience, as the rapid adoption of chat apps demonstrates.
• The chatbot ecosystem is already robust, encompassing many different third-party chat bots, native bots, distribution channels, and enabling technology companies. 
• Chatbots could be lucrative for messaging apps and the developers who build bots for these platforms, similar to how app stores have developed into moneymaking ecosystems.  

In full, the report:

• Breaks down the pros and cons of chatbots.
• Explains the different ways businesses can access, utilize, and distribute content via chatbots.
• Forecasts the potential impact chatbots could have for businesses.
• Looks at the potential barriers that could limit the growth, adoption, and use of chatbots.

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