Conversational AI
Conversational AI is software that holds a natural back-and-forth exchange with a person in speech or text. It understands free-form input and replies in kind rather than presenting a fixed menu.
Also called: conversational agent, dialogue system
The defining property is that the person leads. They can say what they want in their own words, change subject, correct themselves and ask follow-up questions, and the system keeps up. That separates it from a phone tree or a scripted chatbot, where the caller can only pick from options the designer anticipated.
Modern conversational AI is usually built from three parts: speech-to-text to hear, a large language model to understand and decide what to say, and text-to-speech to reply. On the phone those parts have to run fast enough that the pauses feel human.
For a buyer, the practical test is whether the system copes with the messy calls, the caller who explains their whole story before asking a question, or who answers a different question from the one asked. That is where a conversational system earns its keep over a menu.