# Chatbot

> A chatbot is software that holds a text conversation with users, typically on a website, in an app or through messaging channels such as SMS and WhatsApp. Older chatbots follow scripted decision trees and keyword matching. Current AI chatbots use a language model to understand free-form questions and generate answers, often grounded in a company's own help content.

## Why it matters for your business

A chatbot is often a company's first customer-facing AI project, and it is easy to launch one that frustrates people. The value comes from answering common questions accurately at any hour and handing off cleanly to a person when the bot cannot help. A chatbot that only answers questions is different from an AI agent that can also act, such as rescheduling an appointment or processing a return. Decide which you need, because actions require system integrations, permissions and more testing.

## Example

A community bank's website chatbot answers questions about branch hours, routing numbers, fee schedules and reporting a lost card, drawing only from the bank's published help pages. It cannot see account information. When a visitor asks about a specific transaction, the bot explains that it cannot access accounts and offers secure messaging or a callback from a banker.

Related terms: https://www.lumeor.studio/glossary/ai-agent/, https://www.lumeor.studio/glossary/knowledge-base/, https://www.lumeor.studio/glossary/rag-retrieval-augmented-generation/, https://www.lumeor.studio/glossary/voice-ai-agent/, https://www.lumeor.studio/glossary/hallucination/

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Source: https://www.lumeor.studio/glossary/chatbot/