The market for AI-driven personal assistants and bots will almost double in 2018, reaching more than $12 billion by 2020 with 1.6 billion active users, according to Statista. Today, pretty much every tech giant is making digital agents for their customers. Amazon’s Alexa is getting new looks and perks, Microsoft’s Cortana has just inhabited a brand new device, and Apple’s Siri is expected to move into its own speaker soon, too.

What makes personal assistants so hot right now? And why should we expect even more innovation and interest in this market?

Natural language interface

Natural language is more intuitive than web or mobile interfaces, which usually entail some degree of a learning curve. Instead of dropdowns or checkboxes, personal assistants allow users to formulate queries naturally, by speaking or texting.

Thanks to the record low error rate in conversational speech recognition and improvement in natural language processing engines, personal assistants have already achieved a decent level of understanding of natural queries. Moreover, they’ve learned to identify their users.

For example, Amazon recently announced that Alexa is now able to recognize 10 different voices. Alexa-enabled devices are now able to provide personalized results to each user based on previously expressed preferences and behavior.

Personalization

Speaking of personalization, this feature is absolutely essential for any digital product, as it offers a foolproof track to customer loyalty. However, AI assistants take this benefit to a whole new level.

First, virtual agents apply AI-powered capabilities to interpret user input and understand customer behavior. From here, they employ machine learning to refine their responses and deliver only relevant options based on consumer preferences.

Moreover, this personalization goes far beyond Alexa’s voice recognition. Personal assistants save users time by providing a limited amount of relevant options, instead of flooding users with a full range of both relevant and irrelevant results for a given search.

AI-enabled agents make an attempt to solve the “paradox of choice” that often leads to lower customer satisfaction and abandoned carts. Many retailers, including eBay, Walmart, and Whole Foods, bet on AI-powered virtual shopping assistants to fine-tune their offerings. The Shoppie demo bot for retail demonstrates how a digital clerk can personalize recommendations on a message platform and narrow the choices according to a user’s favorite style of jeans.

Rich knowledge base

Personal assistants can access a large spectrum of data. They can provide everything from data insights that are readily available on Google to field-specific content stored in integrated databases. The integration capacity, flexibility, and self-learning ability of digital agents build part of this benefit. The current state of the market creates the other part.

Forward-looking market players such as Google and Amazon opt for collaboration instead of conspiracy, despite fierce competition. Leading companies seek to enrich their products with the benefits of their counterparts. Note: enrich, not merge.

Just this year, Amazon and Microsoft announced they are joining forces to enable access to each other’s AI assistants. Today, Alexa can ping and call Cortana for certain data, and vice versa. At the same time, a new open access kit of Skills for Cortana allows brands to scale up the agent’s functionality and reach customers on 500 million Cortana-enabled devices.

New levels of connectivity

It’s the intersection of two technologies that makes the unique connectivity possible. AI-enabled assistants and innovations in the Internet of Things bring a whole new level of communication between devices, people, and companies. Considering the volume and prospects of both markets, this will only grow in the future.

According to BI Intelligence, more than 24 billion intelligent IoT devices will be installed by 2020. These installations will span transportation, utilities, connected home, health care, retail, and other areas. Many IoT systems use independent AI assistants as the point of contact with customers and devices. In fact, front-runners such as Bosch already take advantage of this opportunity. Soon we can expect to see more smart robots like Kuri and other IoT systems across industries connected to personal assistants of various kinds.

Enhanced productivity

Last on the list, but certainly not least, is the very basic functionality of AI assistants. Originally built to facilitate human life by taking up routine and repetitive tasks, digital assistants already perform and even thrive in certain areas. For example, Amy, an AI-enabled assistant, improves corporate productivity by cutting through emails to automate meeting scheduling. Soon, the bot will amplify its reach and learn how to extract relevant data from Slack, Alexa, and WeChat.

This improvement is happening on a larger scale, too. Viv, a bot built by the creators of Siri, is expected to connect people, homes, and cars, and to perform multiple tasks in a smarter way than a group of single function agents.

Bridging human and technology

Obviously, there’s a bigger picture for each individual benefit of digital assistants. On the one hand, the growth of voice assistants runs parallel with the progress in artificial intelligence, IoT, self-driving technology, and emerging interfaces based on text, audio, image, and haptic signals. The intelligent agent serves as a practical tool for today’s high-tech environment. It becomes indispensable to the normal functioning of the new generation of devices and emerging driverless cars, connected homes, and smart cities.

On the other hand, AI-enabled assistants serve as a mediator between humans and innovation. This technology helps people adapt to a constantly changing digital space and adopt technology in both the professional and personal areas of their lives.

Katherine Lazarevich is the cofounder and managing partner at Digiteum, a digital technology agency.