Conversational AI has come a long way from rules-based chatbots that could only handle simple FAQs. Thanks to Generative AI and Agentic AI, today’s AI-powered assistants are getting smarter, more intuitive, and capable of handling complex, multi-step interactions—almost like a human assistant.

Rise of Agentic AI

Agentic AI, AI that acts autonomously, is set to revolutionize customer and employee engagement by enabling more intelligent, autonomous, and proactive interactions. Unlike traditional AI, Agentic AI can adapt, learn, and act in real time, allowing businesses to deliver seamless, hyper-personalized experiences while also empowering their workforces. Insights from Omdia’s State of Digital CX 2025 highlight the appetite for Agentic AI by revealing that 63% of respondents said they plan to use the AI in the next 18 months. And 42% who have Agentic AI in place are currently using it as a virtual agent to handle customer queries.

Leveraging Gen AI

But before AI can act on its own, it must first be able to understand, communicate, and reason effectively—and that’s where Generative AI comes in. Generative AI powers Conversational AI by enabling systems to engage in natural, context-aware interactions, ensuring that AI comprehends user intent before making any decisions.

According to Omdia’s data, 51% said challenges they encounter with Agentic AI revolve around dissatisfaction with the AI responses. Without a foundation of Generative AI, Agentic AI runs the risk of making incorrect assumptions, misinterpreting user needs, or taking unintended actions. For example, an AI agent tasked with handling customer refunds needs to first determine why a refund is requested, whether the issue can be resolved in another way, and what policies apply. If it lacks conversational intelligence, it might automate actions prematurely, leading to frustrated customers and costly errors. By integrating Generative AI first, businesses can ensure AI can accurately gather information, clarify intent, and build trust with users before transitioning into full autonomy.

Beyond improving accuracy, Generative AI also plays a crucial role in user adoption and trust. Many customers and businesses are still wary of AI making decisions on their behalf. Omdia’s survey results show that 29% point to customer hesitance to interact with AI as a barrier to AI adoption. Customers need to first experience AI as a reliable, intelligent assistant before feeling comfortable with it as an independent agent.

When AI is introduced gradually—starting with enhanced conversational abilities, then moving toward semi-autonomous decision-making, and finally achieving full autonomy—users can provide feedback, correct errors, and develop confidence in AI’s capabilities. Skipping this step and deploying Agentic AI too soon can lead to resistance and operational disruptions. By first refining conversational AI through Generative AI, companies create a solid foundation for AI-powered automation, ensuring that when AI does act, it does so responsibly, accurately, and with user trust in place.

Striking a Balance Between Conversational and Agentic AI

The future of AI isn’t about choosing between Conversational AI and Agentic AI—it’s about finding the right balance between the two. Businesses need AI that can talk and understand just as well as it can act and execute. Imagine a customer service AI that not only chats with customers naturally but also takes the right actions when needed—without overstepping. Maybe a customer asks an AI assistant about a suspicious charge on their bank statement. Instead of just giving them an FAQ response, it analyzes the charge, flags potential fraud, and suggests next steps—all while keeping the customer in the loop. That’s the sweet spot with AI conversational technologies: AI that’s proactive but not intrusive.

To get there, companies will need to blend the best of both worlds—refining Conversational AI so it can understand complex requests, context, and emotions, while also training Agentic AI to act responsibly, ethically, and transparently. AI should never feel like it’s taking control away from the user, whether it’s a customer or an employee; instead, it should feel like an intelligent partner, always making decisions with human oversight in mind. The future is one where AI knows when to assist and when to proactively engage. This ensures that technology enhances human interactions, rather than replaces them.

I'll be in The Future of Customer Interfaces: How Generative AI is Elevating Conversational AIat 8 a.m. on Wednesday, March 19^th. More information about my session here Schedule | The Future of Customer Interfaces: How Generative AI is Elevating Conversational AI | Enterprise Connect and here's how you can register for Enterprise Connect 2025. See you there!