Gen Z hates phone calls, so one $9.7 billion company is pouring money into AI chatbots for customer service

Max Levchin, Affirm’s CEO, said AI chatbots could save the company money in one to three years. Getty

• Affirm is investing heavily in AI-powered chatbots to cater to Gen Z’s phone aversion.
• AI chatbots are expected to replace 20-30% of customer service agents by 2026, according to Gartner.
• Despite the potential savings and efficiency, AI customer service has seen limited adoption.

Gen Z hates talking on the phone, so companies like the $9.7 billion buy-now, pay-later giant Affirm are betting big on AI-powered chatbots.

The bots let voice-averse customers solve problems online, Affirm CEO Max Levchin said on an earnings call on Wednesday.

“We’ve been investing really heavily in this idea that Gen Z consumers really love chatting versus calling and they have no problem chatting with an Al, especially if the Al is intelligent,” Levchin said.

Affirm uses chatbots to solve fast queries, like policy questions, and then real people take over for more complicated cases, Levchin said. The PayPal alumnus said chatbots are helping Affirm scale its customer service team.

Affirm built an AI-based assistant and tested it in the last quarter. Less than 40% of users needed to speak with a human after using the bot, Levchin wrote in a shareholder letter.

“No one has yet to lose their job to be replaced by robot at a firm, so that’s not a short-term cost saving,” Levchin said on Wednesday’s call, adding that AI could save the company money over the next one to three years.

Tech research firm Gartner estimated last year that by 2026, AI will replace 20-30% of customer service agents.

The nascent technology is already having a big bottom-line impact for some companies.

Deb Cupp, the president of Microsoft Americas, said in a panel discussion at Davos in January that the software giant saved $100 million in its customer-service operation by implementing AI. Microsoft also sells AI-powered customer service technology.

Mihir Shukla, the CEO of Automation Anywhere, said at Davos that the company cut customer-service costs by 40% while seeing improved performance since introducing AI.

AI customer service hasn’t been a panacea for all businesses, though. People tricked and hacked a car dealership’s customer service AI in December, and in January, a UK mail service’s bot swore at a customer.

And AI bots have not yet been widely adopted. Only 8% of customers said they used a chatbot during their most recent customer service encounter, according to a Gartner survey done from December 2022 through February 2023. Of those who used a chatbot, only a quarter said they would use that bot again in the future.

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