Max Levchin, the CEO of Affirm Holdings Inc (AFRM  ), a major player in the buy-now, pay-later industry, has revealed that the younger generation, particularly Gen Z, is showing a strong preference for AI-powered chatbots over traditional phone calls.

What Happened: Levchin made this observation during an earnings call on Wednesday, reported Business Insider. He emphasized that the company is heavily investing in AI chatbots, as Gen Z consumers favor this mode of communication.

"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.

Levchin stated that the chatbots are especially popular for quick queries such as policy questions. For more complex issues, human agents take over. The implementation of chatbots has also facilitated the scaling of Affirm's customer service team.

He further mentioned that the company has developed an AI-based assistant, which was tested in the last quarter. Following the use of the bot, less than 40% of users needed to speak with a human. Levchin also highlighted the potential cost-saving benefits of AI in the next one to three years.

Why It Matters: The rising popularity of AI chatbots among Gen Z is in line with the broader trend of AI integration in various sectors. Companies are increasingly leveraging AI to enhance customer service and streamline operations.

In September, Meta Platforms announced plans to roll out innovative AI chatbots with distinct personalities to engage a younger demographic. This move reflects the growing importance of AI in youth-oriented marketing strategies.

Moreover, the rapid adoption of AI chatbots is evident in China, where Baidu Inc's (BIDU  ) Ernie Bot has surpassed 200 million users. This underscores the global trend of AI chatbot integration and its potential to revolutionize customer service.

Meanwhile, Amazon.com, Inc. (AMZN  ) has launched an AI chatbot named Q, which is designed to assist users in understanding the capabilities of Amazon Web Services and troubleshooting issues. This move by Amazon is aimed at revolutionizing business operations and challenging tech giants like Microsoft (MSFT  ) and Google (GOOGL  ) (GOOG  ) in the productivity software domain.