AI Support Guides

Jun 24, 2025

Why RAG-Based AI Is Failing - and What Comes Next for Customer Support

Why RAG-Based AI Is Failing - and What Comes Next for Customer Support

Why Traditional Support Needs a Redesign, and Why RAG is Not the Answer

Why Traditional Support Needs a Redesign, and Why RAG is Not the Answer

Deepak Singla

IN this article

AI is transforming customer support from its legacy roots in human-intensive operations and brittle ticketing workflows to flexible, intelligent, always-on experiences. This blog breaks down why traditional L1/L2/L3 models are no longer sustainable, why chatbots won’t survive the next two years, and how RAG-based AI often misses the context needed to deliver great customer experiences. It also explores why Fini’s RAGless agentic AI platform offers a smarter, context-rich, and fully autonomous support model built for the

Introduction: The Support Playbook Is Being Rewritten

Support used to mean tickets, macros, and backlogs. A necessary evil rather than a brand differentiator.

But times have changed.

Modern companies like Klarna and Uber are now treating support as a proactive experience driver, investing in intelligent automation that solves real issues—not just fields them.

And yet, many teams still rely on:

  • Three-tier escalation models

  • Chatbots built in 2018

  • Support agents juggling 15 tabs

This isn’t just outdated. It’s broken.

To compete, support teams must shift from workflows to agents, from retrieval to reasoning, and from reactivity to resolution.

Why the L1–L3 Support Model Is Failing

The traditional support structure—L1 for FAQs, L2 for intermediate tasks, and L3 for engineering issues—was designed in an era where ticketing tools like Zendesk and Freshdesk dominated.

This model creates internal silos and external frustration:

  • L1 agents become human macros, stuck repeating scripted responses

  • L2 teams face burnout from contextless escalations

  • L3 (engineering) becomes a black hole where tough tickets go to die

In fast-scaling businesses, this model can't keep up. Just ask Qogita, a global e-commerce marketplace that scaled to 88% automated resolution by retiring the L1 layer entirely with Fini.

In-House vs Outsourced? You Lose Either Way

In-house support offers brand alignment, but it’s expensive and slow to scale.

Outsourcing may seem like a cost saver—but it typically leads to:

  • Language and empathy gaps

  • Broken feedback loops

  • CSAT scores that tank during volume spikes

Modern support leaders are realizing this binary choice is outdated.

Instead, they’re adopting autonomous AI support - powered by tools like Fini, to absorb repeat queries, reduce handoffs, and unlock human agents for high-empathy moments.

Why Chatbots Will Be Dead by 2027

The chatbot revolution began with good intentions—but quickly ran into reality:

  • If/else flows break with ambiguity

  • Static flows can’t handle personalization

  • Most bots can’t even trigger backend actions

Users today expect more. They want systems that understand them, not just route them.

Even LLM-based bots (like Fin or Ada) struggle to:

  • Maintain conversation history

  • Interpret multi-intent messages

  • Navigate real backend logic

Read our full comparison: Fini AI vs Ada

By 2027, chatbots as we know them will be replaced by goal-seeking, memory-powered AI agents.

The Limits of RAG in Support

RAG (Retrieval-Augmented Generation) stitches together a response by fetching documents, then letting the LLM summarize.

It works in internal tools like Notion AI or search platforms.

But in support? RAG breaks down.

RAG fails to:

  • Retain user memory across sessions

  • Understand nuance or intent gaps

  • Take real actions (e.g., process refunds or trigger alerts)

  • Handle edge cases or follow-up queries with context

Salesforce’s AI benchmark showed that even top-tier LLM support tools failed 65% of customer service tasks.

If your AI can only regurgitate docs—it’s not support. It’s search.

RAGless Agentic AI: A Better Way Forward

RAGless systems like Fini skip retrieval entirely at inference time.

Instead, they:

  • Rely on structured, dynamic knowledge bases

  • Retain memory scoped to each user and session

  • Chain backend actions in real time

  • Enforce guardrails for accuracy, safety, and escalation

Think of Fini like an intelligent teammate—not a document fetcher.

It’s goal-seeking: It doesn’t just answer your question—it solves your problem.

What Can RAGless Agentic AI Actually Do?

User IntentRAG BotFini AI (Agentic, RAGless)“Where is my order?”Shares tracking link from FAQChecks shipping API, flags delay, sends SMS“I didn’t get my refund”Replies with refund policyChecks status, logs issue, triggers escalation“Cancel and downgrade my subscription”Handles one, not bothConfirms downgrade + executes billing change

RAG bots are helpful. But Fini is actionable.

Platform Integrations That Matter

Fini integrates with your stack in minutes, not months:

Whether you're resolving KYC cases in fintech, handling returns in e-commerce, or managing SaaS subscriptions, Fini adapts to your stack and business logic.

Case Studies: Real Brands, Real ROI

📦 Qogita
Automated 88% of support tickets with Fini, reducing SLA breaches by 121%.

🏦 Column Tax
Automated password resets, disputes, and PII-heavy flows—cutting cost per resolution by 40%.

🎶 DistroKid
Scaled multilingual, high-volume support across channels with full agentic AI flows.

Each of these brands ditched outdated chatbots and tiered models for real resolution, powered by Fini.

Actionable Deployment Paths

Fini supports gradual rollout for teams of all sizes:

  1. Observe Mode – AI suggests internal actions only

  2. Confirm Mode – AI acts with human approval

  3. Autonomous Mode – AI resolves issues end-to-end, fully policy-aware

With over 40 built-in guardrails, Fini ensures safety, compliance, and brand alignment throughout.

Want to See Fini in Action?

You don’t have to imagine it.

👉 Explore the platform
👉 Book a personalized demo
👉 Check out use case blogs

Support Is Evolving. Are You?

The future of customer support is:

  • Real-time

  • Context-aware

  • Outcome-focused

  • Autonomous

If your team is still relying on ticket queues, chatbots, and RAG-based tools, you're already behind.

The teams who automate early will scale faster, serve better, and win more.

FAQs

FAQs

FAQs

Deepak Singla

Deepak Singla

Co-founder

Deepak is the co-founder of Fini. Deepak leads Fini’s product strategy, and the mission to maximize engagement and retention of customers for tech companies around the world. Originally from India, Deepak graduated from IIT Delhi where he received a Bachelor degree in Mechanical Engineering, and a minor degree in Business Management

Deepak is the co-founder of Fini. Deepak leads Fini’s product strategy, and the mission to maximize engagement and retention of customers for tech companies around the world. Originally from India, Deepak graduated from IIT Delhi where he received a Bachelor degree in Mechanical Engineering, and a minor degree in Business Management

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