The banking group says the 'robo-adviser' can mimic human empathy and will soon be answering customer banking questions in what it calls a "tipping point for the sector".
Luvo is said to have a psychological profile that means it has a "warmth to its personality" that makes it approachable and creative, and can use a combination of intuition and reasoning when answering questions.
RBS could make the artificial intelligence (AI) service available directly to customers as early as this year.
To date the technology has only been trialled among 1,200 staff who manage relations with small businesses, but is now being rolled out to more staff to help them answer basic customer queries.
Typical questions it can answer via web chat include ‘my customer has lost their card – what steps do they need to take now?’ and ‘my customer has locked their PIN – how do they unlock it’.
RBS said Luvo was able to understand questions and then filter though "huge amounts of information in a split second before responding with the answer".
If it is unable to find the answer it passes the question on to a member of staff.
Although artificial intelligence has been used before in the banking sector, RBS claims Luvo is unique because it has had a human-like personality created for it.
Artificial intelligence as a method to answer queries in web chats is also being pioneered by M, the Facebook Messenger assistant.
However, there are still humans ‘supervising’ Facebook's AI behind the scenes.
RBS says that "like humans Luvo has to be trained when dealing with new subject matter". It is also able to learn from its mistakes and answers become more accurate over time.
RBS chief administrative officer Simon McNamara said the techonology will help serve customers "more quickly".
He added: "Its potential is huge and we’ll be exploring if Luvo could talk to customers directly to answer straightforward questions, freeing up time for our staff to answer complex issues."