Your Tech Budget as Strategic Weapon
Prepare for irrelevance if you are not allocating 20% of your IT budget to emerging tech
Your tech budget has transformed from the second-most boring meeting with management and the board to a strategic weapon. Projections vary widely across industries, nevertheless, Deloitte projects 40% operational efficiency gains by 2026 for companies using AI for high-volume processes. Emerging tech, and especially agentic AI workflows, are going to dramatically change the face of business and level the paying field for smaller institutions, like community banks, with the behemoths. But, only if they adopt quickly. To quote Jamie Dimon from his annual letter to shareholders, “AI is a race you don’t want to lose.”
US Bank Tech Spending for 2024
Sources: Bank Director, Gartner
20% of Tech Budget to Emerging Tech
IT budgets are radically different across industries. Using banking as a metric, where the data is available, 10% of IT spending currently goes to “emerging tech”, including AI. So this includes both generative as well as “traditional” AI like machine learning. If you want to keep up with the Joneses, spend 10%. If you want to stay ahead of them, you will need to spend 20%.
AI for New Growth, Not Just Efficiency
Gaining efficiency with AI is great, but the real promise for early adopters of AI will be accelerating growth. Younger clients (and employees) want a digital experience, and you need to provide it to them to pull ahead. For example:
AI chatbots and virtual assistants can resolve common issues 24/7.
Analysis on customer interactions can flag frustration before it escalates and discover common customer questions, which can be addressed on your website.
A digital knowledge center for your human call center team can dramatically increase their accuracy and productivity.
Whether you are running a retail store or a bank, you can leap from local to regional or regional to national with the right digital strategy.
In addition, you can add business lines for a lower cost than every before. For example, a community bank adding wealth management as a capability with a few human financial advisors and a turbocharged digital strategy could go from zero to a billion dollars of wealth management AUM faster than you might expect.
This Tech Budget Fact Is Insane
If you look across all US software spending, all industries, about 20% of 2024 US software spending is for risk, compliance, and cybersecurity. In the AI space, the statistics are not totally clear, but what we do have shows that less than 1% of AI spending is on AI governance, risk, compliance, and cybersecurity. Of course, that has to change or very bad things will happen.
Without AI governance, it can do what it wants and your employees can do what they want with it.
Without AI risk management, you risk data leaking out or even the use of AI for illegal purposes.
Without AI compliance, you risk running afoul of your regulators and potentially millions of dollars in fines.
Without cybersecurity specifically for Gen AI, it will become bad actors’ preferred attack vector, with access to your data crown-jewels and nothing protecting it.
Overall US Software Spending Shows Big Cyber and GRC Spending
Sources: Data Bridge Market Research, Fortune Business Insights, Imarc Group
Otherwise, Prepare for Irrelevance
AI will become a critical part of your strategy. In some cases, it may be the key to your corporate growth. Either prepare to maintain double the effort of your peers on emerging tech or prepare for irrelevance. That irrelevance may apply to you, not just your institution. When you do pursue AI, make sure you do it safely and securely, managing your risks.
Copyright © 2025 Artificial Intelligence Risk, Inc.