AI spending is rocketing, which means big changes ahead for shopping and customer service

Banking and retail sectors spend big on AI in the pursuit of customer service and cybersecurity automation.
Written by Liam Tung, Contributing Writer

Analyst firm IDC is predicting that US organizations will spend $120 billion a year on artificial intelligence systems by 2025. 

At that level, AI will see spending grow at a compound annual growth rate of 26.0% from 2021 to 2025, with the US maintaining its position from 2019 as the biggest spender on AI, accounting for more than half of worldwide spending. 

The analyst predicts retail will lead the charge on AI through investments in augmented customer service agents, expert shopping advisors and product recommendations. About 40% of the industry's spend on AI will be focused on these two goals. 

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Banking will be the second largest spending sector as brands try to improve customer service through advisors and recommendations systems, fraud analysis and investigations, and security through AI-powered threat intelligence and prevention systems. 

IDC looked at 30 AI uses cases and forecasts that augmented customer service agents and sales process recommendation and augmentation will collectively account for 20% of all AI spending in the US in 2025. 

High growth areas of AI spending will include "public safety and emergency response" and "augmented claims processing". These are expected to have CAGRs exceeding 30%. 

IDC senior research manager Mike Glennon sees trouble ahead for incumbents and big opportunities for new entrants because the latter group is less averse to change and new ways of doing business. 

"The future for business is AI and those companies that can seize this opportunity could easily become the new giants," notes Glennon. 

The backdrop to IDC's predictions are retail's accelerated digitization due to the pandemic, attacks on the software supply chain, a rise in state-sponsored hacking and ransomware, the push towards zero trust network architectures, and the ongoing shift to hybrid cloud, most commonly using a blend of AWS, Azure and Google

The past year saw record venture funding of AI startups as well as some large and strategic acquisitions by Google and Microsoft to improve cybersecurity automation capabilities for multi-cloud customers.

Consultancy McKinsey's State of AI 2021 report found that organizations that get higher returns from AI spend are using cloud much more than those getting a lower return from their investments in AI: 64% of AI "high performers" were running AI workloads on public or hybrid cloud, where as only 44% of companies outside of this category were using cloud.

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