Episode Details

Financial services firms are pouring money into AI but face soaring token costs, shadow AI risks and data sovereignty pressures. The 2026 Nutanix ECI reveals the gaps.

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Podcast transcript:

Jason Lopez: Banks, hospitals, government agencies, organizations in most sectors are all building AI into how they operate and they’re hitting a wall. The compute infrastructure wasn’t built to run old systems as well as the new ones at scale, and that means running systems securely without breaking. Nowhere does that strain show up more than in banking and financial services.

Sean O’Dowd: I guess my head immediately goes to, this is going to get uglier and scarier before it gets better.

Jason Lopez: Sean O’Dowd is the head of financial services solutions at Nutanix. This is the Tech Barometer Podcast. I’m Jason Lopez. On this podcast, we talk to O’Dowd about the 2026 Enterprise Cloud Index or ECI. It’s Nutanix’s annual global research survey on IT trends. When we asked him how financial services are doing overall, he compares what’s happening to things like the shift from human labor to mechanized factory production in the late 1800s or the way nuclear technology reshaped geopolitics or even how space exploration, which had a big front end investment, ultimately proved transformative.

Sean O’Dowd: So I say it’s going to get uglier before it gets better because as we all appreciate when you look at these awe technologies, the disruption, the market structure changes, especially in financial, this has the potential to really upside a lot. I think you’re going to see those frictional and structural pains play out over the next 10, 15 years like you did in these other major industrialization cycles. So it’s going to get a lot uglier before it gets better. But I still have a lot of conviction that there will be a lot of positive outcomes here. And we have to be thinking about not just the technology, but how do we govern this? How do we police it? What do we want for ourselves? These are big questions that will get addressed whether we want to or not. They will percolate up.

Jason Lopez: O’Dowd has been an observer of the banking industry for nearly 30 years. He’s seen the ups and downs and lately identifies macro factors which map to his earlier comment. Things will get uglier and scarier before they get better.

Sean O’Dowd: Volatility is good for a lot of financials, so are where rates are. So from a business standpoint, these guys, they’re profitable. They’re posting strong earnings. Regulations are in their favor. So business is good. Being a bank I think is good business right now. However, it’s increasingly costly. So the big things that I continually look at are what are the executives thinking about and obviously the tech behind it.

Jason Lopez: The cost pressure is real money. According to Forrester, financial services as a whole is projected to spend nearly half a trillion dollars on technology in 2026, about 17% of total US tech spending. Findings from the Nutanix ECI report provide more insight into how this is playing out. Shadow IT is one of O’Dowd’s ugly scenarios. Suppose a loan officer asks ChatGPT to summarize data in a complex customer file. Suddenly data like a social security number sits outside of the bank’s firewall. It’s just one of a myriad of weak links. According to Nutanix’s ECI report, 86% of financial sector executives believe shadow AI tools introduce severe business risk.

Sean O’Dowd: Yeah, for me, it’s expected, but also surprising given the FinServ industry has some of the most mature risk management discipline across sectors. They manage cred