Brandon Till, head of business solutions at Soldo, on why gaps in AI governance are fuelling shadow AI, and how finance leaders can close them.
Investment in AI by finance teams continues to grow, with 93 per cent of CFOs saying they expect to see a rise in AI and digital investment over the next year. Meanwhile, adoption has more than doubled since 2024.
The problem is that governance isn’t keeping pace.
Our research found that almost half (49 per cent) of UK finance leaders admit their organisation has gaps in its AI governance strategy. That’s a concern not just from a compliance perspective, but because governance is what enables businesses to adopt AI confidently, at scale.
Without these clear guardrails, employees will naturally make their own decisions about which AI tools to use and how to use them. That’s where shadow AI is born.
AI adoption is accelerating faster than governance
For an industry that’s traditionally been comfortable with established ways of working, it’s genuinely encouraging to see such widespread enthusiasm for AI in finance. In fact, our research found that 83 per cent of finance leaders believe AI will play an important role in helping them achieve their business goals.
What’s less encouraging is that almost a quarter (23 per cent) admit they have little to no AI governance measures in place. That represents a disconnect finance leaders can’t afford to ignore.
Too often, governance is treated as something to think about and address only once the adoption of new technology is in motion. In reality, the two have to be developed alongside one another. There’s often a concern that governance can put the brakes on innovation. But that’s missing the point. Good governance doesn’t stop organisations from innovating, it exists to make sure that innovation happens safely and in a way that business can measure and trust.
Without that foundation, AI adoption can quickly become fragmented, increasing a business’s exposure to compliance and security risks that will only intensify as AI becomes more deeply embedded.
Friction leads to workarounds
Governance gaps are inherently linked to organisational risk, but they also influence employee behaviour in a way many businesses perhaps don’t realise.
If approved tools are challenging to access, limited, or policies aren’t clear, people won’t just stop using AI until they have those guardrails in place, they’ll look elsewhere to get the job done.
And that’s exactly what the figures show. More than a quarter (27 per cent) of UK employees admit they have purchased AI tools for work without approval in the past year. More broadly, 67 per cent say they regularly bend rules or find loopholes to access company money, while 27 per cent report missing business opportunities because of delays accessing spending.
It’s important to understand that these findings aren’t telling us that employees are deliberately trying to undermine company policy. More often, it’s a sign that existing processes aren’t keeping pace with the way people now expect and want to work.
Shadow AI is most often the consequence of making the approved route harder or less clear than the unofficial one.
Shadow AI is a symptom, not the root cause
Businesses may see it as easy to think of shadow AI as the problem itself. But it’s usually a symptom of something bigger.
When employees feel they need to work around approved processes to be productive, businesses quickly lose visibility over which AI tools are being used and how company data is being handled and shared. Meanwhile, finance teams lose track of where money is being spent.
That unmonitored use of AI can lead to data leakage, compliance failures, poor record-keeping and inconsistent decision-making. So, it’s critical to tackle the issue before it spirals out of control.
Addressing these issues early on is far easier than trying to untangle them once they have become embedded.
Strong governance unlocks AI’s potential
The objective isn’t to restrict AI adoption or create additional hurdles for employees. Quite the opposite.
Effective governance should actually make the approved route the easiest one.
That means giving employees access to AI tools that genuinely help them work more effectively, alongside clear guidance on when and how they should be used.
When governance is designed in this way, instead of as an additional obstacle for employees to overcome, the’re far less likely to seek alternatives. As a result, businesses gain greater visibility over AI usage and finance teams can maintain control over spend. And those will be the businesses that can innovate and scale with AI safely and confidently in the long term.
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