For company directors, the Reserve Bank’s latest research carries a sobering message: While Australian firms have poured money into technology and digital infrastructure, most are still in the early stages of deploying artificial intelligence (AI) and automation. The next phase will demand stronger oversight, from identifying the most useful new tools to successfully embedding and adapting them to the broader policy environment.
In its November 2025 Bulletin, the RBA reports that technology investment has risen by around 80 per cent over the past decade, with software’s share of total private business investment increasing from about six per cent in 2014–15 to 10.5 per cent in 2024–25.
Yet, despite that surge, most firms remain at the early start of their AI journey. As the RBA notes, many firms are still experimenting with using AI and machine learning (ML). Achieving immediate productivity gains or cost savings is not their main goal.
The message this conveys to directors is clear: The digital transformation phase may be well underway, but the governance challenge — turning technology investment into sustained productivity — has only just begun.
From infrastructure to intelligence
Drawing on its liaison program with more than 100 medium-to-large firms between June and August 2025, the RBA research found a clear pattern. Companies have spent heavily on cloud computing, data systems and cybersecurity, but adoption of AI and automation remains limited.
“Taken together, these findings suggest that while technology investment has been widespread and often essential for modernisation, the primary drivers of recent investment have included risk management and operational resilience,” says the RBA.
“As such, achieving immediate productivity gains or cost savings was not the goal and their implementation would be unlikely to lift measured productivity.”
But the central bank also found that base-building is now giving way to a new investment focus, with surveyed firms reporting investment in AI/ML and robotics and automation will be “much higher over the next three years than it has been previously”.
Cloud computing, by contrast, is expected to plateau, with most firms having already undertaken major upgrades.
According to the RBA, this shift signals the need for directors to implement “complementary internal changes”, including staff training and strengthening managerial capacity, to support the “diffusion and profitable adoption of technology”.
Early adoption broad but shallow
According to the RBA, around two-thirds of surveyed firms have adopted some form of AI. But for most, this adoption has been “relatively piecemeal”, often limited to digital assistants such as Microsoft Copilot or ChatGPT. Nearly 40 per cent of firms reported minimal use, while around 30 per cent said they were using AI for more defined purposes such as demand forecasting or inventory management.
A smaller subset has gone further, embedding AI across multiple business lines and using it in critical processes such as fraud detection.
“Overall, many surveyed firms indicated that their adoption of AI tools to date has been relatively piecemeal, with adoption often being employee-led rather than employer-led,” says the RBA.
Returns have been mixed, with many firms reporting that identifying “high-impact use cases to lift productivity and profitability” remains a work in progress. As the RBA observes, this slow burn is consistent with past technology waves such as enterprise resource planning and cloud systems, where productivity gains only emerged after several years.
What directors should watch
For boards, the RBA’s findings highlight that capital spending alone is not enough. Realising value from AI depends on complementary changes in people, processes and culture.
Surveyed firms say productivity benefits will hinge on:
Hiring skilled personnel, such as data engineers and product owners
Redesigning workflows to embed AI tools in decision-making
Fostering cultural change to support responsible adoption and data governance
Investing in retraining and change management.
While public debate often focuses on job losses, the RBA’s analysis presents a more balanced picture pointing to firms managing technology change through redeployment and retraining — and large-scale redundancies remain rare.
However, the RBA adds “around half of surveyed firms expect adoption of AI/ML will lead to their firm slightly reducing their total headcount over the next three years”.
Importantly, the central bank notes that technology’s long‑term impact on jobs has historically been positive, citing a 40 per cent increase in Australians employed in information and communication technology roles over the past decade.
While AI may prove different because of its potential to replace “non-routine cognitive tasks” — higher-skilled work, historically shielded from automation — the RBA highlights a likelihood that new roles and firms could be created that were not previously anticipated. For directors, the message again is clear: AI adoption could usher in a renewed focus on workforce planning and reskilling pathways for displaced roles.
The board’s oversight challenge
Despite rising interest in AI, most firms remain uncertain about timing, impact and returns.
“Many surveyed firms reported difficulties finding skilled workers to drive their adoption of AI. This issue is expected to become more challenging over coming years as more firms compete for these skills,” says the RBA.
Other barriers include the integration of new tools with legacy systems, regulatory uncertainty, and limited digital readiness. The RBA warns these factors “may mean the adoption of AI/ML in Australia is slower than anticipated, with possible flow-on effects to competitiveness and productivity if adoption lags other economies”.
For boards, this points to a twin risk — falling behind global peers if adoption stalls, or over-investing without a clear strategy for value capture.
Policy complexity and productivity headwinds
Another key message from the RBA is that technology alone will not solve Australia’s productivity challenge, with its liaison firms citing regulation and policy uncertainty as equally significant obstacles.
“The volume and complexity of regulation has diverted staff away from core business activities and has been a key factor weighing on their labour productivity growth over the past five years,” notes the Bulletin.
Boards may therefore need to advocate for streamlined policy settings while ensuring internal compliance costs are managed proportionately to risk.
The RBA concludes that while technology investment will remain elevated, “the realisation of productivity gains from the adoption of technology could take time”.
For directors, the implication is clear: Technology transformation is entering a more complex phase, one that requires sustained board attention to strategy, workforce and governance. The challenge is no longer whether to invest, but how to turn that investment into performance, responsibly and efficiently.
As Australian firms continue to invest in AI and automation, boards cannot treat oversight as optional. The AICD notes that boards don’t need to be technical experts, but they do need a clear grasp of the opportunities, limitations and risks of emerging technologies. Strategic governance, workforce planning and risk oversight will be essential to ensure AI delivers productivity and value, and that organisations are prepared for the next phase of digital transformation.
For boardrooms, it’s imperative.
Latest news
Already a member?
Login to view this content