The integration of artificial intelligence into financial systems is driving a shift towards a model where machines execute transactions on a large scale, posing new challenges related to control, oversight, and infrastructure, according to Microsoft and Chainalysis executives. Bill Borden, Microsoft's corporate vice president of worldwide financial services, stated that legacy systems will face mounting pressure as transaction demands become more complex. The breaking point occurs when factors such as latency, scale, and complexity begin to impact a firm's ability to compete, forcing them to reassess how their systems are built, he said at an event in New York City hosted by Alchemy.
While automation has long been a part of finance, Borden noted that the focus is now shifting from capability to trust. The question is no longer about whether technology can automate tasks such as executing a hedging strategy, but rather whether it can be trusted and audited. To manage this transition, Microsoft is developing tools that assign identities and permissions to AI agents and track their actions.
In regulated environments, firms must be able to demonstrate what controlled a system and whether it followed policy when decisions are made without direct human input, according to Borden. Jonathan Levin, co-founder and CEO of Chainalysis, pointed to the crypto sector as a working model of automated finance.
Blockchain networks process large volumes of transactions through smart contracts and software-driven wallets, creating an environment similar to agent-based systems. The crypto sector has been preparing for this moment long before other parts of the financial services industry, Levin said. This experience extends to risk management, with efforts to track illicit funds across thousands of different wallets serving as an example of the kind of monitoring needed in a system where transactions occur at scale without direct human input. Looking ahead, both executives expect a mix of systems to coexist.
Levin predicted that the majority of commerce in 10 years will be settled on public infrastructure, while Borden envisioned a more integrated approach linking public blockchains, private networks, and existing rails. Traditional rails will continue to exist, according to Borden, with software acting as the layer that connects them.