The increasing use of artificial intelligence in financial systems is driving a shift towards a model where machines perform transactions on a large scale, creating new challenges related to control, oversight, and infrastructure, according to executives from Microsoft and Chainalysis. Bill Borden, Microsoft's corporate vice president of worldwide financial services, stated that legacy systems will face growing pressure as transaction demands become more complex. The breaking point occurs when factors such as latency, scale, and complexity start to impact a company's ability to compete, forcing firms to reevaluate their system architecture, he said at an event in New York City hosted by Alchemy.
While automation has long been a part of the finance sector, 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, he said.
To manage this transition, Microsoft is developing tools, including systems that assign identities and permissions to AI agents and track their actions. In regulated environments, companies must be able to demonstrate what controlled a particular action and whether the system followed established policies when decisions are made without direct human input, Borden said. Jonathan Levin, co-founder and CEO of Chainalysis, pointed out that the cryptocurrency sector already provides 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 also extends to risk management, with efforts to track illicit funds across thousands of different wallets serving as an example of the kind of monitoring required 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 that links public blockchains, private networks, and existing payment rails.
Traditional payment rails will continue to exist, with software acting as the layer that connects them, Borden said.