The increasing use of artificial intelligence in financial systems is driving a shift towards a model where machines execute transactions at scale, creating 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 growing pressure as transaction demands become more complex.

The point of no return is reached when latency, scale, and complexity start to impact a company's ability to compete, prompting firms to reconsider how their systems are built, he said at an event in New York City. While automation has long been a part of finance, Borden noted that the focus is now shifting from capability to trust. The key question is no longer whether technology can automate tasks like executing a hedging strategy, but rather whether it can be trusted and audited.

To facilitate this transition, Microsoft is developing tools to manage AI-powered systems, including assigning identities and permissions to AI agents and tracking their actions. In regulated environments, companies must be able to demonstrate what controlled a system and whether it followed policy when decisions are made without human input, Borden said. Jonathan Levin, co-founder and CEO of Chainalysis, pointed to the crypto sector as a working model of automated finance, where 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 shift long before other parts of the financial services industry, Levin said. This experience also extends to risk management, with Levin citing efforts to track illicit funds across thousands of wallets as an example of the kind of monitoring needed in a system where transactions occur at scale without human input. Looking ahead, both executives expect a mix of systems to coexist, with Levin predicting that the majority of commerce will be settled on public infrastructure in 10 years, while Borden envisions a more integrated approach linking public blockchains, private networks, and existing systems.

Traditional systems will continue to exist, Borden said, with software acting as the connecting layer.