The increasing use of artificial intelligence in financial systems is driving the industry towards a model where machines handle transactions on a large scale, presenting 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 latency, scale, and complexity start to impact a company's ability to compete, forcing firms to reassess their system architecture, he explained at an event hosted by Alchemy 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 question is no longer about whether technology can automate tasks like 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 adhered to policies when decisions are made without direct human input, Borden said. Jonathan Levin, co-founder and CEO of Chainalysis, pointed out that the crypto sector already provides a working model of automated finance, with blockchain networks processing large volumes of transactions through smart contracts and software-driven wallets.
This creates an environment similar to agent-based systems, he explained. The crypto sector has been preparing for this moment long before other parts of the financial services industry, Levin added. This experience also extends to risk management, with efforts to track illicit funds across thousands of 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 anticipate a mix of systems coexisting. Levin predicted that the majority of commerce will be settled on public infrastructure in 10 years, while Borden envisioned a more integrated approach linking public blockchains, private networks, and existing payment rails. Traditional payment rails will continue to exist, Borden said, with software acting as the layer that connects them.