The integration of artificial intelligence in financial systems is driving a shift towards a model where machines handle transactions on a massive 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 increasing strain 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 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 technology's ability to automate tasks like executing a hedging strategy, but rather whether it can be trusted, audited, and controlled, he said. To facilitate this transition, Microsoft is developing tools, including systems 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 policy when decisions are made without direct human input, Borden explained. 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, creating an environment similar to agent-based systems. The crypto sector has been preparing for these developments 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 different wallets 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 anticipate a mix of systems coexisting. 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, Borden said, with software acting as the layer that connects them.