The increasing use of artificial intelligence in financial systems is driving a shift towards a model where machines execute 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, with the tipping point occurring when latency, scale, and complexity impact a firm's ability to compete. This forces companies to rethink their system architecture, 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 manage 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 followed policy when decisions are made without direct 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 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 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 payment rails will continue to exist, with software acting as the connecting layer, Borden said.