The increasing use of artificial intelligence in financial systems is driving the industry toward a model where machines handle transactions on a massive 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 mounting pressure as transaction demands become more intricate. The turning point occurs when factors like latency, scale, and complexity start to hinder a company's ability to compete, forcing firms to reassess 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 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 facilitate this transition, Microsoft is developing tools to manage AI-driven systems, including assigning identities and permissions to AI agents and tracking 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 intervention, Borden said. Jonathan Levin, co-founder and CEO of Chainalysis, pointed to the crypto sector as 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 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 wallets as an example of the kind of monitoring needed in systems where transactions occur at scale without 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, with software acting as the connecting layer, Borden said.