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 turning point occurs when latency, scale, and complexity start to impact a company's ability to compete, forcing firms to reevaluate 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 address 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 adhered to 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. 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 efforts to track illicit funds across thousands of wallets serving 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. Levin predicted that the majority of commerce will be settled on public infrastructure in the next decade, while Borden envisioned a more integrated approach linking public blockchains, private networks, and existing systems.
Traditional systems will continue to exist, with software acting as the connecting layer, Borden said.