The integration of artificial intelligence into financial systems is driving a shift towards a model where machines perform transactions on a large scale, thereby presenting new challenges related to control, oversight, and infrastructure. This was stated by executives from Microsoft and Chainalysis. Bill Borden, Microsoft's corporate vice president of worldwide financial services, stated on Tuesday that the growing complexity of transaction demands will exert increasing pressure on legacy systems.
The point of no return is reached when 'latency, scale, and complexity begin to impact your ability to compete,' thereby forcing companies to reevaluate how their systems are structured, he said at an event organized by Alchemy in New York City. While automation has long been a part of the finance sector, Borden noted that the focus is now shifting from capability to trust. 'The question is no longer about whether technology can automate the execution of a hedging strategy - that can be done.
The question is: can you trust it? Can you audit and control it?' he said. Microsoft, which offers its own AI assistant in many of its products, is developing tools to manage this transition. These include systems that assign identities and permissions to AI agents and track their actions.
In regulated environments, Borden stated that companies must be able to demonstrate 'what controlled it' and whether a system 'followed the policy' when decisions are made without direct human input. Jonathan Levin, co-founder and CEO of Chainalysis, stated that the crypto sector already provides 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. 'We've been preparing for these moments long before other parts of the financial services industry,' Levin said.
This experience extends to risk management. Levin cited efforts to track illicit funds across 'thousands of different wallets' 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 stated that 'the majority of commerce in 10 years will be settled on public infrastructure,' while Borden pointed to a more integrated approach that links public blockchains, private networks, and existing rails. 'I believe traditional rails will continue to exist,' Borden said, with software acting as the layer that connects them.