The increasing use of artificial intelligence in financial systems is driving a shift towards a model where machines handle transactions on a massive scale, posing 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 mounting pressure as transaction demands become more intricate. The turning point occurs when 'latency, scale, and complexity start to impact your ability to compete,' forcing firms to reevaluate how their systems are designed, he said at an event in New York City.

While automation has long been a part of finance, Borden emphasized that the focus is now shifting from capability to trust. 'It's not 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?' he said. Microsoft is developing tools to manage this transition, including systems that assign identities and permissions to AI agents and track their actions. In regulated environments, Borden noted that firms 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, pointed out 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 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 pointed to a more integrated approach linking public blockchains, private networks, and existing rails.

'I do think traditional rails will continue to exist,' Borden said, with software acting as the layer that connects them.