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 breaking point occurs when factors such as latency, scale, and complexity begin to impede a company's ability to compete, prompting firms to reassess their system architecture, he explained at an Alchemy-hosted event in New York City.
While automation has long been integral to finance, Borden noted that the focus is now shifting from capability to trust. "It's no longer about whether technology can automate tasks like executing a hedging strategy - that's achievable. The question now is: can you trust it? Can you audit and control it?" he said.
To facilitate this transition, Microsoft is developing tools, including systems that assign identities and permissions to AI agents and monitor their actions. In regulated environments, Borden emphasized that firms must be able to demonstrate "what controlled it" and whether a system "adhered to policy" when decisions are made without direct human intervention.
Jonathan Levin, co-founder and CEO of Chainalysis, pointed out that the crypto sector already provides a functional model of automated finance. Blockchain networks process vast volumes of transactions via smart contracts and software-driven wallets, creating an environment akin to agent-based systems.
"We've been preparing for these developments long before other parts of the financial services industry," Levin said. This experience also extends to risk management. Levin cited efforts to track illicit funds across thousands of 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 predicted that "most commerce in 10 years will be settled on public infrastructure," while Borden envisioned a more integrated approach combining public blockchains, private networks, and existing systems. "I believe traditional systems will continue to exist," Borden said, with software serving as the layer that connects them.