Sending emails using our own SMTP server

We are attempting to setup a create app to send emails using our Microsoft 365 instance as we need the ability to send encrypted emails. We have tried setting it up using the “Use own SMTP server” option on the channel identity and can get it to authenticate properly, but when we come to trying to send an email we get an “SMTP Connect() failed” error int he log. We have raised this with Netcall support and they were able to get a bit more info out of the log, indicating that it was an authentication issue with Microsoft 365. We’ve enabled SMTP authentication for the account we’re trying to use. The additional errors we receive are:
[28-Nov-2025 11:37:24 Europe/London] SMTP INBOUND: “535 5.7.3 Authentication unsuccessful [LO3P123CA0022.GBRP123.PROD.OUTLOOK.COM 2025-11-28T11:37:21.120Z 08DE2DDD98AAA4FF]”

[28-Nov-2025 11:37:24 Europe/London] SERVER → CLIENT: 535 5.7.3 Authentication unsuccessful [LO3P123CA0022.GBRP123.PROD.OUTLOOK.COM 2025-11-28T11:37:21.120Z 08DE2DDD98AAA4FF]

[28-Nov-2025 11:37:24 Europe/London] SMTP ERROR: AUTH command failed: 535 5.7.3 Authentication unsuccessful [LO3P123CA0022.GBRP123.PROD.OUTLOOK.COM 2025-11-28T11:37:21.120Z 08DE2DDD98AAA4FF]

[28-Nov-2025 11:37:24 Europe/London] SMTP Error: Could not authenticate.

[28-Nov-2025 11:37:24 Europe/London] CLIENT → SERVER: QUIT

Has anyone else attempted to setup a channel identity to use their own SMTP server?