How could quantum computing benefit the financial services industry

The future of quantum computing is likely to be transformational, but we cannot currently predict exactly how. So what can government do to support or accelerate that future? The significant anticipated economic and national security implications of quantum technologies mean that doing nothing is not an option. To help nurture an unpredictable future, government should approach quantum like a gardener approaches a plot of land, carefully considering what nutrients can best encourage growth. Understanding the needs of the industry can help government leaders provide essential resources, remove challenges, and set conditions for a flourishing quantum-enabled future. Of Math and Soap Bubbles Quantum information technologies create value because they work fundamentally differently from the way classical technologies do. Since the days of mechanical adding machines, we have solved problems by representing them as math problems and encoding logic into mechanical or electronic circuits to solve them. But quantum information technologies work differently. They harness the fundamental properties of atoms to solve problems. It’s a bit like a soap bubble. Mathematically modeling the formation of a soap bubble turns out to be incredibly challenging. So, does that mean the plastic wands you buy at the dollar store are mathematical geniuses? Of course not. They do not make soap bubbles by solving math equations for bubbles; they use the laws of physics. There are certain problems that a...

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management. Summary: The era of quantum computing is about to begin, with profound implications for the global economy and the financial system. Rapid development of quantum computing brings both benefits and risks. Quantum computers can revolutionize industries and fields that require significant computing power, including modeling financial markets, designing new effective medicines and vaccines, and empowering artificial intelligence, as well as creating a new and secure way of communication (quantum Internet). But they would also crack many of the current encryption algorithms and threaten financial stability by compromising the security of mobile banking, e-commerce, fintech, digital currencies, and Internet information exchange. While the work on quantum-safe encryption is still in progress, financial institutions should take steps now to prepare for the cryptographic transition, by assessing future and retroactive risks from quantum computers, taking an inventory of their cryptographic algorithms (especially public keys), and building cryptographic agility to improve the overall cybersecurity resilience. Series: Working Paper No. 2021/071 Subject: Frequency: regular

What’s so great about a quantum computer? Conventional computers use bits — 1s and 0s — to store data and run programs. Crucially, these don’t interact. Quantum computers, on the other hand, have qubits. Qubits exist in a superposition between 0 and 1, and when you try to observe their state, you force them to choose between the two. Each qubit has an amplitude, a complex number that’s similar to a probability, but which doesn’t adhere to quite the same rules. Given the nature of amplitude values, qubits can — like waves — interact constructively or destructively, and we call this quantum interference. Quantum interference is one of the secrets to the incredible power of quantum computers. If you can tailor an algorithm to solve a particular computational problem by taking advantage of quantum interference (i.e., building it in a way that increases the chance of hitting the right answer), you end up with an efficient solution for computational problems you may never be able to solve on a conventional machine. That’s why full-scale quantum computers will likely be revolutionary for so many industries, solving previously computationally impossible problems and uncovering unimaginable new possibilities. Here’s a quick overview of just some of the places I believe we can expect to feel the impact: Drug And Materials Development Quantum computers could enable drastic progression in drug discovery and development, ultimately giving scientists the ability to solve problems that a...

Quantum computing use cases for financial organizations involve solving complex problems that have too many variables for classical computers to be able to return a result on a realistic timescale. These include making accurate predictions of markets, predicting trading signals in financial markets, calculating credit-decision outcomes, portfolio optimization, risk mitigation and identifying fraudulent activity.

QCs in banking can be a game changer due to the potential of multiplying the speed and volume of calculations and transactions. Credit: Cointelegraph Based on the World Economic Forum's Nevertheless, they have already demonstrated The mentioned features of QCs can have an enormous impact on the future of financial services. There are several tasks where financial forecasting and financial modeling can be supported by QCs for faster and more accurate processes. Notably, portfolio optimization, risk management and asset pricing are some of the most mentioned examples. However, their potential advantages and threats to cryptography make it important for financial service providers to monitor the technology. Collaboration is crucial in the area of QCs due to the fact that technology and software development enable the revolution. Accelerating programs are initiated by the largest tech companies for experimentation with their hardware, software or cloud solutions, such as IBM, Microsoft, Google or Amazon. From Cointelegraph

Opinion is divided over when quantum computers will enter the commercial mainstream: IBM reckons four to five years; more conservative forecasts suggest not for a decade, at least. Whichever timeframe proves correct, it’s probable that the financial services sector will be foremost to adopt quantum tech for line-of-business applications – and to bear the brunt of the challenges that early adopters always face. Quantum promises pros but also cons, especially in respect to the cyber-security liabilities that its power gives rise to. Quantum computing will “redefine” banking, says Elisabetta Zaccaria, chairman at Secure Chorus, an organisation that promotes multi-stakeholder cooperation in information security. “Yet while quantum computers present an opportunity to solve many challenges, they also create problems for data security,” she says. Analysts do largely agree, however, about the prospective market opportunities. According to BCC Research’s Quantum Computing: Technologies and Global Markets, its expansion into key industries will boost demand for quantum-scale solutions. The industry anticipates a compound annual growth rate (CAGR) of 37.3 per cent to 2022, when it could be worth $161m; this date falls before the earliest estimate for mainstream penetration to begin. The report further estimates that between 2022 and 2027, the market will see a CAGR approaching 53 per cent and be worth $1.3bn. By sector application, the financial services will see a CAGR from 2022-202...

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. https://www.wsj.com/articles/quantum-computing-holds-promise-for-banks-executives-say-11573230983 Unlike with other industries, a quantum algorithm could be deployed to a new financial model in days or weeks, according to Goldman executive. Photo: brendan mcdermid/Reuters BROOKLYN, N.Y.—When quantum computing hits the market, the financial-services industry could be the first to benefit, a Goldman Sachs Group Inc. executive said at a quantum-computing panel event. Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8 Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.

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Summary. Digital computing has limitations in regards to an important category of calculation called combinatorics, in which the order of data is important to the optimal solution. These complex, iterative calculations can take even the fastest computers a long time to process. Computers and software that are predicated on the assumptions of quantum mechanics have the potential to perform combinatorics and other calculations much faster, and as a result many firms are already exploring the technology, whose known and probable applications already include cybersecurity, bio-engineering, AI, finance, and complex manufacturing. Quantum technology is approaching the mainstream. Goldman Sachs To understand what’s going on, it’s useful to take a step back and examine what exactly it is that computers do. Let’s start with today’s digital technology. At its core, the digital computer is an arithmetic machine. It made performing mathematical calculations cheap and its impact on society has been immense. Advances in both hardware and software have made possible the application of all sorts of computing to products and services. Today’s cars, dishwashers, and boilers all have some kind of computer embedded in them — and that’s before we even get to smartphones and the internet. Without computers we would never have reached the moon or put satellites in orbit. These computers use binary signals (the famous 1s and 0s of code) that are measured in “bits” or bytes. The more complicated t...

Opinion is divided over when quantum computers will enter the commercial mainstream: IBM reckons four to five years; more conservative forecasts suggest not for a decade, at least. Whichever timeframe proves correct, it’s probable that the financial services sector will be foremost to adopt quantum tech for line-of-business applications – and to bear the brunt of the challenges that early adopters always face. Quantum promises pros but also cons, especially in respect to the cyber-security liabilities that its power gives rise to. Quantum computing will “redefine” banking, says Elisabetta Zaccaria, chairman at Secure Chorus, an organisation that promotes multi-stakeholder cooperation in information security. “Yet while quantum computers present an opportunity to solve many challenges, they also create problems for data security,” she says. Analysts do largely agree, however, about the prospective market opportunities. According to BCC Research’s Quantum Computing: Technologies and Global Markets, its expansion into key industries will boost demand for quantum-scale solutions. The industry anticipates a compound annual growth rate (CAGR) of 37.3 per cent to 2022, when it could be worth $161m; this date falls before the earliest estimate for mainstream penetration to begin. The report further estimates that between 2022 and 2027, the market will see a CAGR approaching 53 per cent and be worth $1.3bn. By sector application, the financial services will see a CAGR from 2022-202...