How could quantum computing benefit the financial services industry?

You may have heard about quantum computers and possibly read about the future threat quantum computers might pose to cryptography. What are quantum computers, and should the financial services industry as defined by ISO TC 68 be worried? These are the questions this document will try to address. What’s a Quantum Computer? To fully understand what a quantum computer is probably requires a Ph.D. in quantum physics, but generally speaking, a quantum computer is a device that uses the quantum mechanical phenomena superposition and entanglement to solve certain specific problems much faster than classical computers. Where a classical computer uses bits, which can be either 0 or 1, on or off, as its basic building block, a quantum computer uses qubits and a qubit carries much more information than a simple bit.1 Qubits can exist in an intricate superposition between 0 and 1. This richness enables quantum computers, in principle, to solve certain specific problems dramatically faster than classical computers could. For example, a quantum computer could solve certain problems in days where classical computers would take years or more. What Kind of Threat Would a Quantum Computer Pose to the Financial Services Industry? While the promise of quantum computing is to solve certain specific problems dramatically faster than otherwise possible, currently quantum computers lack the stability and fault tolerance required to solve most real-world problems. As the technologies behind quantu...

Fully scaled quantum technology is still a way off, but some banks are already thinking ahead to the potential value. . Many financial services activities, from securities pricing to portfolio optimization, require the ability to assess a range of potential outcomes. To do this, banks use algorithms and models that calculate statistical probabilities. These are fairly effective but are not infallible, as was shown during the financial crisis a decade ago, when apparently low-probability events occurred more frequently than expected. In a data-heavy world, ever-more powerful computers are essential to calculating probabilities accurately. With that in mind, several banks are turning to a new generation of processors that leverage the principles of quantum physics to crunch vast amounts of data at superfast speed. Google, a leader in the field, said in 2019 that its Sycamore quantum processor took a little more than three minutes to perform a task that would occupy a supercomputer for thousands of years. The experiment was subject to caveats but effectively demonstrated quantum computing’s potential, which in relative terms is off the scale. Financial institutions that can harness quantum computing are likely to see significant benefits. In particular, they will be able to more effectively analyze large or unstructured data sets. Sharper insights into these domains could help banks make better decisions and improve customer service, for example through timelier or more relev...

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...

It’s not just financial investors. Governments and research centers are ramping up investment as well. Cleveland Clinic, University of Illinois Urbana-Champaign and the Hartree Centre have each entered into “discovery acceleration” partnerships with IBM—anchored by quantum computing—that have attracted $1 billion in investment. The $250 billion U.S. Innovation and Competition Act, which enjoys broad bipartisan support in both houses of the US Congress, designates quantum information science and technology as one of ten key focus areas for the National Science Foundation. Potential corporate users are also gearing up. While only 1% of companies actively budgeted for quantum computing in 2018, 20% are expected to do so by 2023, according to Gartner. Three factors are driving the rising interest. The first is technical achievement. Since we released our last report on the market outlook for quantum computing in May 2019, there have been two highly publicized demonstrations of “quantum supremacy”—one by Google in October 2019 and another by a group at the University of Science and Technology of China in 1 1 Though there are no hard-and-fast rules about what the terms mean, “quantum supremacy” generally refers to a quantum computer outperforming a classical computer on a defined mathematical problem, while “quantum advantage” is a quantum computer outperforming a classical computer on a problem of practical commercial value. Notes: 1 Though there are no hard-and-fast rules abou...

It’s not just financial investors. Governments and research centers are ramping up investment as well. Cleveland Clinic, University of Illinois Urbana-Champaign and the Hartree Centre have each entered into “discovery acceleration” partnerships with IBM—anchored by quantum computing—that have attracted $1 billion in investment. The $250 billion U.S. Innovation and Competition Act, which enjoys broad bipartisan support in both houses of the US Congress, designates quantum information science and technology as one of ten key focus areas for the National Science Foundation. Potential corporate users are also gearing up. While only 1% of companies actively budgeted for quantum computing in 2018, 20% are expected to do so by 2023, according to Gartner. Three factors are driving the rising interest. The first is technical achievement. Since we released our last report on the market outlook for quantum computing in May 2019, there have been two highly publicized demonstrations of “quantum supremacy”—one by Google in October 2019 and another by a group at the University of Science and Technology of China in 1 1 Though there are no hard-and-fast rules about what the terms mean, “quantum supremacy” generally refers to a quantum computer outperforming a classical computer on a defined mathematical problem, while “quantum advantage” is a quantum computer outperforming a classical computer on a problem of practical commercial value. Notes: 1 Though there are no hard-and-fast rules abou...

(8 pages) Many financial services activities, from securities pricing to portfolio optimization, require the ability to assess a range of potential outcomes. To do this, banks use algorithms and models that calculate statistical probabilities. These are fairly effective but are not infallible, as was shown during the financial crisis a decade ago, when apparently low-probability events occurred more frequently than expected. This article was a collaborative effort by In a data-heavy world, ever-more powerful computers are essential to calculating probabilities accurately. With that in mind, several banks are turning to a new generation of processors that leverage the principles of quantum physics to crunch vast amounts of data at superfast speed. Google, a leader in the field, said in 2019 that its Sycamore quantum processor took a little more than three minutes to perform a task that would occupy a supercomputer for thousands of years. The experiment was subject to caveats but effectively demonstrated quantum computing’s potential, which in relative terms is off the scale. Financial institutions that can harness quantum computing are likely to see significant benefits. In particular, they will be able to more effectively analyze large or unstructured data sets. Sharper insights into these domains could help banks make better decisions and improve customer service, for example through timelier or more relevant offers (perhaps a mortgage based on browsing history). There ar...

You may have heard about quantum computers and possibly read about the future threat quantum computers might pose to cryptography. What are quantum computers, and should the financial services industry as defined by ISO TC 68 be worried? These are the questions this document will try to address. What’s a Quantum Computer? To fully understand what a quantum computer is probably requires a Ph.D. in quantum physics, but generally speaking, a quantum computer is a device that uses the quantum mechanical phenomena superposition and entanglement to solve certain specific problems much faster than classical computers. Where a classical computer uses bits, which can be either 0 or 1, on or off, as its basic building block, a quantum computer uses qubits and a qubit carries much more information than a simple bit.1 Qubits can exist in an intricate superposition between 0 and 1. This richness enables quantum computers, in principle, to solve certain specific problems dramatically faster than classical computers could. For example, a quantum computer could solve certain problems in days where classical computers would take years or more. What Kind of Threat Would a Quantum Computer Pose to the Financial Services Industry? While the promise of quantum computing is to solve certain specific problems dramatically faster than otherwise possible, currently quantum computers lack the stability and fault tolerance required to solve most real-world problems. As the technologies behind quantu...

Fully scaled quantum technology is still a way off, but some banks are already thinking ahead to the potential value. . Many financial services activities, from securities pricing to portfolio optimization, require the ability to assess a range of potential outcomes. To do this, banks use algorithms and models that calculate statistical probabilities. These are fairly effective but are not infallible, as was shown during the financial crisis a decade ago, when apparently low-probability events occurred more frequently than expected. In a data-heavy world, ever-more powerful computers are essential to calculating probabilities accurately. With that in mind, several banks are turning to a new generation of processors that leverage the principles of quantum physics to crunch vast amounts of data at superfast speed. Google, a leader in the field, said in 2019 that its Sycamore quantum processor took a little more than three minutes to perform a task that would occupy a supercomputer for thousands of years. The experiment was subject to caveats but effectively demonstrated quantum computing’s potential, which in relative terms is off the scale. Financial institutions that can harness quantum computing are likely to see significant benefits. In particular, they will be able to more effectively analyze large or unstructured data sets. Sharper insights into these domains could help banks make better decisions and improve customer service, for example through timelier or more relev...

It’s not just financial investors. Governments and research centers are ramping up investment as well. Cleveland Clinic, University of Illinois Urbana-Champaign and the Hartree Centre have each entered into “discovery acceleration” partnerships with IBM—anchored by quantum computing—that have attracted $1 billion in investment. The $250 billion U.S. Innovation and Competition Act, which enjoys broad bipartisan support in both houses of the US Congress, designates quantum information science and technology as one of ten key focus areas for the National Science Foundation. Potential corporate users are also gearing up. While only 1% of companies actively budgeted for quantum computing in 2018, 20% are expected to do so by 2023, according to Gartner. Three factors are driving the rising interest. The first is technical achievement. Since we released our last report on the market outlook for quantum computing in May 2019, there have been two highly publicized demonstrations of “quantum supremacy”—one by Google in October 2019 and another by a group at the University of Science and Technology of China in 1 1 Though there are no hard-and-fast rules about what the terms mean, “quantum supremacy” generally refers to a quantum computer outperforming a classical computer on a defined mathematical problem, while “quantum advantage” is a quantum computer outperforming a classical computer on a problem of practical commercial value. Notes: 1 Though there are no hard-and-fast rules abou...

You may have heard about quantum computers and possibly read about the future threat quantum computers might pose to cryptography. What are quantum computers, and should the financial services industry as defined by ISO TC 68 be worried? These are the questions this document will try to address. What’s a Quantum Computer? To fully understand what a quantum computer is probably requires a Ph.D. in quantum physics, but generally speaking, a quantum computer is a device that uses the quantum mechanical phenomena superposition and entanglement to solve certain specific problems much faster than classical computers. Where a classical computer uses bits, which can be either 0 or 1, on or off, as its basic building block, a quantum computer uses qubits and a qubit carries much more information than a simple bit.1 Qubits can exist in an intricate superposition between 0 and 1. This richness enables quantum computers, in principle, to solve certain specific problems dramatically faster than classical computers could. For example, a quantum computer could solve certain problems in days where classical computers would take years or more. What Kind of Threat Would a Quantum Computer Pose to the Financial Services Industry? While the promise of quantum computing is to solve certain specific problems dramatically faster than otherwise possible, currently quantum computers lack the stability and fault tolerance required to solve most real-world problems. As the technologies behind quantu...