Quantum Computing: Coming to an FSI Company Near You

While there is still a great deal of uncertainty about quantum computing – it’s still mainly in the experimental stage – financial services may be among the first industries where it emerges as a viable technology.

In a recent post at the MasterCard site, Deborah Lynn Blumberg outlined the ways in which quantum may be reshaping the financial service space. “It’s already beginning to transform financial services,” she writes. “Last week, experts across the industry shared insights into the technology, the potential it holds and the risks it could pose at a Mastercard Foundry Live event.”

Financial services applications are already in the works, Blumberg illustrates. “Companies are exploring applications that could help with portfolio optimization, fraud detection, secure communications, transaction settlements and ultrafast trading platforms.” Quantum computing enables sophisticated and data-intensive applications to deliver results in less than three minutes, as compared with 30 hours with a traditional computer, she reports.

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Quantum computing will help create highly customized experiences for customers, she continues. “Today’s customers expect high degrees of personalization, and quantum computing can help deliver on that expectation — again through its unique power to analyze huge numbers of potential combinations of options or solutions.”

Potential examples of quantum-powered financial services applications, identified by Everest Group, were highlighted by Linda Grasso, founder and CEO of DeltalogiX:

• Portfolio analysis: “Identification of the most attractive portfolios given thousands of assets with interconnecting dependencies.”
• High-frequency trading: “Extremely quick execution of complex quantitative buy-sell strategies wil improve financial firms’ abilities to generate greater returns while controlling risk.”
• Fraud detection: “Quick and accurate identification of fraud indicators to enable proactive fraud risk management.”
• Asset valuation: “Performance of risk analysis by uncovering intelligence from large information sets and processing data at lightening speeds.”
• Optimization: “Improved efficiency in clearing large batches of transactions that have varying credit, collateral, and liquidity constraints.”
• Clustering: “Grouping of seemingly disparate sets of assets to enable the discovery of patterns in areas such as asset performance, consumer sentiment, and risk aversion.”
• Quantum-proofing of cybersecurity systems: “Development of next-generation cryptography to safegiard confidential customer data.”

The field is very much still evolving, but financial services companies need to prepare, Blumberg notes in her analysis. “Top of mind should be cybersecurity and the risk that quantum poses to networks and systems.” Still, the outlook is positive. “Expect major advancements over the next five to ten years not just in quantum computing, but also in artificial intelligence and blockchain” – and these technologies will cross over in interesting, and unthought-of, ways.