According to GlobalData’s Technology, Media and Telecoms Predictions 2022, 2022 is a pivotal year for quantum computing. In addition to the high level of hype generated around this disruptive technology, significant technological advances have led companies to invest to explore its potential benefits.

According to Markets and Markets, the global quantum computing market is expected to grow from $472 million in 2021 to $1.77 billion by 2026, at a CAGR of 30.2%. The pioneering adoption of quantum computing by financial services firms is expected to drive this growth.

Is the financial services industry ready for the quantum?

What does quantum supremacy over classical computing mean for financial services? Multifolding the speed and volume of computations and transactions is the biggest change for the post-quantum financial services sector. Research is the key to identifying potential benefits for a particular use case. Early iterations of quantum computing as a service are underway, with big tech companies Microsoft, Amazon, IBM, and Google providing clients with quantum simulators (basically a quantum computer in the cloud that mimics what you can do). It offers a cloud service for experimenting on a classical computer (to see if it works). conduct).

This collaborative approach between business and technology companies addresses two issues simultaneously. First, quantum supremacy is years away, but companies can get used to emerging technologies. Second, it addresses the biggest business challenge of identifying the most effective use cases for financial services.

US tech giant IBM’s quantum accelerator program was set up with just that in mind. It’s about enabling companies themselves to find effective quantum computing use cases. Many of IBM’s financial services clients participating in the accelerator program were initially concerned about the impact of quantum computing on cryptography, said the managing director of IBM’s Financial Services – Digital Transformation. said Prakash Pattni.

“For example, it took banks several years to understand how blockchain fit in with cryptography, but now blockchain is really taking off,” he says.

Pattni likens quantum computing to the same early stage of experimentation as blockchain. Financial services companies may be more aware of the potential impact quantum computing has on data security. This is because the nature of banking regulations requires data to be stored and kept secure for years, he adds Pattni.

While cybersecurity remains a distinct concern for our clients, certain use cases have yet to be resolved. Again, experimentation is key, says Pattni. According to Gartner, his 40% of large companies plan to create initiatives on quantum computing by 2025, but even with accelerator programs and R&D budgets, very specific Identifying a valid use case has still proven difficult.

Financial services, especially those that operate in multiple markets, stand to benefit greatly from the efficiencies enabled by quantum computing. This is because it allows modeling multiple permutations of different scenarios or values ​​and solves for the most efficient result in a fraction of the time. classical computing.

Pattni believes this could be particularly useful in the area of ​​cross-border fraud detection, stating: As AI becomes more and more integrated into banking systems, the interface between AI and quantum computing will also be the testing ground. Pattni says risk calculation is an area of ​​investment bank focus.

“It takes an incredibly high level of computational power to run multiple risk scenarios that regulators don’t like. It’s in the very early stages,” he adds.

Pioneering the Financial Industry in Adopting Quantum Computing

EY’s 2022 Quantum Readiness survey, produced in collaboration with the UK’s National Center for Quantum Computing, found that 81% of senior UK executives expect quantum computing to play a key role in the industry by 2030. I understand. See approach. But there are those in the financial sector who are taking a pioneering approach by testing the technology and increasing investment in the calculated bet that quantum computing will actually live up to its hype.

US investment bank Goldman Sachs is actively researching how quantum computing can be applied to the pricing of complex derivatives. Calculating prices within complex contracts or statistical models can be an expensive process. According to William Zeng, head of quantum research at Goldman Sachs, who argued for quantum computing on Microsoft Azure in September 2022, derivatives are so common in finance that the price of derivatives Even small improvements in configuration and related quantity calculations can be very valuable. blog.

In March 2022, VidaCaixa, a life insurance and annuity company of Spain’s CaixaBank, will use cloud services from Canadian quantum computing company D-Wave to perform investment portfolio selection and allocation activities, as well as for portfolio hedging. announced that it is building a quantum computing application.

According to CaixaBank, this is the first time a financial services company has applied quantum computing to hedge investments in the insurance sector. Calculation times that normally took hours have been reduced to minutes, up to 90% faster. This reduction in time increases modeling complexity, better adapts to real-time markets, optimizes investment capital while maintaining constant risk levels, and improves the hedging decision-making process. The Spanish banking group is evaluating whether to use the application in other areas of its business over the next few months.

In March 2022, HSBC will join the IBM Quantum Accelerator program to advance potential quantum use cases in pricing and portfolio optimization, furthering the goal of net zero, including identifying and addressing fraud. announced to reduce risk. This collaboration includes knowledge transfer through an internal training program and the aggressive recruitment of quantum computing research scientists to build dedicated capabilities within our innovation team.

Elsewhere, Standard Chartered has embarked on research into quantum computers as part of an academic partnership with the University Space Research Association. The partnership is already actively developing what is known as a quantum computing system for financial services, which banks will use to meet the security challenges posed by ultra-powerful quantum computers.

Post-quantum security is a pressing issue

According to GlobalData, both IBM and Google have roadmaps for creating quantum computers capable of breaking current encryption by 2030. Future quantum computers will be able to decrypt data collected today, even though the cybersecurity industry had developed quantum-safe cryptography before then. As a result, GlobalData expects companies to implement quantum security solutions in his 2022.

Interest in quantum security in the financial services sector has increased significantly over the past 12 months, according to Duncan Jones, head of cybersecurity at quantum computing company Quantinuum. “This is driven in part by a series of announcements from the U.S. government highlighting the business opportunity as well as the urgent need to combat the quantum threat,” he says.

Moreover, as the number of quantum-powered business use cases grows, so do cybersecurity concerns. Jones and his team at Quantinuum are working on ways to improve this. Quantinuum’s partnership with cybersecurity software company PureVPN will use Quantinuum’s cyber he platform, Quantum Origin, to create and deploy cryptographic keys generated using verifiable quantum processes. This cryptographic key is more secure than keys from traditional computing processes that have not been verified.

According to Jones, all technological advances have created their fair share of cybersecurity challenges, and quantum-tolerant financial services firms continue to be a concern alongside business growth opportunities. We are aware that we have a new quantum baseline for , and we are factoring this into our cyber planning,” he adds.

In July 2022, US investment bank JP Morgan Chase hired Dr. Charles Lim, a world-renowned expert on next-generation quantum-safe communication networks from the National University of Singapore, as an assistant professor to develop quantum communications for banks. It became public that I directed. and encrypted. The move not only demonstrates that quantum computing has become a business concern, but also highlights the global race for talent in this space, giving other financial services firms a competitive edge in quantum computing. It is a warning that we may need to step up our talent search. Historically, financial services has attracted the brightest and brightest talent with attractive compensation, but now the sector is competing with big tech to provide a well-deserved workforce. The battle for quantum computing talent continues.

Moody’s Analytics, a credit-rating financial services company, has announced that it will establish the Moody’s Analytics Quantum Computing team in September 2022. Early adoption of this technology may seem like an option for 2022, but it is essential to future-proofing financial services companies against the changes this technology will bring to the industry. may be proved. As with any emerging technology, there are predecessors and trend followers. It is still too early to tell which approach will yield the greatest benefit.

Source link

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *