How to leverage quantum computing (2024)

Earlier this year, researchers devised a breakthrough method for creating supremely pure silicon – the fundamental material inquantum computers. Imperfections in existing silicone mean that today’s quantum computers can maintain coherence (or more simply, operation) for only a fraction of a second. This newly-created, ultra-pure element sustains coherence for longer – paving the way to a scalable product.

The co-supervisor on the project, professor David Jamieson, from the University of Melbourne, pointed out that reliable quantum computing promises astep change across all of society – including in artificial intelligence, data, and communications. These are some of the key tools in the financial services trade – so what does it mean for the sector? How can quantum computing be leveraged to the benefit of institutions and their customers?

According to McKinsey, in just over ten years, quantum-computing use cases could create over$600 billion in value for the industry. This will be generated by sharpening existing processes, and creating new ones – across corporate banking, risk and cybersecurity, retail banking, payments, wealth management, investment banking, and operations.

This article explores four key areas:

1. Cybersecurity

Customer data held by institutions can be made ‘quantum safe’, using post-quantum cryptography (PQC) and quantum key distribution (QKD).

According to McKinsey, “PQC algorithms are classical, quantum-resistant algorithms consisting of cryptographic problems that are computationally difficult.” QKD, on the other hand, refers to a method of exceptionally secure communication via the implementation of a cryptographic protocol that leverages quantum mechanical principles. In practice, it enables two parties to produce a random secret key known only to them, which is then used to encrypt and decrypt messages.

The key difference between QKD and classic public key cryptography (which relies on the mathematical difficulty of functions) is the fact that QKD exploits photons that are in a Schrödinger-esque superposition (in other words, assuming only a probabilistic cloud in space, as opposed to a defined point) to convey information. Heisenberg'sUncertainty Principle shows that once this superposition is observed, for instance by a third-party eavesdropper, the subatomic particles’ wave function collapses, and thus the communication channel breaks down.

Crucially though, QKD is based on physical properties and therefore its security is derived from purpose-built machines. This means that in the short term, PQC is more realistic for financial institutions because it can be accessed via software-as-a-service. Institutions looking to benefit from QKD will have to rent dedicated fibre connections or physically manage free-space transmitters, until the requisite hardware becomes more affordable and widely available.

Such quantum security features would no doubt have prevented the leaking of banking information from the Ministry of Defence’s payroll system at the hands of China-sponsored hackers – and will no doubt be considered by the UK government in the future.

2. Retail Banking

The use cases of quantum computers in retail banking are similar to those in corporate banking, though the requirements for adoption are more surmountable given the fact assets and volumes around retail clients are smaller.

There is potential here to for banks to enhance the precision of credit-decision algorithms and tighten collateral optimisation.

In terms of credit decisions, quantum technology – thanks to its fundamental ability to occupy superpositions, thus processing far more information than today’s binary digits – can weigh up a far greater variety factors; ensuring customers are happier and better served. When it comes to collateral optimisation, the technology may be able to incorporate more values and data types as boundary conditions.

3. Payments

The colourful world of probabilistic wave functions also hails a new era of transaction security and payment speed – even when compared to blockchain.

The birth of quantum payments, for instance, would eradicate the industry’s challenge of money laundering over the blockchain. This is because a quantum state is unfalsifiable; it cannot be replicated. The key enabler of quantum payments is the aforementioned QKD hardware.

The careful realisation of quantum money could revolutionise the broader banking ecosystem – tightening security for intra- and interbank trades, particularly when founded on QKD protocols.

There are benefits for payment fraud detection, too, with quantum developments serving to upscale rule-based heuristics. With new kinds of transactions inbound, this technology will only serve to boost the accuracy of fraud-detection algorithms.

4. Operations

Today, machine learning is deployed by many banking call centres – using data to improve scheduling operations. Quantum computing, however, has the ability to classify jobs more precisely, assigning tasks to the correct operator against considerations such as sophistication and complexity. This will have the effect of highly optimising workforces within financial institutions and boosting their relationships with customers.

In its report on the topic, McKinsey points out that the technology “lends itself to solving problems of natural-language processing because of the large amount of data and number of boundary conditions inherent in language.”

Once quantum computation has had time to find its feet in call centres, improvements in data quality and privacy will mean the machines may support even the most challenging of operational tasks.

A cautious optimism

Despite the promises of quantum technology, it is not time for financial institutions to throw caution to the wind. These futuristic computers may also be able to crack today’s encryption – putting customer data at risk.

Firms must communicate with regulators today and study their systemic weaknesses to avoid potential financial and reputational damage.

For some, this technology seems a concern of the distant future, but quantum computers are already being tested – and predicted to be fullyoperational in a decade. It is in the interest of institutions to be proactive and make space for this technology in their offering, while also ensuring all security systems are ‘quantum resistant’. Doing so now will promote the overall performance and stability of the financial sector for decades to come.

Now that’s a benefit not even Schrödinger could have predicted.

How to leverage quantum computing (2024)

FAQs

How might individuals and organizations leverage quantum computing? ›

Individual organization might leverage quantum computing in a number of ways including: development of new products that benefit society, creation of new industries, personal gain, more sophisticated and deadly ways of waging war, etc.

How to make money with quantum computing? ›

You can profit from that growth by investing in the startups or Big Tech firms building quantum computers, or by investing in firms that manufacture the components. Alternatively, you could invest in sectors set to benefit from the advent of quantum computing, like Big Data, biotech, and cybersecurity.

What is the best way to invest in quantum computing? ›

Besides investing in individual companies, there is one ETF, or exchange-traded fund, dedicated to the quantum computing industry: Defiance Quantum ETF (QTUM 1.68%). Defiance ETFs -- the company that sponsors this and other themed ETFs -- launched in 2018, with its Quantum ETF debuting in September 2018.

Is quantum computing even possible? ›

A large-scale quantum computer could break widely used encryption schemes and aid physicists in performing physical simulations; however, the current state of the technology is largely experimental and impractical, with several obstacles to useful applications.

Is there an ETF for quantum computing? ›

The Defiance ETF, QTUM, includes stocks that are significant players in the quantum computing space, including big names like IBM, Microsoft, and Amazon.

How close are we to quantum computing? ›

Quantum advantage has not been shown yet. It's impossible to predict, but the developments in quantum computing are promising, and there are several considerations. First, there are still open technical questions concerning the hardware. We need more qubits and need to better control them; this is really a hard task.”

What company is leading in quantum computing? ›

1. International Business Machines Corporation (IBM)

How do I start Quantum AI trading? ›

Here are the steps to start trading on Quantum AI:
  1. Step 1 – Create an Account. Navigate to the official Quantum AI website and create an account. ...
  2. Step 2 – Deposit the Initial Amount. Part of that process is depositing $250. ...
  3. Step 3 – Start Trading. Once the account is funded, the in-app tools start to work.
Feb 13, 2024

Is there anything better than quantum computing? ›

The scientists' results show that classical computing can be reconfigured to perform faster and more accurate calculations than state-of-the-art quantum computers.

Why will quantum computing fail? ›

Major impediment: Inability to debug larger quantum algorithms. Classical quantum simulators can support debugging capabilities for smaller quantum algorithms, up to 32 or maybe 40 qubits, but not for quantum algorithms much larger than about 50 qubits.

Is NASA using quantum computing? ›

NASA's QuAIL team aims to demonstrate that quantum computing and quantum algorithms may someday dramatically improve the agency's ability to address difficult optimization and machine learning problems arising in NASA's aeronautics, Earth and space sciences, and space exploration missions.

Why is quantum computing not popular? ›

Qubits (or anything from the quantum realm) are extremely small, so even the smallest perturbation or vibration can cause them to behave chaotically. Not to mention that in a large system with many qubits, such as a quantum computer, there are bound to be a few errors in the state of the qubits.

What might businesses be interested in using quantum computers? ›

Another way businesses can use quantum computing is to encrypt the data of their customers. With quantum computing, businesses can leverage large prime number factorization and ensure better protection for their digital assets.

How can quantum computing be used in business? ›

Theoretically, quantum superposition can aid in processing massive quantities of data, given that qubits can represent multiple states at once. Factorization. Quantum computers excel at factorization problems, which have many applications across cryptography, data compression and control systems. Optimization.

How does quantum computing help society? ›

Quantum computing's ability to perform certain calculations much faster than classical computers could revolutionize fields such as finance, logistics, and healthcare by enabling new levels of efficiency and accuracy.

What are the benefits of quantum computing to society? ›

Quantum Computers offer accelerated computational speeds, enabling organisations to perform computations at unprecedented rates. This speed advantage translates into faster decision-making, reduced time-to-market for products and services, and increased productivity across various industries.

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