Let’s Talk Quantum (In Banking & Finance)
UTPAL CHAKRABORTY | December 21, 2021
Let's discuss some of the potential that Quantum Computing and Artificial Intelligence bring to Banking and Finance in this series of "Let's Talk Quantum." Banking and finance are data-intensive industries, with many critical decisions requiring real-time data insights and forecasting. The difficulty with using classical computing to cope with massive amounts of data created at breakneck speeds is that the outcomes are frequently nothing more than post-mortems. Not only can these be performed in absolute real-time with quantum computing, but it also offers up a plethora of new possibilities in the field.
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Banks and financial companies can extract additional value from Big Data by using Machine Learning algorithms that leverage Quantum Computing's capability. A fantastic combination of potent technology, this trio is set to transform virtually every industry. Banks and other financial institutions throughout the world have begun focusing their efforts on the use of quantum computing technologies to manage and simulate investment portfolios.
Quantum computing has the potential to enable a variety of applications, including the analysis of vast amounts of heterogeneous data in order to make financial forecasts and better understand economic phenomena, the analysis of financial markets, and asset allocation and risk management. All of these quantum computing applications in finance and banking have the potential to add value to the financial sector and other businesses, particularly those with a high degree of complexity.
Certain complex derivatives that are path-dependent; evaluating innumerable paths used to be computationally prohibitively expensive and difficult to comprehend their interdependence, and thus could never be computed in near-real time on classical computers; however, quantum computers can easily compute those in real time. This is going to transform the study and forecast of financial markets for stocks and cryptocurrencies.
IDC Financial Insights has been conducting research into the area of quantum computing and its application to banking and finance. They are analysing real-world use cases that are being explored or are already being used by banks worldwide.
According to preliminary findings from several research conducted in this area, it is clear that the usage of quantum computing will undoubtedly influence the industry's future evolution.
Several instances include JPMorgan is exploring the use of quantum computers to figure out how to streamline its investment and risk management systems. The current work seems largely exploratory and small demonstrations or proof of concepts are been developed to explore how quantum computing systems could serve financial institutions. Goldman Sachs and JPMorgan Chase anticipate implementing quantum computers in real time within the next few years. Meanwhile, Standard Chartered is the latest bank to commit to quantum computing research as part of an academic collaboration. The alliance is already actively building what it calls the Quantum Computing System for Financial Services, with the goal of addressing the security risks posed by a super-powerful quantum computer.
Operating these types of initiatives, especially in collaboration with Tech-Giants, is extremely costly. Thus, until quantum computing services become widely available and economically viable, only the largest financial institutions may invest in quantum computing research and compete for the upper hand in this developing technology.
According to some analysts, within the next five years, businesses worldwide will have complete access to quantum computing as a service, reaping a variety of benefits including quicker, more efficient, and more secure computing. Quantum computing is already gaining traction in a variety of areas.Numerous businesses are likewise vying to be the first to market in their respective domains in this technological area. Due to the increasing interest in quantum computers, it is anticipated that there will be a significant demand for Quantum Computing skills across multiple industries.