Quantum Computing in Financial Services – Report by MEDICI

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Quantum Computing can be defined as exploiting the collective properties of quantum states to perform computation. The economic potential of traditional computing has already been leveraged. Hence, we need to explore other possibilities including Quantum Computing to handle the next generation of technological advancements. MEDICI has recently launched a comprehensive report titled Quantum Computing in Financial Services. This article shares some snippets from the report and provides a gist of the report’s content.

Overview

The report explores Quantum Computing and its impact on financial services, one of its core use cases. 

Although Quantum Computing can no longer be called the future of computing, as we are already developing these computers, its applications and full potential will be realized only after several years. The often-discussed Moore’s Law, which predicted the development of robust computer systems with more transistors, is coming to an end because engineers are unable to develop chips with smaller and more transistors. The creation of more powerful computers is regarded as the most crucial aspect of a computer system. Regardless, energy efficiency, device lifetime, and economic viability are just as important, requiring numerous transistors especially when it comes to large cloud data centers that power large portions of online web applications. These are among the many reasons why computer science engineers and corporations are forced to look beyond traditional systems and explore areas such as Quantum Computing.

Impact areas and Early Use Cases

Quantum Computing is expected to impact multiple areas in the financial services industry. D-Wave and Accenture have together identified over 150 use cases across industries, most of which belong to financial services. Top sectors in financial services where Quantum Computing can make a critical contribution are Investments, Insurance, and Lending.

Multiverse Computing, a Spanish startup, has a fairly mature quantum-inspired portfolio optimization tool that has shown to generate twice the average ROI compared to classical computational methods, risk and volatility remaining constant. Multiverse has worked with BBVA and Credit Agricole Corporate & Investment Bank in this area to achieve quantifiable results. As adoption improves and costs become manageable, one can expect digital-centric fund platforms and robo-advisors to become active users of quantum in the realm of investments.

Quantum Supremacy and Hardware Manufacturers

In 2012, John Preskill, a professor of theoretical physics at the California Institute of Technology, proposed the term Quantum Supremacy—the point where quantum computers can do tasks that classical computers cannot.

Google rose to prominence in the Quantum Computing world in 2019 when it announced that Sycamore, its state-of-the-art quantum computer, achieved “quantum supremacy.” The quantum computer carried out a specific calculation beyond the practical capabilities of regular, ‘classical’ machines.

IBM has been exploring superconducting qubits since the mid-2000s, increasing coherence times and reducing errors to enable multi-qubit devices from 2010. It claims to have built the first quantum computer on the cloud in 2016. In 2017, IBM announced that it would add two 20-qubit machines to its quantum cloud. The same year, the company declared that it had constructed a 50-qubit quantum processor. As of 2020, IBM made a total of 28 quantum computers available. 

IBM has launched IBM Quantum—an initiative that uses IBM’s full-stack approach, including Quantum Computing systems, together with software tools and cloud services to build quantum systems for business and science applications

A detailed analysis is available in our new ‘Quantum Computing in Financial Services’ report. You can access the full report here.

Adoption of Quantum Computing

Quantum Computing is currently confined to laboratory experiments by a select few technology companies and niche startups. The commercial adoption of the technology is at least a decade away.

However, this does not essentially imply a long wait before we put Quantum Computing to use. For the next five years, the most likely approach would be to combine the power of both classical and Quantum Computing into a hybrid computing framework. Hybrid computing uses the exponential computing power of Quantum Computing to solve parts of a complex problem and combines them with classical computing methods to solve other parts. In early 2020, CaixaBank developed a machine learning algorithm leveraging hybrid computing to do better credit risk profiling based on a limited set of 1,000 user profiles. 

Although the availability of a competent quantum computer is many years away, Amazon Web Services, Google, and Microsoft provide cloud-based quantum simulation capabilities for researchers and developers to try out potential applications. Amazon Braket is a managed Quantum Computing service run in partnership with D-Wave, IonQ, and Rigetti. The availability of cloud-based computing infrastructure and classical computing is expected to fuel adoption and accelerate learning in this decade. The industry expects that during this period, quantum computational power will grow fast enough to start implementing specific algorithms and simulations to solve some of the most complex problems in financial services.

Outlook

We have barely scratched the surface of Quantum Computing. Cloud-based Quantum Computing, a new field that allows users to use these quantum-powered computers through the internet, is focusing on making Quantum Computing more accessible. With the limitations of traditional computing getting amplified and vast amounts of data being generated every second, the rise of Quantum Computing systems to fill the gap is inevitable. Both corporations and governments are focusing on developing Quantum Computing. India announced a $1 billion fund for the National Mission on Quantum Technologies and Applications. In 2020, the White House Office of Science and Technology Policy, the National Science Foundation, and the Department of Energy in the US announced a $1 billion fund to establish 12 AI and quantum information science research centers nationwide. Companies and governments are working together to lead the next wave of innovations in computing systems. Innovations and higher processing power need to ensure that these systems can solve real-world problems.

The ‘Quantum Computing in Financial Services’ report is a detailed study on the various aspects of Quantum Computing and its impact on financial services. It profiles some of the major quantum hardware and software providers. You can access the report here.

About the Report

In July 2021, MEDICI published the ‘Quantum Computing in Financial Services’ report, a comprehensive study based on MEDICI’s proprietary financial services data, deep market intelligence derived from years of tracking the segment, and secondary research that was refined through brainstorming sessions and in-depth interviews with segment experts to extract valuable market signals from the noise, identify market trends, and develop viewpoints for the report.

Here’s what more you can expect from the ‘Quantum Computing in Financial Services’ report by MEDICI:

This 42-page report by MEDICI analyzes the following in detail:

  • What led to the exploration of Quantum Computing?
  • Complementary fields of computing being explored
  • History of Quantum Computing
  • Data representation in Quantum Computing
  • Quantum supremacy and key players
  • Impact on financial services
  • Quantum Computing in financial services—Adoption & Early Use Cases 
  • Limitations
  • Conclusion

Grab your copy of the full report here.

https://gomedici.com/quantum-computing-in-financial-services-report-by-medici