In this paper, Atos experts examine the development trajectory of quantum computing and when it is likely to make an impact on business. Elena specializes in bringing to market solutions based on emerging technologies. Our cross-disciplinary team is developing scalable quantum systems, and potential applications for the technology we make available today. Beyond that, greater compliance, employing behavioral data to enhance customer engagement, and faster reaction to market volatility are some of the specific benefits we expect quantum computing to deliver. The next great leap for computing may be a bit closer with the help of joint efforts between the U.S. government, the private sector — and hundreds of millions of dollars. Quantum computers’ impact on the Financial Services sector Almost all financial business is about evaluating the probabilities of positive outcomes, and eliminating negative outcomes, to achieve an acceptable risk with an agreeable profitable outcome. A quantum computer is thus able to process a large number of combinations simultaneously, whereas a traditional computer has to process them sequentially, which is both slower and more energy-intensive. Copyright | For example, the valuation adjustments model for derivatives, the. Copyright © International Banker 2020 | All Rights Reserved Subscription | About us | A quantum computer, however, could identify a portfolio that remains optimal over a much longer time horizon, meaning that the frequency of rebalancing could be greatly reduced. A similar problem exists in fraud detection. Whereas a classical computer holds data in standard binary-bit units—either 0 or 1—quantum computing enables data to be represented by quantum bits, or qubits. Financial services institutions are under increasing pressure to balance risk, hedge positions more effectively, and perform a wider range of stress tests to comply with regulatory requirements. To place your organization in the vanguard of change, consider joining a quantum computing ecosystem. Quantum computing’s specific use cases for financial services can be classified into three main categories: targeting and prediction, trading optimization, and risk profiling. Before we reach this level, a number of critical issues will have to be dealt with.” And that means that the technology can be assessed only in terms of its potential rather than any proven capability. The European Bank for Reconstruction and Development: A... National Bank of Greece: The Journey from Traditional,... Banking Post COVID-19: Five Things That Will and... Stellar Management and Accelerated Digitalisation Lie at the... Interview with Mr. Johan Thijs, Group Chief Executive... DeFi: Behind the Latest Revolution in Crypto, Operational Resilience in Financial Services. The solution space of a quantum computer is orders of magnitude larger than traditional computers—even immensely powerful ones. A quantum computation is like a symphony—many lines of tones interfering with one another,” according to Seth Lloyd, professor of mechanical and physics at the Massachusetts Institute of Technology (MIT) and a self-described “quantum mechanic.” The financial services applications of quantum computing are staggering. As such, quantum computers can solve problems, analyse data and spot patterns much more quickly and robustly than what is possible today. Imagine being able to make calculations that reveal dynamic arbitrage possibilities that competitors are unable to see. “A classical computation is like a solo voice—one line of pure tones succeeding each other. Risk management, an area that has grown massively in importance to financial institutions over the last decade, could also experience a major upgrade through the use of quantum computing. And a quantum computer with 50 qubits can hold more than one quadrillion states. First financial services use cases: Banks and other financial firms are focused on leveraging quantum computing technology for investments, portfolio management and simulations. Advertise | Careers | Editorial Guidelines | Nick has over 25 years of practitioner experience with blue chip names in international banking and financial markets over three continents. In turn, this means quantum computers can hold more data through qubits than what a classical computer can hold via traditional bits. Terms & Conditions Finance Publishing | International Director | Forex Focus, This site is protected by reCAPTCHA and the Google, Trade Financing: Enabling Trade-Based Economic Recovery Dr. Daniel J. Egger is a research staff member in the Quantum Technologies group at IBM Research in Zurich. That’s because doubling the power of a classical computer requires about double the number of transistors working on a problem. Save reports and curate your favorite content from the IBM Institute for Business Value. Risk management, an area that has grown massively in importance to financial institutions over the last decade, could also experience a major upgrade through the use of quantum computing. Lynn Kesterson-Townes is the Global Cloud and Quantum Leader for the IBM Institute for Business Value. JPMorgan has also reportedly commenced with the creation of a “quantum culture”, while Wells Fargo has joined forces with IBM to boost its quantum-computing “learning efforts”. The best solution lies in … Paul Burchard, a senior researcher at Goldman, recently noted that there’s a distinct possibility that quantum computing will become a “critical technology”, following recent advancements in the scale of quantum circuits that he believes is similar to the rapid growth seen during the early stages of semiconductor development. While broad commercial applications may remain several years away, quantum computing is expected to produce breakthrough products and services likely to successfully solve very specific business problems within three-to-five years. In the face of more sophisticated risk-profiling demands and rising regulatory hurdles, the data-processing capabilities of quantum computers may speed up risk scenario simulations with higher precision, while testing more outcomes. Four examples of new quantum computing applications in financial services and their implications on the future of banking: 1) Quantum cryptography: Today, Monte Carlo simulations—the preferred technique to analyze the impact of risk and uncertainty in financial models—are limited by the scaling of the estimation error. Experimental systems Experimental quantum systems are already being used to test and develop financial services use cases in such appli-cations as targeting and prediction, asset Leading utilities are using digital tech to increase their resiliency—and deliver cleaner, cheaper energy to their customers. We explore potential use cases in each of these categories, providing examples that apply to three main industries in financial services: banking, financial markets, and insurance. Looking forward, we expect continual waves of overlapping amendments to regulations, directives, and standards, such as. 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Brooks – Comptroller of the Currency, Christian Nolting – Deutsche Bank Wealth Management, Adam Farkas – Association for Financial Markets in Europe (AFME), Liliana Rojas-Suarez – Center for Global Development, Andrew Powell – Inter-American Development Bank, David Bischof – International Chamber of Commerce (ICC). Since the 1950s, computers have played an increasingly crucial role in modern society, such that today the world is all but wholly dependent on them. Global Banking and Financial Markets Leader. She has over 20 years of expertise in management consulting, business development, strategic planning, marketing, and mergers and acquisitions.