7 areas in banking ripe for quantum computer disruption

By Edwin Boadu | 27 July 2018

Despite the hype still rife around blockchain, quantum computing threatens to undermine distribution ledger capabilities before they've even had a chance to disrupt the financial services.


"And that's before we mention our quantum computing," says Jason Kelley, the IBM Global Head of Blockchain, at the very end of an interview with bobsguide all about the tech company's blockchain capabilities. For Kelley, quantum computing is instrumental to IBM's 'Network of Networks' vision for the future of the financial services.  

Quantum computers take advantage of complex laws of nature. In particular, that of subatomic particles and their inherent ability to exist in more than one state at any time. The exploitation of quantum mechanics allows such computers to, unlike classical computers, eschew from encoding information in bits (each bit can take the value of either 1 or 0). They are able to, instead, operate in any superposition of such values, and, in turn, process much larger pieces of information at a relatively faster pace.

Which companies are currently developing quantum computing capabilities?

At the forefront of the development of quantum computers lies Alphabet Inc.’s Google, Intel, IBM and Microsoft. 

Alphabet Inc.’s Google announced that the new Bristlecone quantum processor, with 72-qubits, can achieve ‘quantum supremacy’.

Intel, with its recently launched 49-qubit test chip, Tangle Lake, said that it ‘represents progress toward Intel’s goal of developing a complete-quantum computing system’

In May 2017, IBM Q, which was made accessible to researchers and developers in 2016, upgraded to have a 17-qubit processor, with Beta Access (IBM Q Experience) and SDK (Github).

Microsoft, in 2015, launched ‘Station Q’, a research lab that focuses on topological quantum computers. Whilst the progress of the station remained unknown for years, on the 25th of September 2017, Microsoft CEO Satya Nadella announced the launch of a new coding language and simulators for quantum computing.

Here are 7 areas within the financial services set to take full advantage of quantum computing:

  • Algorithmic trading
    • Through the use of algorithms, the introduction of quantum computers would give birth to high-frequency trading. Financial institutions would be able to take advantage of algorithms to automatically initiate stock trades according to pre-defined strategies.

 

  • Provide more insights into modern markets
    • The inherent randomness of quantum computers goes hand-in-hand with the arbitrary, stochastic nature of financial markets. Quantum computers would give investors the ability to evaluate the distribution of outcome under a multitude of scenarios, which are generated arbitrarily. 

 

  • Fraud Detection
    • Quantum computers can enhance pattern recognition algorithms to efficiently investigate and spot fraudulent activities, and, in turn, reduce the extent of data breaches.

 

  • Cryptocurrencies
    • The creation of quantum computers would mean that the otherwise unsafe public-key/private key of blockchains would become quantum safe. Quantum computers would be able to take any number of public keys and rapidly de-crypt to establish their private key counterparts.

 

  • Cryptography
    • Majority of online security operates on the complexity of factoring large numbers into primes. With the ability of quantum computers to exponentially factor such numbers into primes, they would efficiently strengthen online security compared to classical computers.

 

  • Artificial Intelligence
    • The ability of quantum computers to process large quantities of data means that they would provide artificial intelligence machines with the feedback required for them to improve their performance, and subsequently, shorten their learning curve. Such machines would be able to learn from experience and self-correct.

 

  • Supply chains, procurement and fleet operations
    • Quantum computers would be able to scan and quickly calculate optimal routes to enable efficient logistical scheduling and reduce the extent of traffic congestion, while also optimising air and ground traffic control.

 

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development