Quantum Motion and Goldman Sachs make a quantum leap in finance

UK-based quantum computing scale-up Quantum Motion has joined forces with global investment bank Goldman Sachs to explore the innovative applications of quantum computing in the financial services industry. Their research, now published on the preprint server arXiv, showcases a quantum algorithm designed to enhance the speed and accuracy of options pricing – a critical and notoriously complex function in modern finance.

Options pricing, which relies on variable market dynamics, volatility, and time sensitivity, has long been a challenge for classical computers. Traditional systems often struggle to process large amounts of data quickly or explore the vast number of possible scenarios required for accurate pricing. This is where quantum computing holds the potential to make a significant difference.

“People often don’t realise that even though quantum computers may sound like magic, in reality it’s not enough to have just any machine,” explains Simon Benjamin, Chief Strategy Officer at Quantum Motion. “To have a real impact in sectors such as finance and pharmaceuticals, which involve exploring a huge space of possibilities and demand accuracy, quantum computers need to have a large number of qubits available at once, and all of them capable of fast operations.”

Quantum Motion and Goldman Sachs have developed an efficient quantum algorithm that can handle the intricate multi-qubit operations essential for advanced options pricing calculations. By dividing the complex algorithms into smaller, parallel tasks, the team has been able to maximise qubit usage and dramatically reduce the time required to run the computations – a critical factor for time-sensitive financial applications.

“The strategy at Quantum Motion is to deliver a scalable, integrated quantum architecture capable of building systems of sizes yielding real value,” says James Palles-Dimmock, CEO of Quantum Motion. “Working alongside end-users, such as Goldman Sachs, enables our researchers to understand the quantum hardware requirements, often stretching to many millions of physical qubits, that are needed to run quantum algorithms that can provide transformative benefits for business.”

The collaboration’s research has also highlighted the broader potential of quantum computing in fields beyond finance. The algorithm design explores the simulation of Coulomb potentials, a capability that holds promise for applications in chemistry and materials science, where understanding molecular interactions is crucial for developing new materials.

“The collaboration has focused on optimising quantum software for use on hardware with limited qubit counts, a common constraint in current quantum systems,” explains the research paper. “Quantum Motion’s approach involves dividing algorithms into smaller, parallel tasks, maximising qubit usage and reducing calculation time. This method could provide the response times necessary for practical applications in time-sensitive fields like finance.”

As the financial services industry continues to grapple with the complexities of options pricing, the partnership between Quantum Motion and Goldman Sachs offers a glimpse into a future where quantum computing could transform the way risk is assessed and value is delivered to clients. With the successful development of this quantum options pricing algorithm, the industry may be on the cusp of a quantum-powered transformation.

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