The financial services industry relies on complex probability calculations to perform a multitude of operations from pricing derivatives to seeding Monte Carlo simulations. These calculations are critical to minimizing risk and maximizing returns in volatile markets. Quantum computing promises to significantly reduce the computational time needed for these calculations.
This could save the industry billions in cost and lost profits due to current estimates that show financial intuitions lose $10-40 billion per year because of fraud and bad data management. In addition, it will offer more precise and accurate credit assessment, enabling more informed lending decisions. Quantum annealing techniques may also lead to more effective methods for portfolio optimization. And quantum machine learning will eliminate data blind spots, avoiding inaccurate assumptions about the markets that result in costly miscalculations.
While a full-scale fault-tolerant quantum computer may not become available for years, significant technical developments have already been underway. As a result, many business units within the industry can begin to reap value from quantum computing efforts even before fault-tolerant computers are available. The key is to start experimenting and building capabilities now, and then aligning those capabilities with business processes to accelerate integration when the technology becomes ready for production use.
To prepare for this quantum revolution, financial institutions should be actively building expertise in quantum computing and cryptography. This can be done by recruiting and training personnel, as well as through collaboration with external entities such as research institutes and technology vendors specializing in quantum computing. By engaging with these partners, financial institutions can gain insights into the latest research and technology advances, as well as play a role in shaping quantum standards and frameworks.