Quantum computer speed and power is moving to have a profound impact on the financial industry. As banks begin to embrace quantum computing, potential use cases for the banking industry are emerging such as CaixaBank and its quantum banking program.
Dr Dario Gil, Senior VP and Director of Research at IBM says the quantum business advantage is where they consistently outperform conventional computers on problems that are useful for companies. In banking the potential is enormous and closer than you may think.
Since 2018 for example, Spain’s CaixaBank identified areas including
- overall risk assessment and tail risk simulators
- fraud detection with artificial intelligence and machine learning
- quantum safe cryptography
- portfolio selection and allocation
- data mining optimization
The bank has worked with IBM, Xanadu, QUSIDE Technologies and Institute of Phototonic Sciences.
One partnership involved using a quantum algorithm capable of assessing the financial risk of two portfolios, one consisting of mortgages and the other treasury bills. Unlike traditional methods needing thousands or millions of simulations, it reached the same conclusions as using a few dozen.
The speed advantage results in cost savings in compute time, and faster more accurate risk management.
Derivative application could mean instead of needing several hours to price complex products for customers, it’s done in real time.
CaixaBank’s life insurance and pensions’ subsidiary VidaCaixa is working with Canadian D-Wave Systems.
Banks have applied quantum computing to investment portfolio hedging calculations in the insurance sector.
Multiverse Computing says banks can already get a 100-fold advantage by using quantum technology to solve narrow problems such as portfolio optimization and fraud detections.