Quantum computing is rapidly becoming a tangible reality with far-reaching implications for the financial sector. This groundbreaking technology promises to solve complex financial problems much faster than classical computers while also changing how banks approach security, transactions and decision-making. Jean-Charles Cabelguen, head of quantum adoption and impact at Pasqal, described quantum computing as "the next generation of high-performance computing." He envisions its integration into high-performance computing centres, making it a core component of future computational infrastructure. This technology is particularly relevant for portfolio optimisation, risk assessment and high-frequency trading. Quantum computing can redefine financial analysis Tomoyuki Nii, director and executive officer at SBI Investment, explained that qubits can "solve complicated problems or calculations quickly," surpassing even supercomputers. At the heart of quantum computing's promise lies the fundamental difference between classical and quantum computing. Unlike classical computers that rely on bits representing zero or one, quantum computers can leverage "qubits," which can represent zero, one or a combination of both simultaneously. This allows quantum computers to explore a vast number of possibilities concurrently and solve problems that are impossible for current computers to solve. This has profound implications for the banking industry, which relies heavily on complex calculations and data analysis. Many financial problems, such as portfolio optimisation, risk modelling, and fraud detection, involve exploring multiple combinations to find the optimal solution. For instance, a bank may need to choose the best combination of 100 assets from a pool of 5,000. A classical computer might take weeks or even months to evaluate all the possibilities. A quantum computer, however, could find the optimal portfolio in a matter of hours or even minutes. Cabelguen also highlighted quantum computing’s suitability for handling graph-based problems, which are prevalent in financial modelling. Many financial models and artificial intelligence (AI) applications rely on graph structures to represent relationships and dependencies, making quantum computing ideal for network analysis and customer relationship management. Cybersecurity threats posed by quantum computing Despite its benefits, quantum computing presents significant challenges, particularly in cybersecurity. Cabelguen warned that as quantum capabilities advance, they may “in the future decrypt data that are today considered extremely secure." Cybercriminals are already engaging in a practice called “harvest now, decrypt later,” wherein they steal encrypted data today with the expectation that quantum computers will eventually break it. The implications for financial institutions are profound, as sensitive data and transactions could be at risk. Cabelguen emphasised the importance of leveraging quantum-resistant encryption to safeguard financial systems before quantum decryption becomes a reality. Quantum supremacy, the point at which quantum computers can solve problems that are impossible for even the most powerful classical computers, is rapidly approaching. Nii estimates a "50% probability in five years," while Cabelguen believes some specific applications could achieve a "small quantum advantage in two or three years." He stressed that instead of focusing on theoretical benchmarks, banks must prioritise solving real industry problems. Financial institutions leading the quantum charge Recognising the transformative potential and challenges of quantum computing, leading global banks and fintech companies are already investing in quantum research and pilot projects. SBI Investment's investment in Oxford Quantum Circuits exemplifies this trend. Nii underscored that companies providing quantum computing, such as Oxford Quantum Circuits, prioritise speed through a “superconducting modality”. This method of creating qubits using superconducting materials is significantly faster than other approaches. Speed is a crucial advantage in banking applications like trading, wherein transactions must be completed instantly. “If you are using quantum computing for trading, the execution has to be instantaneous,” said Nii. Oxford Quantum Circuits is already conducting workshops with major Japanese banks, including SMBC and Sumitomo Mitsui Trust Bank, to explore potential use cases. These collaborations highlight why strategic partnerships are essential. The complexity of quantum computing requires a collaborative approach. Cabelguen said that entering the quantum computing market is challenging and requires significant expertise and resources that fintech firms are well-positioned to provide. Balancing the cost and benefits of quantum computing Financial institutions must also weigh the financial burden of quantum computing. While the technology offers game-changing capabilities, it comes at a significant price. “Quantum computing is expensive and costs up to $50 or $100 million,” said Nii. Banks should then adopt a strategic approach. Nii advised against blindly investing in the technology but warned against ignoring it. Instead, he recommended leveraging "Quantum as a Service" (QaaS) offerings, which allow banks to gain practical experience with quantum technologies without committing to large-scale purchases. This phased approach, starting with proofs-of-concept, lets banks explore potential use cases and build internal expertise before making significant investments. Cabelguen also pointed out quantum computing’s potential for long-term savings and sustainability. "A single quantum computer at Pasqal consumes just 10 kilowatts of power," he said, comparing it to the energy consumption of a few hair dryers. In contrast, traditional high-performance computing centres, like Elon Musk's latest high-performance computing (HPC) centre with 200,000 graphics processing units (GPUs), consume enormous amounts of energy. In addition to cost and efficiency, financial institutions must prepare for post-quantum cryptography which uses encryption techniques that are resistant to attacks from both classical and quantum computers. Quantum research will be essential in identifying high-value use cases for banks. At the same time, Cabelguen cautioned that regulatory monitoring will be critical, as quantum computing could become a “computational weapon” in the wrong hands. Preparing for a quantum-powered financial future The quantum revolution in finance is fast approaching, demanding immediate and strategic action from banking leaders. With its unprecedented computational power and the potential for significant cost reductions, quantum computing presents both a significant opportunity and a formidable challenge for financial institutions. The QaaS model provides an avenue for banks to identify high-impact use cases. By launching pilot projects in key areas such as risk modelling, fraud detection and portfolio optimisation, banks can build early expertise and position themselves for the quantum future. At the same time, banks must assess their cryptographic vulnerabilities. With Quantum supremacy fast approaching, financial institutions must prepare for a future where today’s encryption standards become obsolete. In August 2024, the National Institute of Standards and Technology released encryption standards designed to withstand attacks from quantum computers. Delaying the implementation of quantum-resistant security measures could expose banks to breaches in customer data or transaction integrity. The ability to adapt to and leverage quantum capabilities will distinguish the leaders from the laggards. As quantum-powered financial services take shape, ranging from ultra-fast trade execution to next-generation AI-driven assessments, early adopters will gain a decisive advantage. Financial institutions that take action now will be best positioned to unlock the transformative power of quantum computing, gaining a competitive edge in the rapidly evolving world of finance.
