Although it will take years to achieve its full potential, quantum computing offers incredible benefits. Financial institutions should embrace the new paradigm.
By Jayant Tandon
Digital transformation is clearly the buzzword today, and in the financial services industry, it’s a critical prerequisite for being successful in a constantly evolving environment.
To stay competitive and stay ahead of the curve, financial institutions need to keep pace with industry-wide developments and leverage new digital technologies. One such technology that seems to be gaining importance in the financial services industry and is able to unlock digital potential and resolve operational bottlenecks is quantum computing.
Financial institutions can use quantum computing to achieve many business benefits, including optimizing existing processes and enabling efficient financial market analysis.
What is quantum computing?
Quantum computing is a technology that uses the principles of quantum mechanics to perform complex data operations. The devices that perform these quantum calculations are called quantum computers. They can perform complex arithmetic operations exponentially faster than conventional devices.
The calculations performed by conventional computers use bits to encode information – each bit has a value of 1 or 0. In quantum computers, information is stored in quantum bits, or qubits, which can have a binary value. In addition, these qubits can also reach a mixed state called superposition, in which they reach the values 1 and 0 at the same time.
By leveraging this capability, a quantum processor with a collection of qubits can contain exponentially more information than a processor with the same number of classic bits, allowing for much more complex problem solving.
Impact on financial services
Financial institutions can use quantum computing to achieve several business benefits, including streamlining existing processes, enabling efficient financial market analysis, and ensuring effective risk management and portfolio optimization.
Financial institutions that use quantum computing, in particular, can leverage data-driven analysis from large and unstructured data sets to gain more accurate insights, make smarter decisions, and improve customer service.
In addition, quantum computing can also help financial institutions protect their customers’ financial information, improve cybersecurity, contain fraud, increase transaction speeds, and reduce operating costs.
Preparing for a quantum financial future
The introduction of quantum computing is potentially groundbreaking, but is still in the early stages of introduction due to the mystery surrounding its computing power. In addition, a number of restrictions limit the current utility of quantum computers.
The qubits in quantum processors have a short shelf life and are subject to high error rates due to a phenomenon known as quantum decoherence. In addition, the use of quantum computing on a large scale requires hardware with an ideal acquisition capacity of one million qubits.
Hence, quantum computers need to be resilient and able to solve an effective error correction. This means that it will probably take a few more years before functional quantum computers can be built.
Although it can take several years for quantum computing to be institutionalized, companies invest significant amounts of time and resources in accelerating the process of developing commercially available quantum computing technology.
As financial institutions begin to gain access to the hardware needed to develop quantum algorithms, it is time to build skills, knowledge, and understanding of quantum computing and to work with partners to explore potential business applications and the risks associated with quantum computing .
Quantum computing represents the future and opens up enormous opportunities for financial institutions to meet computing and business needs that would otherwise be difficult to solve using traditional methods. With quantum computing, banks and asset managers could quickly and accurately assess risks, optimize portfolios, manage securities and protect customers.
Quantum computing is potentially breakthrough, but it’s still in its infancy due to the mystery surrounding its computing power.
Building a quantum computer that surpasses classical computers is a daunting task that can take some time to fully implement. However, financial institutions that proactively adapt and embrace this new paradigm will be prepared to stay one step ahead of the competition.
Tandon is Head of Banking Excellence at Newgen Software