Digital transformation is unequivocally the buzzword today, and in the financial services industry, it is a critical imperative to succeed in an ever-evolving environment.
In order to stay competitive and ahead of the curve, financial institutions must keep pace with industry-wide developments and embrace new-age digital technologies. One such technology that seems to be gaining traction in the financial services industry and has the capacity to unlock digital potential and resolve operational bottle necks is quantum computing.
Financial institutions can leverage quantum computing to reap many business benefits, including streamlining existing processes and enabling efficient financial market analysis.
What is quantum computing?
Quantum computing is a technology that harnesses the principles of quantum mechanics to carry out complex data operations. The devices that perform these quantum computations are called quantum computers. They can perform complex computational operations exponentially faster than traditional devices.
The computations performed by traditional computers use bits to encode information – each bit having a value of either 1 or 0. In quantum computers, information is stored in quantum bits, or qubits, which can have a binary value. Furthermore, these qubits can also achieve a mixed state, called superposition wherein they achieve the values of 1 and 0 simultaneously.
By harnessing this capability, a quantum processor with a collection of qubits can contain exponentially more information than a processor with the same number of classical bits, thereby allowing for far more complex problem-solving.
Implications for financial services
Financial institutions can leverage quantum computing to reap several business benefits, including streamlining existing processes, enabling efficient financial market analysis, and ensuring effective risk management and portfolio optimisation.
In particular, financial institutions leveraging quantum computing can utilise data-driven analytics from large and unstructured data sets to gain sharper insights, make smarter decisions, and improve customer service.
Additionally, quantum computing can also help financial institutions to safeguard customers’ financial data, enhance cybersecurity, mitigate fraud, increase transactional speeds, and reduce operational costs.
Preparing for a quantum financial future
The arrival of quantum computing is potentially game-changing, but it is still in the nascent stages of adoption due to the mystery surrounding its power of computing. Additionally, a number of restrictions impose limits on the current utility of quantum computers.
The qubits in quantum processors have a short shelf life, due to a phenomenon known as quantum decoherence, and are subject to high error rates. Also, leveraging quantum computing at scale requires hardware with an ideal collection capacity of one million qubits.
As a result, quantum computers will need to be resilient and able to solve effective error correction. This means it will probably be a few years before functional quantum computers can be built.
While it may take several years for quantum computing to be institutionalised, organisations are investing huge amounts of time and resources to fast-track the process of developing commercially accessible quantum computing technology.
With financial institutions starting to gain access to the hardware necessary for developing quantum algorithms, it is the right time to start building skills, knowledge, and an understanding of quantum computing, and to begin collaborating with partners to explore potential business applications and the risks surrounding quantum computing.
Quantum computing represents the future, opening up vast possibilities for financial institutions to meet data computing and business needs that might otherwise be difficult to resolve through traditional methods. With quantum computing, banks and assets managers would be able to quickly and accurately assess risks, optimise portfolios, manage securities and safeguard customers.
Quantum computing is potentially game-changing, but it is still in the nascent stages of adoption due to the mystery surrounding its power of computing.
Building a quantum computer that outperforms classical computers is a formidable task that may take time to be fully implemented. However, financial institutions that proactively adapt and embrace this new paradigm will be primed to stay ahead of the competition.
By Jayant Tandon, Head of Banking Excellence, Newgen Software