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Uses of Quantum computing in Finance
Quantum computing technology leverages the power of superposition. This phenomenon happens at the subatomic level, where objects have no defined state.
This occurrence in turn is used to quicken computers speed a lot. This is something the business world desires to take advantage of.
Quantum computing used to be considered Science Fiction talk not so long ago. Today, many companies including financial ones, are investing in Quantum infrastructures.
Quantum is usually mentioned together with new technologies in Physics, medicine and Science.
However, Finance and Economics are also candidates for quantum technologies implementation.
The financial sector is considered to be a top candidate to receive an enhancement using Quantum Financial Technology.
The use of large amount of data due to the digital economy, the need to measure risks and to optimize asset allocations, make the financial sector a good candidate to move to Quantum Computing.
Even though quantum in Finance is still a concept in research and it is in modeling status, it is progressing.
Some institutions are getting into the action now before it becomes the new financial infrastructure.
Some of the major banks funding quantum finance technology include JP Morgan Chase and HSBC among others.
The applications of this technology in Banking touches everyday processes such as the movement of funds and the forecasting of financial models with more certainty.
Measurements and probabilities with accuracy and speed are some of the benefits for institutions using this technology.
Quantum supremacy is something Google, IBM and other tech companies are reaching for in the near future. According to Google, it’s quantum computer Sycamore was able to perform a problem in 200 seconds that will take a traditional computer 10,000 years to do.
Uses of Quantum Financial Computers
Why quantum systems for financial institutions.
A quantum financial system will double the power of more traditional computer system at exponential speed.
This feature is a benefit for calculating or measuring very large amounts of data and transactions handled by financial institutions.
Financial institutions can use quantum financial computers to better target customers for more specific services.
These computers can discover patterns and classify data coming from large pools of information better than traditional computers.
The Banking System sustains payments fraud quantifiable in the billions of Dollars annually.
The current infrastructure is not that capable of preventing much of this fraud using traditional computers.
Quantum Financial Computers’ speed can provide solutions to the problem of payments fraud.
Investment Banking and Portfolio Management
Investment banking’s core processes include quantification of large data and its measurements.
Some of the processes that quantum algorithms can improve include;
- Enhance trade settlements
- Improve investments diversification
- Adjust investments according to market conditions
- Optimize risk analysis beyond traditional methods
- Maximize portfolio returns
Development of Quantum Financial systems
This technology is not fully completed yet, but companies in the financial sector are not waiting for final development to participate and to influence its future implementation.
The financial sector is doing early adoption of quantum technologies.
There has been some progress made in quantum financial systems. So far, Quantum algorithms have been able to solve portfolio optimizations and financial fraud problems among other activities.
Quantum computing has not been totally deployed yet, but its market value is expected to grow to $65 Billion on the upper end of estimates by 2030.
Banks Participating In Quantum Finance
There are already a few national and international banks participating in the development of quantum financial systems.
These institutions are funding and participating in research and development of new algorithms using quantum technology.
These are some of the major banks that have built a quantum program.
- JP Morgan Chase
- Wells Fargo
Investing In Quantum Computing
After decades in the making, quantum’s long term possibilities are attracting investment bankers and individual investors.
For individual investors looking to invest in quantum computing there are choices, including stocks and Exchange Traded Funds.
These companies shares are listed on major stock exchanges like the NY Stock Exchange and Nasdaq.
There are some pure quantum plays that may be risky at this point because of their unproven track record.
However, some traditional technology companies are getting quantum computer exposure. Here are some of these companies.
- Honey Well
- Defiance Quantum ETF
This is not investment advice, these companies are mentioned for education purpose only.
Quantum computing is still in early development, but it is progressing and picking up pace. The financial sector is making a bet on quantum finance technology to improve many of its operations and is an early adopter with funding.
As the digital economy grows, it is expected that this technology will be adopted by industries ranging from finance and retail to aerospace.
Quantum computers are becoming more affordable and with the promise of speed, it may be a key technology in the coming years.