Quantum Poised to Transform Financial Services Industry: Q&A

Quantum computing is poised to change the way financial services industry (FSI) organizations operate, supporting improved fraud detection, risk analysis, liquidity optimization and more.

A new report from Deloitte, Financial Services Industry Market Research: Market Analysis of Quantum Computing Use Cases, highlights the importance of FSI organizations understanding and preparing for a quantum-driven future.

It investigates why, while still currently in its infancy, quantum can potentially address complex FSI problems. It ranks the top use case classes, explaining how quantum could support and improve them. 

The top classes studied in the report are derivative pricing, liquidity optimization, portfolio optimization, risk analysis, supervised anomaly detection and unsupervised anomaly detection.

In this Q&A, Deloitte’s global quantum computing leader, Scott Buchholz, discusses how quantum computing will impact FSI, and how leaders are looking for opportunity.

Enter Quantum: Until recently, FSI as a whole has been discussed as an application for quantum computing. How has awareness and technology evolved to the point that executives are now considering more specific use cases?

Scott Buchholz: Some of the largest banks have been investing significantly in quantum for years, which means that a lot of the other banks and insurers and others have been asking, should we be involved?

Related:Quantum Computing’s Impact on the Workforce

Part of the idea behind the report was to help provide some detailed analysis behind those things. Part of the challenge is, if you're saying Mr. Banker, Mrs. Banker, you should replace your existing technology with new technology, then the new technology has to be cheaper, faster, better or some combination thereof.

It hasn't been clear what we should expect on the cheaper, faster, better dimension when we were talking about quantum systems. If you think about it from a return on investment perspective, you have to know what is the current thing and how much better is the new thing. That was what we were trying to quantify in this report.

For the report, you looked at 50 use cases and ranked them for factors including impact and their feasibility. What process did you use?

We asked internal and external experts what things we should be looking at and talking about. We realized some were the same things with slightly different names, so we reduced that down to a smaller set.

We then used a set of weighted criteria to measure each one against. What is the likelihood we think that we can do this better than today? What is the potential market size for actually doing it right? How many organizations is this going to impact? Then we ranked them and did some deep analysis for the top five.

For the feasibility element, did you look at current or near-future quantum capabilities?

We looked at the current state of the art as we know it today but with quantum, you have to squint a little bit forward. There are problems where a quantum algorithm exists but needs to scale to be practical.

Some problems, when you go from 1,000 to a million factors, they take 1,000 times longer to solve. Others take the lifetime of the universe longer. We can look at the patterns of, as you add more things in, how much longer they take. And some of the quantum algorithms are going to beat the classical ones at when the hardware is available. We’re looking at the direction things are going.

What is it about FSI that makes it particularly good candidate for quantum?

It’s partially that time is money in financial services and they're willing to pay money to make more money. The nice thing about financial services from an adoption perspective is when you have a technique that can help an organization, make or save more money, they tend to be very quick adopters.

Life sciences or computational chemistry is a much more complex space than FSI and there's in more reluctance to try to move into new things, because they aren't always obviously better. “I'm very comfortable with how the lab works. I'm comfortable with how my testing works. Doing it digitally isn't as comfortable.” Whereas FSI is all digital