JPMorgan Chase, Wells Fargo, Citigroup and HSBC are among the banks testing quantum computing's ability to speed up applications, to alleviate bottlenecks, to protect digital assets and to use high-performance computing without ramping up energy consumption. They believe this will give them a competitive advantage when the technology is available for everyday use.
"I think this is a crucial time," said Marco Pistoia, head of global technology applied research at JPMorgan Chase. "It's critical at this point to invest in building a quantum team. Quantum computing is still in the R&D phase, as quantum computers are not yet powerful enough to be usable in production. However, it's important to become quantum-ready now."
On Thursday, HSBC said it has piloted the first application of quantum-secure technology, to protect its platform for buying and selling tokenized physical gold, from
"I think we've reached that point in quantum where we're no longer high priests of an esoteric technology," said Bob Sorensen, senior vice president of research at Hyperion Research, at the HPC + AI on Wall Street conference last week. "The sector is starting to transition into a more general purpose, generally acceptable kind of activity."
Quantum computing is like a helicopter. Classical computing is like a car," says Wells Fargo technology fellow Constantin Gonciulea. "A helicopter can do a lot of things a car can't do, but if you want to get groceries, you're not going to use a helicopter.
Challenges remain, and some of the work bank researchers and software developers are doing is to understand and address the downsides as well as the potential benefits of quantum.
Quantum computing uses the principles of quantum mechanics, the science that explains how very small particles like atoms and photons behave, to perform certain types of calculations much faster than traditional computers. Classical computers use bits (0s and 1s), while quantum computers use qubits, which can represent multiple states at once. Classical computers process one calculation at a time, while quantum computers can process many possible calculations in parallel due to superposition. Quantum computing is faster at solving specific, complex problems that would take classical computers an impractically long time.
"Quantum computing is like a helicopter," said Constantin Gonciulea, a technology fellow at Wells Fargo working on emerging technologies like quantum computing and blockchain, in a
Meeting a need for speed
One reason the financial services industry may benefit more from quantum computing than some other industries is because of its need for speed, Pistoia said.
"A pharmaceutical company may have the luxury to wait three days to complete a computation," he said. "We cannot do that in a financial institution. We need results in real time, because the market is so volatile, it changes so quickly that we cannot afford to spend three days to optimize a portfolio or deliver a derivative pricing or risk analysis result."
In June, the bank and Quantinuum demonstrated the use of a quantum computer handling a random circuit sampling problem, a computational task that involves sampling from the probability distribution of outcomes for a given quantum circuit. According to the two companies, the Quantinuum machine performed 100 times faster than Google's Sycamore quantum computer did in 2019 when it completed a task in 200 seconds that would take a state-of-the-art supercomputer 10,000 years to finish.
Pistoia joined the bank in January 2020; before that, he was at IBM. When he was interviewing at the bank five years ago, "it was still debatable whether or not quantum would eventually succeed," he said.
"Many companies didn't want to take the risk of building a team for working on quantum computing: What if this doesn't work? What if it works 20 years from now? But I think J.P. Morgan is a company that has courage and vision. So they decided that it was the right thing to do," Pistoia said.
Use cases
Portfolio optimization, the process of selecting the optimal mix of assets, such as stocks, bonds, and other financial instruments, to achieve the highest returns for a given level of risk, is a popular potential use case for quantum in banking. In February, Citi partnered with an Israeli startup, Classiq, to test the use of a quantum algorithm called Quantum Approximate Optimization Algorithm for portfolio optimization. JPMorgan Chase and Wells Fargo have conducted similar tests.
Another use case the JPMorgan Chase quantum team is working on is quantum key distribution, a method for exchanging encryption keys that is resistant to quantum computing attacks.
Often, Pistoia's team addresses bottlenecks that are presented to them by the business side. They will examine these applications in detail, figure out where the problem is and decide whether it's a candidate for quantum computing. If it is, they will build a quantum algorithm.
HSBC is using Quantinuum's quantum randomness technology to protect digital assets such as HSBC gold tokens from a quantum computing attack. The bank hopes to prevent "store now, decrypt-later" cyber incidents, where thieves steal sensitive data now and store it, in the hopes of deciphering it later using quantum computers.
Pain points: Integration and recruitment
Integration of quantum computing with existing technology infrastructure will be a pain point to adoption, Pistoia said.
"The reason is that quantum computing is a very disruptive technology in the sense that it requires specialized knowledge and also, you cannot take a classical algorithm and make it run somehow on a quantum computer," he said. "You have to throw away everything that you did classically and reimplement it in a completely different way."
Another challenge is hiring quantum experts, Pistoia said. People who have doctorates in the field are likely to gravitate toward technology companies, he said.
At JPMorgan Chase, "I think the perception has changed now, because of the work that we have published," Pistoia said. His team has published research in journals and presented it at conferences. They have also received several patents.
"Now we can actually attract very good talent," he said.
It's crucial to build a team, even if it's a small one, Pistoia said.
"Quantum computing cannot be easily outsourced," he said. "If you are a company, you cannot outsource it because then what is your competitive advantage against the rest of the ecosystem? If you are outsourcing it, then you're basically sharing the knowledge of your algorithms with a lot of other companies, so there is no advantage anymore."
Rajeeb Hazra, CEO of Quantinuum, unsurprisingly urges industry leaders to move forward with quantum computing.
"This is the time to try it," he said. "You've got to be bold, you've got to try, you've got to fail, you've got to have patience."
