Quantum computing is on the way: Are financial services institutions ready?
Protiviti recently teamed with our partner Chicago Quantum Exchange (CQE) to host a half-day workshop for technology executives from seven leading financial institutions with a simple but cutting-edge goal in mind: discuss use cases for quantum computing in the financial services industry (FSI). Quantum computing is rapidly developing and is expected to completely disrupt certain industries, particularly financial services, while simultaneously solving problems not possible to tackle with classical computing.
Our workshop explored 15 FSI use cases that detailed the realm of possibilities quantum computing can deliver, from near-term proofs of concept (PoCs) to the applications that will change the world by 2023. The discussions and conclusions reached by the attendees made for a stimulating day. Perhaps most importantly, attendees recognized that the opportunity to gain a true quantum advantage is not far away, so planning now is essential.
We’ll look at details of those use cases in a future blog or two. In this post, we’d like to share some surprising results from one exercise from that day. We asked participants: “How is the financial services market positioned to take advantage of quantum computing?” The discussion yielded many ideas – both positive and negative – around implementing quantum. While these were FSI leaders, many of the benefits and challenges they identified will likely also affect other industries. We grouped the brainstormed responses into topics and themes. Some groupings included hopes and concerns (some only concerns), but all provide a glimpse of how we’re marching into the post-quantum era with eyes wide open.
Applications and ability
This topic generated the day’s most lively conversations, and the most positives. As one attendee said, “there is no shortage of data or problems to solve.”
Financial services institutions are in an excellent position to invest capital for research and development (R&D), and the goals for research will be easy to define. Most future-use cases will be all about doing something we used to do on classical systems either faster or cheaper (or both) on quantum machines.
Several attendees did question whether it was wise to spend a considerable sum of R&D money to potentially end up with many dead ends. Another fear was spending to create a solution that financial firms cannot protect from copycats. Is it better to be a “fast follower” than to invest in this type of IP?
Being compliant can mean a great many things. For example, numerous attendees brought up having to deal with difficult questions about the “explainability” of classical machine learning (ML). Will quantum algorithms for ML add more transparency, or make it even more difficult to explain why a program turns down a particular loan or why a transaction is declared fraudulent? We don’t know the answer yet but are working on finding it.
To benefit from quantum, an organization must be able to use it. Third-party regulatory bodies usually demand that firms demonstrate they have strong controls when they implement new technologies and are innovating in a responsible manner. “Explainability” might also define the challenge FSI companies will face in the boardroom when pitching quantum computing.
Financial institutions also worry about public opinion. Will there be any negative perceptions about using quantum computing? Not likely, as quantum is only going to grow in public awareness and acceptance. It may be that claiming a particular type of gained edge from this technology will make a financial brand seem more forward-thinking and desirable, especially if the edge comes in the form of better returns for investors.
Workshop participants expressed concerns that their customers might be hesitant to any type of adaptation they would need to make on their end, although we believe this is not likely to be a barrier to acceptance. Quantum computing is a deep back-end technology that would appear seamless to consumers, similar to running in the cloud. For example, consumers do not have to change behavior depending on which cloud provider their bank uses – they simply log onto bankname.com, unaware of whether the system is running on AWS or Azure.
Of course, some customers might experience a fear of the unknown. It is, admittedly, difficult to predict how people will react to new technology, especially if they are the first to experience it.
Workshop participants identified several types of concerns about resources. Getting access to quantum computing technology is a leading issue. This technology is very expensive and difficult to develop and maintain, although cloud computing models will help make it more accessible. When a quantum computer is powerful enough to claim supremacy at an application with real-world benefit, it may be just that: a single quantum computer. Even with cloud access, will financial institutions be able to get short enough queue times to make accessing such a machine worth it? If quantum computing can run an 8-hour job in 15 minutes, but there is a two-day wait to run it, is there an advantage to be gained? There might be bottlenecks at first.
Another resource concern is talent. Who will code these applications? Financial institutions realize the need to ramp up the search for quantum talent. We discussed how some types of developers might find it easier than others to make the shift to quantum — ML coders, for example. Not many professionals currently have quantum computing backgrounds or experience, and it is likely many organizations will be fighting over the same resources. It may be worth doing outreach to universities to encourage future developers to take quantum classes. Having a long-term strategy for quantum talent acquisition could become a strategic differentiator.
Budgets, of course, are a critical resource concern. Will the organization be able to justify the investment in quantum computing? Will the board and shareholders support the investment in this new unproven technology? While this is a reasonable concern, one could argue no organization can afford not to invest in quantum computing. There is a risk that those who do not invest in quantum could find themselves disrupted in their industry and, ultimately, out of business.
Current state of tech and process
It is no secret that most financial institutions will access quantum computers via the cloud. As a result, these companies will need to move critical processes to the cloud to achieve a quantum edge. Interestingly, a few significant financial players do their most critical classical operations exclusively on-premises, which is an important non-quantum hurdle to overcome. FinTechs may be the first to embrace quantum because they already have both the infrastructure and mindset to be on the cutting edge.
The ecosystem is attractive to all financials, though. All participants agreed that, in addition to providing an edge or supremacy, quantum computing could one day reduce energy costs and maybe even lead to a safer infrastructure, if we get the security of this new era of IT just right.
What to do now?
This workshop showed that, while there are tremendous potential benefits to quantum computing, there are also fears which must be acknowledged and dealt with. Organizations should think about their own potential use cases and the advantages quantum computing could bring to their business. They should also socialize the concepts of quantum computing with their key leaders and document the concerns and risks raised. The organization should work through those concerns and develop an agreed-upon road map to the implementation and application of quantum computing.
Everyone agrees this is a multi-year journey. Organizations will proceed on the journey at their own pace. But ignoring the risk of being late on quantum computing could be the end of the business. Because potential benefits are so great and the power of quantum computing so awesome, organizations must make well-informed, balanced decisions regarding the timeline and key milestones in their quantum journey.