Banks can’t wait for quantum advantage to start preparing for the quantum

When quantum computing technology arrives in full force, it will create as big a reversal of our established systems as the advent of Generative AI. Some of these reversals will make banking jobs much easier, as quantum computers have the ability to accomplish in seconds tasks that would take a classic supercomputer thousands of years.

For example, quantum algorithms will allow the application of combinatorial optimisation to portfolio optimisation; currently one of the major bottlenecks when it comes to predicting assets. Applying combinatorial optimisation to investments involves a level of complexity that is a truly insolvable problem for supercomputers, which are unable to progress beyond a certain number of variables.

However, quantum computing also carries some alarming risks for the banking industry. There are well-publicised fears that bad actors will be able to apply quantum algorithms to RSA-2048 and thereby easily crack all the passwords currently used to secure the majority of financial information and assets, and tamper with digital signatures, effectively destroying cybersecurity.

According to some recent reports this is already possible, raising alarm bells that any digital data that has not been quantum encrypted is now vulnerable.

Despite this, we are still hearing many C-suite banking executives saying that there’s no point in rushing to prepare now, as a functional quantum computer does not yet exist. This is not actually true; six companies including IBM and Toshiba have now built reliable quantum computers. What is true is that banks are unlikely to own their own quantum computer this decade. However, we expect that in the next 12-24 months banks will start to licence quantum algorithms together with cloud-based access to a quantum computer.

The Rubicon of quantum advantage

Banking executives also routinely argue that the Rubicon of quantum advantage – meaning that a quantum computer has outperformed a classic supercomputer – will not be crossed for 5-10 years. However, start-ups actually working on quantum algorithms say they expect to reach quantum advantage within 12 months. The breaking of the quantum advantage barrier is not, however, a stark line that once crossed will launch us into the quantum future. It a diffuse region that will be explored by claims, counterclaims, refutations and refinements of the technology.