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Quantum Computing in Financial Services: Requirements, Applications and Expenditures

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  • June 2021
  • Region: Global
  • Inside Quantum Technology
  • ID: 5356096

This new report analyzes the opportunity for quantum computing in the financial services sector and forecasts its level of capital and service expenditures on quantum computing in the next five years. The publisher believes that this sector has the funds to support significant investment in quantum computing and also that there are abundant applications for quantum computing in financial services going forward. Some of the interviewees for this report were “frustrated” that their companies were not focusing sufficiently on the opportunities that they saw in quantum computers. Others thought their organizations were too distracted by the hype associated with quantum computing.

This report sorts out where quantum computing really sits as a future tool for the financial services industry. Here we note that many of the largest banks and other financial institutions already have substantial quantum computing teams in place. With this in mind, this report includes profiles of the internal quantum computing development work being done by 18 leading financial institutions comprising, ABN AMRO, Barclays, BBVA, BNP Paribas, CaixaBank, Citigroup, Commonwealth Bank of Australia, Goldman Sachs, HSBC, JPMorgan, Mizuho Financial Group, Mitsubishi Financial Group, NatWest, Nomura Securities, ScotiaBank, Standard Chartered, UBS and Wells Fargo.

While some credit card companies and insurance companies are also expressing interest, this report finds that it is banks that are publishing research and defining partnerships. Also, the key to this market is a handful of quantum computing firms that are focused specifically on the financial services sector. Many of these are also profiled in this report including QuantFi, JoS QUANTUM, Nordic, Quantum Computing Group (NQCG), Multiverse Computing, Quantum Mads, QC Ware and 1Qbit.

The report also discusses the many potential applications for quantum computing in the financial services industry that the publisher believes will become prominent in the coming years. These will include trade settlements, risk modeling, accelerating AI/ML, goals-based investment, portfolio construction, tax-loss harvesting, fraud detection, analytics-driven CRM, dynamic portfolio management, credit scoring, currency arbitrage, and derivative pricing. For each of these areas, we take a look at how quantum computing can add efficiencies and profitability to financial institutions.

As with other reports by the publisher, the forecasts for this report are included in a separate spreadsheet, enabling the reader to play “what if” games. The numbers presented here are based on the publisher's forecast models for the entire quantum technology market.

The report is based on both primary and secondary research. The primary research included interviews with leading financial institutions as well as on the ongoing interviews carried out by the publisher throughout the quantum technology sector and end-user base. The secondary research consists of reviews of both technical and business articles related to quantum computing as well as the websites of commercial firms and other organizations involved.

The publisher believes that quantum computing has the potential to disrupt financial services to the same degree that occurred with digital computing and high frequency trading in the past. We believe that this report will become required reading for marketing and business development executives at quantum computer companies and cloud vendors as well as managers in financial institutions themselves.

Table of Contents

Chapter One: Background to this Report
1.1 Executive Summary - Quantum Computing in Financial Services
1.1.1 Time to Put Business Ahead of Research
1.1.2 The Math is Out There, the Hardware is Not
1.1.3 Keep Your Options Open
1.2 Methodology of this Report
1.2.1 Forecasting Methodology
1.3 Plan of this Report
Chapter Two: Quantum Computing in Financial Services: Technologies, Opportunities and Challenges
2.1 Attitudes to Quantum in the Financial Services Industry
2.2 Changing Market and Deployment Patterns of Quantum Computing for Financial Services
2.2.1 Regulation and Quantum Computing Deployment
2.3 Emerging Potential Market Applications for Quantum Computing in Financial Services
2.3.1 Quantum Machine Learning
2.4 IT Aspects to Quantum Computing Deployment in Financial Services
2.4.1 Hardware Aspects
2.4.2 Software Aspects
2.4.3 Impact on coding of a probabilistic approach:
2.4.4 Challenges to Cloud Provisioning
2.4.5 Batch-like Nature of Quantum
2.5 Key Points from this Chapter
Chapter Three: Quantum Computing in Financial Services - Use Cases
3.1 Using Quantum Computing within Financial Services
3.2 Trade Settlements
3.2.1 High Frequency Trading (HFT)
3.3 Risk Modeling
3.4 Accelerating Artificial Intelligence/Machine Learning (AI/ML)
3.5 Goals-based Investment (Static) Portfolio Construction
3.6 Cybersecurity
3.7 Tax loss harvesting
3.8 Fraud detection
3.9 Analytics-Driven CRM
3.10 Dynamic Portfolio Management
3.11 Credit Scoring
3.12 Currency Arbitrage
3.13 Derivative Pricing
3.14 Key Points from this Chapter
Chapter Four: Quantum Computing in Financial Services - Activity
4.1 Participants
4.1.1 ABN AMRO
4.1.2 Barclays
4.1.3 BBVA
4.1.4 BNP Paribas
4.1.5 CaixaBank
4.1.6 Citigroup
4.1.7 Commonwealth Bank of Australia
4.1.8 Goldman Sachs
4.1.9 HSBC
4.1.10 JPMorgan
4.1.11 Mizuho Financial Group
4.1.12 Mitsubishi Financial Group
4.1.13 NatWest
4.1.14 Nomura Securities
4.1.15 ScotiaBank
4.1.16 Standard Chartered
4.1.17 UBS
4.1.18 Wells Fargo
4.2 Key Points from This Chapter
Chapter Five: Quantum Computing Vendors Serving the Finance Vertical
5.1 R&D Activity Overview
5.2 Vendors Focused on Financial Services
5.2.1 QuantFi
5.2.3 Nordic Quantum Computing Group (NQCG)
5.2.4 Multiverse Computing
5.2.5 Quantum Mads
5.2.6 CogniFrame
5.2.7 QC Ware
5.2.8 1Qbit
5.3 Ecosystem Vendors Supporting Financial Services Vertical
5.4 Key Points from This Chapter
List of Exhibits
Exhibit 1-1: Vendor Activities for Safely Crossing the Quantum Computing Chasm
Exhibit 2-1: Evolution of Quantum Computing in the Financial Services Sector
Exhibit 3-1: Use Case Timeframes for Quantum Computers in Financial Services
Exhibit 3-2: Common Derivative Types
Exhibit 4-1: SWOT for Quantum Computing in Financial Services
Exhibit 4-2: Barclays - Inhibitors to Full-Scale Quantum Computing
Exhibit 4-3: BBVA Use Cases and Alliances
Exhibit 5-1: QuantFi Use Cases
Exhibit 5-2: QC Ware Forge Cloud Hardware Options and Pricing
Exhibit 5-3: Ecosystem Vendors Offering Computer Stacks for Financial Services

Companies Mentioned

  • 1Qbit
  • Barclays
  • BBVA
  • BNP Paribas
  • CaixaBank
  • Citigroup
  • CogniFrame
  • Commonwealth Bank of Australia
  • Goldman Sachs
  • HSBC
  • JPMorgan
  • Mitsubishi Financial Group
  • Mizuho Financial Group
  • Multiverse Computing
  • NatWest
  • Nomura Securities
  • Nordic Quantum Computing Group (NQCG)
  • QC Ware
  • QuantFi
  • Quantum Mads
  • ScotiaBank
  • Standard Chartered
  • UBS
  • Wells Fargo