WEF: Quantum technology's $622 bn opportunity could transform banking and finance

Quantum technology is on the brink of transforming industries by tackling intricate challenges in computing, sensing, and communication, with the financial services sector being a significant focus. According to a recent report by McKinsey Digital, the application of quantum computing in finance could yield a staggering $622 billion in value by 2035. This anticipated growth is supported by insights shared in the World Economic Forum’s latest Quantum Technologies report, highlighting the increasing relevance of quantum innovations for both public and private sector leaders. Despite the futuristic allure of quantum breakthroughs, financial institutions are actively pursuing practical applications. The potential of quantum technology is recognized as a significant game-changer in areas like enhancing investment returns and protecting digital assets against emerging cyber threats. The report emphasizes quantum computing as a key frontier, with banks investigating new methods to tackle problems beyond the capabilities of traditional machines. For example, Yapı Kredi bank in Turkey has utilized quantum computing to scrutinize its network of small and medium-sized business clients, identifying vulnerabilities that could lead to widespread financial distress. This type of intricate analysis, which would typically take years, was significantly expedited by D-Wave’s quantum technology. The insights gained from this analysis enable banks to uncover hidden risks and manage credit exposure more effectively—an essential advantage in unpredictable markets. Similarly, Italian bank Intesa Sanpaolo is exploring quantum computing to enhance its fraud detection processes. On another front, while quantum sensing is still emerging, its potential in finance is becoming evident through ultra-precise timekeeping solutions. High-frequency trading, where timing is everything, increasingly requires exceptionally accurate clocks. Quantum optical atomic clocks can now achieve timing precision that surpasses current standards by a hundredfold. Notably, a commercial quantum clock named Tiqker was recently installed at the University of Strathclyde in the UK, contributing to the development of a robust national timing infrastructure. For financial markets, these technological advancements could enhance the sequencing and verification of trades, promoting greater transparency and compliance as trading volumes rise. A critical area of focus is quantum security and communication. As quantum computers advance, they pose a risk of breaking existing encryption methods that safeguard financial data. To counter this threat, HSBC has incorporated quantum-safe technologies into its gold tokenization platform, utilizing post-quantum cryptography alongside quantum random number generators. This approach aims to maintain the security of transaction data, ensuring that trust in financial systems remains intact even as quantum capabilities evolve. To fully harness the potential of quantum technologies in finance, stakeholders—including policymakers, industry leaders, and academics—must concentrate on six foundational pillars: research and development, responsible quantum deployment, infrastructure enhancement, education and workforce training, public-private partnerships, and support for entrepreneurship. Experts caution that while quantum technologies hold immense promise, they are still in their infancy, with practical applications likely years away. Challenges such as high costs, a shortage of skilled talent, and the necessity to integrate quantum systems with current financial frameworks remain significant hurdles. However, with trillions of dollars transacted globally every day, the opportunities presented by quantum technology are too significant to overlook. As banks, regulators, and technology companies strive to exploit quantum’s potential, the next decade promises to reshape the financial landscape in ways that are currently difficult to envision.