When you hear quantum computing, what do you think of? Mathematical equations swirling around you? Einstein standing at a blackboard? A computer running extensive code? Quantum computing may initially sound confusing, but it is currently a big factor in where banks are moving. According to IBM, quantum computers provide the potential for quite a few developments in the fields of science and finance. From medications to machine learning diagnosis to financial strategies for retirement, these are just some of the ways quantum computing has real-life impacts. It can also drastically impact banking as we know it. Here is what you should know.
Quantum computing 101
Quantum computing — as its name would suggest — is computing based on the principles of quantum theory. A classic computer encodes information in the binary value of 1 or 0, which ultimately restricts their ability. Conversely, quantum computing differs by manipulating its information utilizing quantum mechanical phenomena also known as “qubits.” The difference is that subatomic participles allow them to exist in more than one state simultaneously, which means that you can have both a 1 and a 0. The topic largely relies on the ideas of superposition and entanglement which are not used in typical computing. By bring quantum physics into computing, you create new avenues and developments.
How does quantum computing serve banks?
Security is one of the most significant problems that banks are faced with. As such, they are constantly reviewing their current systems and seeking new technology that could add to their defenses. Quantum computing is one of those technologies that could change the ways that banks protect themselves.
According to Deltec Bank, Bahamas – “Quantum computing could help build systems that protect vital customer information and transaction details and safeguard against market vulnerability and financial crashes.” That said, the technology is not being used to its fullest potential… yet. It might take some time before quantum computers have the ability to overtake traditional computers, but when they do, it will be a swift switch because it is a better option overall.
It is becoming known as the “quantum advantage” to use quantum computing to run everyday banking tasks rather than a traditional computer. It is more efficient and more secure, which has both customers and banks on board.
Are there any other impacts?
The impact of quantum computing on banking is enormous. Big names in banking like JP Morgan and Barclays are preparing to make the switch. IBM has released a full report detailing the potential uses and applications of quantum computing in the financial sector. Yet, even beyond that, there is a prediction that quantum computing may be competition for another well-known method of data protection that is on the rise. Some believe that quantum encryption could actually eclipse blockchain, which is key to the use of cryptocurrencies as it stores information about monetary transactions. Quantum encryption enables banks to send highly secure data over its quantum network.
“The greatest benefit of quantum computing is that it provides banks a highly secure way to solve problems that were — at one point — very resource-intensive or entirely impossible to complete,” says Deltec Bank, Bahamas That said, will quantum computing change the face of banking as we know it tomorrow? Probably not.
The technology exists and is being tested to see how it can be practically implemented. Banks must calculate financial models due to complex hardware requirements and that takes time. The most important takeaway is that the technology exists and it is something that banks are both aware of and working towards. When a new system is capable of running the same calculations in a matter of seconds and provides the high level of security necessary for financial transactions, it is only a matter of time before it begins to see massive implementation.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.