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Q-day is coming. While opinions differ on an exact date, at some point in the next five to ten years, large-scale quantum computers will have the ability to break encryption algorithms using multi-state quantum bits (qubits), which will have significant implications for every industry, including the financial sector.

However, while Q-day poses risks to the encryption systems that protect our personal data, bank accounts, financial markets and vital infrastructure, the dawn of quantum computing also holds immense potential for businesses and society at large.

Quantum computing is well suited for tasks like optimisation problems, data analysis, and simulations. From a broader perspective, quantum computing can potentially address some of the biggest challenges facing humanity. By processing large data sets and training machine learning engines quicker, quantum computing can process complex problems and compute potential solutions that could help the world feed our growing populations, generate more energy sustainably, reduce the effects of climate change, counter emerging viruses and bacteria, and create more economic opportunities for all.

Immense potential in the financial industry

From a financial sector standpoint, quantum computing will also be transformative. It's a topic I spoke on at the recent Commercialising Quantum event hosted by The Economist in London. While the technology poses a significant cyber security threat through its application in cryptography, it can also help combat cybercrime by performing anomaly detection in real-time to detect potentially fraudulent activity and create quantum-safe operations.

Moreover, quantum computing can facilitate in-depth research into asset classes to determine the right mix for portfolios and execute simulations to plot potential market scenarios, find workable solutions to stabilise volatile global economies or determine an investor's requirements to generate hyper-personalised investment plans. Across the financial industry, portfolio optimisation is a popular first use case to experiment with and this is where exploration at Investec has begun, along with applications in our Wealth business.

Financial institutions that specialise in lending and credit extension can also apply quantum computing to perform more accurate credit scoring, analysing exponentially more data points to estimate the level of risk associated with a loan.

The financial industry is already leveraging the power of machine learning and AI to fundamentally change how we work and the products we offer. The promise of quantum computing leads to the next generation of quantum-powered AI that adds the potential exponential processing benefits on top of AI to unlock a truly game-changing technology.

Commercialising quantum

Based on the potential benefits and threats, organisations – in and outside the financial industry – must prepare for all possible eventualities by building quantum-ready workforces and capabilities.

It is important to start exploring quantum computing use cases today to understand how the technology can advance services in the future based on the rapid pace of development in this space. IBM, for example, unveiled its latest Osprey quantum computer in November 2022, a 433 qubit processor that is three times more powerful than its predecessor built in 2021.

By creating an environment that embraces a proactive exploratory approach to this advanced technology, organisations can begin to reap the optimisation and efficiency benefits that quantum technology delivers and fine-tune these capabilities to keep them ahead of the curve when Q-day finally arrives.

Creating future-ready quantum computing capabilities can already offer a competitive advantage in areas such as risk management, fraud detection and portfolio optimisation through improved predictive analytics and forecasting. As an early adopter of fintech solutions and digital banking technologies, Investec is pursuing a first-mover strategy to quantum computing.

We believe that the potential opportunity cost related to a delay in exploring this transformative technology now is too great. As such, we have already entered an evaluation phase to explore and identify potential use cases where quantum computing can deliver better solutions than classical algorithms.

Collaboration and continuous learning are key

However, few companies have the scale to invest in a fully-fledged R&D department for quantum computing. In this regard, Investec is leveraging a strategic partnership with Microsoft to experiment with quantum computing hardware using Azure's quantum computing as a service (QCaaS).

Partnering with existing providers in this manner effectively lowers the barrier to entry to this technology while fostering a community-driven culture of experimentation to develop a diversity of related skills and experience. Leveraging QCaaS also allows us to scale up or down the compute commitment according to each use case, reducing the investment risk when experimenting.

Leveraging strategic alliances and embracing a collaborative approach in this way can accelerate quantum adoption across sectors.

Fostering a deeper understanding of the potential use cases among all industry stakeholders will also help to drive adoption. To achieve this goal, it is important to keep concepts simple wherever possible and use the power of demonstration to make the technology more tangible.

Organisations must also embrace a culture of continuous learning and experimentation to understand relevant concepts and advance industry knowledge about this game-changing technology.

In this regard, the financial services industry can advance the quantum computing agenda by launching in-house proof of value projects, attending workshops, in-person and online training sessions and networking events. Companies can also invite guest speakers to share insights on the subject, join communities and connect with researchers, and, importantly, share learnings and ideas with peers.

A marathon, not a sprint

As the world edges ever closer to Q-day, organisations, including the financial services sector, must start their journey to quantum computing now to formulate specific strategies around this game-changing technology.

Starting to explore quantum computing today could unlock significant optimisation benefits that companies apply immediately while keeping them ahead of the curve as wider adoption gathers pace as Q-day approaches.

The journey to quantum computing however is a marathon, not a sprint. Continuing to build our understanding of this technology and its potential applications in small incremental steps will ensure the industry is ready for this quantum leap forward in our computing capabilities when it arrives.