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Quantum: The next frontier for financial services

The financial services sector is investing in exploratory quantum applications, developing and testing compelling use cases with the aim of gaining a competitive advantage.

Quantum: A new paradigm of computing

The financial services sector has historically been at the forefront of adopting technology to deliver stakeholder value. A high data and computation-intensive sector, it requires many applications to perform highly complex mathematical calculations. 

With continuously changing environments due to various economic and geopolitical factors, the sector is exposed to increased complexity, risks, agile competition and uncertainty, leading to significant volatility.  

The industry needs to solve these problems in real time to maximize returns, but many quickly become intractable on currently available classical computational platforms. However the advent of quantum computers offers a new paradigm of computing, promising to solve some of the most complex, computationally challenging problems across banking, financial markets and insurance domains.

The future of risk management?

Using quantum computing to model financial risk scenarios

Exploration into key applications and early implementation

Quantum stochastic modelling approaches could help financial organizations to comply with regulatory requirements ranging from meeting parameters like value at risk, liquidity and capital allocation values, and help in the pricing of financial assets, such as derivatives.

Quantum computers are very effective in large optimization problems, so FS applications like optimization of asset portfolios.  Also, quantum machine learning techniques are evolving fast and promise a wider tool kit for solving many financial applications, ranging from anomaly detection for fraud detection and money laundering, time series-based asset pricing and implied volatility estimation of assets, to credit score classification and more. Although full-scale fault-tolerant quantum computers are still some years away, some leading financial institutions and Capgemini’s Quantum Lab are exploring proofs of concept to see how quantum could be applied and generate operational benefits.

Quantum financial risk profiling

Using quantum to model major random events and manage future risks

Quantum safe cryptography – a key requirement 

Financial institutions handle large amounts of personal information and financial transactions, with a responsibility to maintain the privacy, security and integrity of these transactions. With unprecedented computing capabilities, quantum computers could break some of the current public key encryption mechanisms used in many financial applications for security and privacy. 

Even though this scenario is far off, this risk is already here due to the harvest-now-decrypt-later threat. So financial institutions need to start thinking now about how this might impact their resilience today and in the future.

A first step is to implement a crypto agility approach – well-defined processes and systems equipped to rapidly adapt, mitigate, and handle any security challenges.  Capgemini helps its clients achieve crypto agility and quantum safe cryptography across their IT landscape. 

Capgemini is a leading partner for its clients on their quantum journey. By combining our sector expertise with that of our dedicated Quantum Lab, we help identify use cases with real future business value, develop and deploy an early quantum roadmap, explore proofs of concept and their scalability in a business context. This is designed to accelerate the realization of a quantum advantage through measured/calibrated investments to achieve industry leadership. Find out more on Capgemini’s work in Banking and Capital Markets and Insurance sectors.

Research and insights

Capgemini Research Institute

Quantum technologies
Report

TechnoVision 2022: Financial Services

Expert perspectives

Innovation

Four reasons why your organization should invest in quantum technologies

Amol Khadikar
Sep 27, 2022
Innovation

Monte Carlo: is this quantum computing’s killer app?

Camille de Valk
Dec 16, 2022

Meet our experts

Sudhir Pai

CTIO, Financial Services
Sudhir is the EVP and Chief Technology & Innovation Officer (CTIO) for the Global Financial Services business at Capgemini. He is also a thought leader, speaker, blogger and business advisor for the CXO’s in the finance industry.

Nadine van Son

Senior Consultant Strategy, Innovation and Transformation | Financial Services
As a consultant in the field of financial services I am passionate about innovation and new technologies, which motivates me look beyond the current standards and status quo. I find inspiration in combining insights, trends and developments with their effect on society and how the business environment should navigate.vation on customer behaviour is a topic that inspires me specifically.

Camille de Valk

Quantum Finance Specialist
As a physicist leading research at Capgemini’s Quantum Lab, Camille specializes in applying physics to real-world problems, particularly in the realm of quantum computing. His work focuses on finding applications in optimization with neutral atoms quantum computers, aiming to accelerate the use of near-term quantum computers. Camille’s background in tectonophysics research at a Dutch bank has taught him the value of applying physics in various contexts. He uses metaphors and interactive demonstrations to help non-physicists understand complex scientific concepts. Camille’s ultimate goal is to make quantum computing accessible to the general public.

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