by Quantum computing is a technology based on the principles of quantum theory. Quantum computing harnesses the laws of quantum mechanics to carry out complex data operations. Quantum mechanics pertains to the realm of sub-atomic particles where the laws of classical physics breakdown. It shows how particles and waves have a dual nature. Particles like electrons tend to behave like waves, whereas light waves also display particle nature.
A quantum processor has millions of qubits that explore all possible combinations to find the best answer. A qubit (or quantum bit) is the basic unit of quantum information (quantum version of the classical binary bit). Quantum entanglement (perfect correlation between quantum particles) allows qubits to communicate with each other even if they are miles (or even millions of miles) apart.
Optimal arbitrage, credit scoring, derivative pricing; all these financial procedures involve many mathematical calculations and become even more complicated and resource-intensive as the number of variables increases. At some point, people have to settle for less-than-optimal solutions, because the complexity of the problem surpasses the capabilities of current technology and methods.
Over time, financial institutions will grow their quantum technology capacity and ability and will grow the number of specific business applications. As a result, the hybrid quantum-HPC computer will lie at the basis of their core business. Those that don’t join in could be running serious commercial risk and financial organizations know this.
Quantum has a bright future, with the potential to make the sector more profitable and less risky. One day it might even make the global economy more stable, as fiscal risks can be better predicted with quantum computers. But quantum computing is not the only quantum technology. What would Finance look like once we have a quantum internet that allows for instantaneous, faster-than-light, correlations? Will we again change the statistics of algorithmic trading, as the rules of the game change? Nobody knows, but it is interesting to consider.
