The future of quantum computing in financial services
There is no shortage of quantum computing these days, and with good reason. Quantum computers have the potential to unlock new answers and solve new problems by performing functions not only faster than standard computers, but also in entirely new ways.
Depending on who you ask, the industry is years or decades away from commercial viability, and no one is quite sure when this next breakthrough in physics will happen to step up the pace. While it is not clear when these computers will reach their full potential, there is no doubt that they will have the power to change the way we work.
Why should wealth management companies pay attention to quantum and how might advisors use it in the future? Quantum computers have the potential to help consulting companies be more efficient and grow their businesses.
There is a lot of potential, including opportunities around optimization problems, who seek out the best solutions among the universe of possible options to minimize risk, cost, time, resources and more, and the machine learning. Also, because there are a variety of quantum computers, there are many different approaches to solving problems by combining different types of computers.
Solve optimization problems faster
Consider an advisor running a Monte Carlo simulation to determine if a client’s portfolio is likely to last until retirement. The simulation takes uncertain or unknown variables (for example, future market performance), assigns them random values, and then repeatedly performs this process to display a distribution of potential probable outcomes. This distribution gives the probability of the desired outcome, namely that the portfolio is likely large enough for retirement.
With today’s computers, this method requires many iterations to be reliable and, therefore, a lot of time, even a few days for simulations with many variables.
Quantum computing has the potential to change that. With a quantum computer, quantum bits (or qubits) have a partial chance of being a 0 AND a partial chance of 1 – unlike their binary counterparts in standard computers, which can only be one or the other. . This means that the qubits can basically be divided into the Monte-Carlo simulation, adjust the distribution curve and reduce the number of steps to find an answer.
Accelerate and improve machine learning
Machine learning – in which artificial intelligence mimics the way humans learn, gradually improving in the task – as it exists today is already exciting, and quantum computers could provide the potential for s ‘train and test more effectively, and better results. Consultants often view AI as a tool to help them better understand their clients’ needs and identify where they need to focus to maximize impact. Imagine the possibilities if meaningful information could be modeled faster and more accurately in the future. We are already seeing evidence that quantum computers can improve the output quality of generative AI models like those that create new text, images and audio.
Quantum-to-quantum hybrid solutions
There is a growing landscape of quantum computers, each with their own set of strengths and weaknesses. Many are currently specially designed to accomplish specific types of tasks, such as generating random numbers or finding minimal energy solutions. Combining them in hybrid models will allow us to take advantage of the strengths of different technologies and unlock new possibilities.
While still in the exploratory stages, the Fidelity Center for Applied Technology recently collaborated with Amazon Quantum Solutions Lab to use Amazon Braket – a cloud-based quantum computing platform – to develop a proof of concept which uses a quantum-to-quantum hybrid algorithm that creates stocks and rates options for them, essentially mimicking the behavior of a market index.
What might proof of concepts like this mean for the wealth management industry? Advisors could potentially perform more in-depth analysis than they do today, including looking at more complex scenarios with more variables than they can currently analyze, which would help deliver even more value to investors.
Although we are still in its infancy, quantum computing has already shown the potential to positively disrupt the technology we use today and impact the way we work. Now is the time to think concretely about how best to harness the benefits of quantum computers so that we are ready to get the most out of them when they reach commercial viability.